What customers want from loyalty programs: 4 charts every business must 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 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 are easily achieved with a loyalty program.
 

A well-designed rewards scheme gives customers personalised offers and incentives based on their behaviours and activities, which leads to high levels of engagement and satisfaction. 
 

Do rewards and incentives actually work?

Yes, rewards really work - but only if you offer the right incentives. 
 

Which rewards are right for your customers?

A recent survey showed that 69% of consumers cited cashback as one of their most valued reward categories. 
 

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 want 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. 

How do customers want to receive rewards?

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 create a loyalty program that customers love?

We already know that customers want valuable, easy to redeem rewards, but how do you implement these? To create a loyalty program that customers want, brands need access to first-party data. This data gives you insights into customer shopping behaviours, preferences, and even non-transactional activities - such as how often they engage with you on 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. If you want to reward non-transactional activities and grow your social media platforms, reward customers who share your product on Instagram or TikTok. 

What's the number one reason why customers lose interest in loyalty programs?

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 customers 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 2024…

Customer behaviour in 2024 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.