ShopTalk: Where consumers’ loyalty lies
Whether through key chain cards or smartphone apps, loyalty and rewards programs seem to be everywhere. In addition to the discounts and rewards they provide consumers, loyalty programs are also valuable to the retailers that sponsor these programs. By making customers feel recognized and appreciated, they encourage return business. Retailers, in turn, can focus their attention (and dollars) on attracting new clients while better retaining existing customers. Considering that new client acquisition costs five times more than existing customer retention, the business case for loyalty programs is compelling.
Loyalty rewards programs are also a treasure trove of information about consumer behavior. By analyzing what customers have bought in the past, retailers can help recommend or predict future purchases. Vantiv and Socratic Technologies conducted a survey of 500 consumers to learn more about loyalty rewards programs and the customers that are using them. Here are the results.
9 out of 10 survey respondents belong to a loyalty rewards program
92% of consumers report belonging to at least one loyalty rewards program.
Consumers belong to an average of 6+ loyalty rewards programs per person
Survey respondents report belonging to an average of 6.7 loyalty rewards programs.
Gen Xers record the highest average number of memberships to loyalty rewards programs
Gen Xers report belonging to an average of 7.2 loyalty rewards programs. This is followed by Baby Boomers at 7.0, Millennials at 6.2, and Retirees at 5.8.
Women belong to more loyalty rewards programs than men
On average, women belong to 7.6 loyalty rewards programs compared to men at 5.9.
Women are more likely than men to belong to these types of loyalty rewards programs:
- Grocery stores – 73% women vs. 54% men
- Drugstores – 69% women vs. 47% men
- Department stores – 43% women vs. 29% men
- Fast casual restaurants – 32% women vs. 22% men
- Discount retailers – 32% women vs. 21% men
- Apparel retailers – 20% women vs. 12% men
Grocery stores offer the most popular loyalty rewards programs
63% of consumers belong to loyalty rewards programs sponsored by grocery stores. Drugstores come in second at 57%.
Automatic discounts and free shipping are the most popular reasons to join loyalty rewards programs
46% of survey respondents belong to loyalty rewards programs because of the automatic discounts they receive when making purchases. Free shipping is the second most popular reason at 44%. Points for free travel or merchandise and members-only discounts tie for third place at 39%.
Consumers don’t like spending thresholds
What features of loyalty programs turn consumers off? The top reason is too much spending required to reach the next status level (45%). Consumers also dislike rewards that expire before they can be used (43%) and rewards that are hard to use due to restrictions (34%).
One-quarter of consumers belong to a coalition loyalty program
25% of survey respondents belong to a coalition loyalty program that lets them earn/redeem rewards across a variety of retailers or restaurants. In addition, 43% of consumers report that they would shop more frequently with retailers or restaurants that are part of a coalition loyalty program.
Some loyalty program members like getting personalized recommendations
One-third of consumers that are members of loyalty rewards programs are “extremely” or “very” interested in receiving recommendations or offers based on their past purchase history.
Interest in personalized recommendations and offers varies by generation
Millennials show a significantly higher interest (55%) in receiving personalized recommendations and offers based on their purchase history. Retirees show the least interest with 57% being “not very” or “not at all” interested.
Recommendations from grocery stores and drugstores are most welcome
Consumers are most open to receiving purchase history recommendations from grocery stores (42%) and drugstores (31%).
Email is the preferred method of communication for offers and recommendations
45% of survey respondents are interested in receiving offers and recommendations by email.
One-third of survey respondents have received recommendations or offers based on geolocation
This percentage jumps to 50% for Millennials. While overall interest is still low (23%), Millennials are significantly more interested (48%).