But what do consumers really want out of these loyalty programs?
The short answer to that question is “freebies and discounts,” the Loyalty Barometer Report from HelloWorld, an arm of Merkle, makes clear.
Of the ~1,500 U.S. consumers polled, ~77% of the respondents said they expected benefits for their loyalty to be in the way of free products, and an almost-equal percentage (~75%) expect to be offered special offers or discounts.
As for the most important reasons people participate in loyalty programs, the Merkle survey reveals that most people take a purely “transactional” approach to them. Discounts and free products far outweigh other considerations:
- Participation to receive discounts or offers: ~43% of respondents cited as the most important reason
- To earn free products: ~27%
- To gain access to exclusive rewards: ~10%
- To receive members-only benefits: ~9%
- To stay connected to a “brand I love”: ~6%
- Other factors: ~5%
Notice how far down the list “brand love” falls.
As for negative aspects of reward programs, it turns out that there are a number of those. The following five factors were cited most often by the survey respondents:
- It takes too long to earn a reward: ~54% cited
- It’s too difficult to earn a reward: ~39%
- Receiving too many communications: ~36%
- The rewards aren’t very valuable: ~32%
- Worries about personal information security: ~29%
[For more details from the Merkle report, you can access a summary of findings here.]
The results of the Merkle survey suggest that rewards programs may be more “transactional” in nature than many brand managers would like them to be. But perhaps that’s happened because of the very way the loyalty programs have been structured. When loyalty marketing is focused on discounts, it’s likely to drive transactions without necessarily engendering much if any actual customer loyalty.
On the other hand, if we define customer loyalty as when people are willing to pay a premium, or go out of their way to purchase a particular brand’s product or service, that represents a significantly smaller group companies than the plethora of companies offering loyalty programs to their customers.
Which brands do you consider to be true loyalty leaders? A few that come to my mind are Amazon, American Express and Nike — but what others might you posit? Please share your thoughts with other readers here.