What customers want from loyalty programs: 4 charts every business needs to see
How do you create a loyalty program that truly resonates with your customers? And what kind of rewards actually work? Let’s dive into the latest data and insights on loyalty programs to answer these questions and more…
Firstly - do customers actually want to participate in loyalty programs?
A recent survey by eMarketer found that 79% of consumers said they were more likely to choose a retailer that offered a loyalty program over one that didn’t.
Plus, according to Accenture, 75% of customers are more likely to purchase from a brand that recognises them by name, recommends products based on past purchases, and can personalise their experience - all of which can be easily achieved through a loyalty program.
A well-designed loyalty program gives customers personalised offers and rewards based on their behaviours and activities, which leads to ultimate satisfaction.
Do rewards actually work?
Yes, rewards really work - but only if you offer the right incentives.
Which rewards are right for your customers?
A Capgemini study also shows that 63% of customers prefer loyalty programs that offer exclusive access to products and services.
Finally, according to research conducted by Merkle, 79% of respondents prefer to receive simple discounts, whilst 65% of consumers want free products.
These studies show that each customer has different preferences - but generally customers value rewards that offer instant value, have a level of exclusivity and save them money.
Key takeaway: Give your customers what they actually want. It’s important to do research into your customers preferences to understand what kind of rewards they find truly valuable. You can get them to participate in surveys or spend time collecting first-party data to get insights into what products and services they use the most.
Which reward redemption mechanisms work best?
Studies have shown that the most important factor in driving loyalty is not the reward itself, but the ease of redeeming it.
In other words, customers are more likely to stay loyal to a business that offers easy-to-redeem rewards, rather than those that require effort. That’s why it’s crucial to develop your loyalty program with the customer experience in mind.
A Salesforce report shows that automatically applied rewards are the top reason why global consumers would use loyalty programs more frequently…
Key takeaway: Redemption mechanisms are just as important as the rewards you offer. Don’t make your customers jump through hoops just to redeem their rewards.
How do you provide true value to your customers?
To offer valuable rewards, brands need access to first-party data. This data gives you insights on customer shopping behaviours, preferences, and even non-transactional activities - such as how often they engage with your social media. Brands can use this information to choose rewards that customers truly resonate with.
For example, if you find that your customers frequently purchase a certain product, you could offer them a discount or reward for their next purchase of that product. Or, if you notice that customers tend to abandon their shopping carts before completing a purchase, you could offer them a discount or free shipping to incentivise them to complete their purchase.
A study by LendingTree shows that the number one reason for customers abandoning a loyalty program is because the rewards aren’t worth it.
Key takeaway: Providing value to your customer means more than just discounts - it’s about offering them a relevant experience based on what you already know about them. Use the data you collect to offer rewards that are actually worth it.
What you need to know about customer behaviour in 2023
Customer behaviour in 2023 is changing. Consumers are becoming less loyal to brands and are more likely to switch. In fact, many customers who are part of paid loyalty programs have cancelled their memberships in a bid to save money.
You must adjust your business strategies in response to these changing behaviours. Lucky for you, we’ve gathered all the information you need to know about how consumer spending is being affected by the current cost of living crisis.
Key takeaway: Monitor your customers' behaviours and understand what’s changing. More customers are cutting back on their spending, and this means a rise in brand-switching. This phenomenon makes it even more important to stand out from your competitors and offer real value to each of your customers.
The key to a successful loyalty program is to offer rewards that resonate with your customers and provide them with a personalised, easy-to-redeem experience.
By leveraging first-party data, brands can gain valuable insights into their customers' behaviours and preferences to create a loyalty program that truly adds value to their lives.
As consumer behaviour continues to evolve in the coming years, it will be more important than ever for businesses to stay attuned to these changes and adapt their strategies accordingly.
By prioritising the customer experience and offering relevant, meaningful rewards, businesses can build long-term loyalty and drive growth in an increasingly competitive marketplace.
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Creative & Content Marketing Executive
Helen is our Creative & Content Marketing Executive. She shares valuable information about the Future of Loyalty and will keep you up to date on the latest industry insights...