Loyalty Programs Continue to Affect Shopping Behavior, Members Say

May 31, 2017

Member satisfaction with loyalty programs is gradually rising but could still use improvement, according to the latest annual “Loyalty Report” [download page] from Bond Brand Loyalty. Some 46% of respondents to the survey report being “very satisfied” with their loyalty programs, up a couple of points from last year’s study, with financial programs earning the highest level of satisfaction from US members.

Fewer than half of the US respondents reported being “very satisfied” with other loyalty programs, ranging from retail specialty (42%) to airline (39%) and apparel (31%).

That could explain the gap between enrollment – which is going up (to an average of 14 programs) – and activity, which has declined to around 7 programs. Between 2014 and 2017, member engagement (percentage of programs in which they’re active) has declined from 72% go 47%.

Nevertheless, members’ behaviors remain largely intact from last year:

  • 81% say that programs make them more likely to continue doing business with brands;
  • 73% are more likely to recommend brands with good loyalty programs;
  • 69% modify when/where they make purchases in order to maximize points; and
  • 67% modify the brands they purchase to maximize point.

Improving the Loyalty Experience

The report’s results suggest that “Program Experience” and “Brand Alignment” are more important than “Rewards & Redemption” and the capacity to “Earn” as components of satisfaction. That’s interesting in light of other research indicating that rewards are key drivers of retail loyalty and credit card loyalty programs.

It’s also telling that the highest satisfaction rate was reserved for Bank Branded Cashback/Rebate programs, for which 59% of members are very satisfied.

Breaking the components down into individual drivers, Bond Brand Loyalty says that the most important is that the “Program Meets Needs” – which could be interpreted in a variety of ways. The #2 and #3 drivers of satisfaction are “Enjoy Participating in the Program” and “Program Makes Brand Experience Better” – which do point to the experience as being important.

Notably, last year’s top element of satisfaction – the program being consistent with brand expectations – fell to the 5th spot this year.

Some data points stand out as befitting more attention with regards to improving the experience:

  • Only 1 in 4 members are very satisfied with the level of personalization they experience with their program, though that represents modest improvement from last year (22%);
  • Just 36% are very satisfied with their program’s customer support experience, although again that’s a slight rise from last year (33%); and
  • Perhaps most importantly, only around 1 in 5 members (@2%) feel that their experience with the brand is better than that of non-members.

Among the report’s recommendations are for brands to:

  • Differentiate on experience, not rewards;
  • Focus on the redemption experience and encourage reward goal-setting;
  • Determine the right mix of dividend and experience; and
  • Integrate the Program into the brand’s discrete initiatives into a cohesive loyalty ecosystem.

The report’s Executive Summary is available for download here.

About the Data: The study is based on a sample of more than 28,000 US and Canadian consumers who judged more than 400 loyalty programs across more than 10 industry sectors and 50 attributes.

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