Consumers Not Fully Satisfied With Loyalty Programs, But Modify Behavior Based on Them

June 7, 2016

BondBrandLoyalty-Loyalty-Program-Members-Satisfaction-Jun2016Roughly 8 in 10 US and Canadian consumers say that loyalty programs make them more likely to continue doing business with certain companies, and almost 3 in 4 feel they’re more likely to recommend brands with good loyalty programs, details Bond Brand Loyalty in its 2016 Bond Loyalty Report [download page], conducted in association with Visa.

However, there seems to be room to improve in program satisfaction. Fewer than half (44%) of program members are very satisfied with their loyalty program experience, a figure which hasn’t improved from last year.

Satisfaction is highest for the drug store/grocery and gas & convenience sectors (50% each), with the CPG industry among the lowest in satisfaction (31%).

Some program aspects in particular appear to have room to grow:

  • Only 1 in 4 feel that the program experience is consistent across various touch points;
  • Just 22% are very satisfied with the level of personalization they’re getting from brands; and
  • 1 in 5 strongly agree that a brand or program representative makes them feel special.

As for consistency across channels, a recent survey [download page] of 234 digital marketers at Fortune 500 brands – from CrowdTwist and Brand Innovators – found that just 17% have multichannel loyalty programs that ensure harmony across diverse channels and data sets.

Meanwhile, the Bond Loyalty Report indicates that the top driver of satisfaction is the loyalty program fitting with expectations of the brand. Level of effort needed to earn a redemption, along with ease of redemption, are also top-5 drivers.

Perhaps owing to subpar experiences in those regards, there appears to be a gap in engagement with loyalty programs. Although consumers reported belonging to an average of 13.4 loyalty programs, they are only active in half as many (6.7). Moreover, in excess of 1 in 5 have never made a redemption, a problem given that non-redeemers are 2.3 times more likely than recent redeemers to defect from a program.

Despite those challenges, consumers are taking their programs into account when making purchase. This year two-thirds of the almost 20,000 respondents said they modify the brands and companies they purchase from in order to maximize points. That’s up from 64% last year and 55% in 2014, suggesting that loyalty programs are having a gradually rising impact on buyer behavior.

Consumers aren’t only modifying their brand decisions, but also the amounts they purchase. About 2 in 3 also said that they modify amounts spent in order to maximize the points.

When it comes to how they earn points and what they do with them, there are some differences between genders and age groups. For instance, women are more likely than men to be interested in earning rewards for non-purchase activities such as profile updates and friend referrals (68% vs. 60%). Millennials are more than twice as likely as Boomers to pay a premium for products and services if they can also earn loyalty and reward points, and are considerably more likely to value programs that offer special services like concierge (59% of Millennials vs. 38% of Boomers).

In fact, research released in late 2014 by LoyaltyOne found that hands-on experiences appeal to Millennials as rewards types. A more recent study from LoyaltyOne reveals that youth are more likely than older adults to feel that customer rewards are worth paying for if they’re relevant to their needs. And recent research from COLLOQUY notes that Millennials are more likely than Boomers to continue participating in a loyalty program because it supports their lifestyle and preferences.

About the Data: The 6th annual Bond Loyalty Report is based on a survey of roughly 12,000 US consumers and 7,000 Canadian consumers, with more than 280 programs ranked across categories.

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