Commentary

The Price Of Loyalty: Consumers Want Discounts Above All Else

Email marketers tasked with promoting loyalty programs often wonder what will work.

That’s easy. Consumers like discounts -- especially instant ones, according to the 2019 Loyalty Barometer Report from HelloWorld, a Merkle company. 

But nothing is that simple. The study states that “promotional overlays are short-term tactics that motivate specific behaviors and layer onto existing programs without changing the program framework.”  

That doesn’t mean they lead to long-term loyalty. Ancient direct marketing wisdom is that prospects enticed by cheap offers are not the best long-term customers. 

Still, the study provides clues about what people want out of loyalty programs, and marketers should offer these benefits not only in promotional emails, but in cart abandonment, welcome and browse follow-ups. 

Of the consumers polled, 77% crave free products. Another 75% expect discounts/offers. And 66% want free samples, while 57% want free services. 

In addition, 41% welcome opportunities to win something, and 32% like surprises from brands. 

Here are the main reasons people participate in loyalty programs:

  • I receive discounts or offers — 43%
  • I can earn free products — 27%
  • I have access to exclusive rewards — 10%
  • I get members-only benefits—9% 
  • None of the above — 6%
Don’t expect loyalty in the classic sense: Only 5% sign up to “stay connected to a brand I love. It’s like Lester Wunderman said: How can you be loyal to a toothpaste?

And beware: Many people dislike being bombarded with emails and other messages. Here’s what loyalty members don’t like:

  • It takes too long to earn a reward — 54%
  • It’s too difficult to earn a reward — 39%
  • I receive too many communications — 36% 
  • The rewards aren’t very valuable — 32% 
  • I worry about the security of my personal information — 29%

(I would add one complaint of my own: That it’s too hard to track accumulated points in many programs).

Of course, the most effective benefits vary with the sector. 

Credit card holders like instant rewards/discounts and the ability to choose rewards — 60% say so. Personalized rewards are last, cited by 36%.   

Travel customers are similar — 60% want instant rewards and 59% want the ability to choose rewards. Only 34% care about personalized rewards. 

On the retail front, 63% want instant rewards and discounts, and 52% apiece demand surprise rewards. Also, 39% want personalized rewards.

Finally, 63% of CPG customers list instant rewards.

That brings us to the question of how to best engage with customers. The choices, which seemed more geared toward shopping in general than loyalty programs per se, include:

  • Surprising me with offers or gifts for being a customer — 61%
  • Making my shopping process more convenient — 50% 
  • Helping me solve a problem/question — 45% 
  • Recommending products to be based on my needs — 27%
  • Keeping me up to date on the latest news and products — 23% 
  • Welcoming me when I visit (in-store or online) — 20%
  • Engaging with me on social media — 9% 

Here’s one more preference, cited by 6%: “No interactions are important to me.”

HelloWorld surveyed 1,500 consumers in the U.S.

 

1 comment about "The Price Of Loyalty: Consumers Want Discounts Above All Else".
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  1. Phil Rubin from rDialogue, March 2, 2019 at 5:41 p.m.

    This is about loyalty programs and not customer loyalty, which customers - from multiple waves of primary research - define as being willing to pay a premium or go out of their way to purchase a brand.  When loyalty marketing is focused on discounts, as (too) many of them are, it might drive transactions but it won't engender actual customer loyalty.

    The pervasiveness of "me too" loyalty programs is increasingly detrimental to brand development, engagement and profitability.  As a CFO at one of our clients wisely said, "great companies and brands get their best customers to pay more."  They are more profitable, deliver a better customer experience (because they can afford to invest) and have stocks that outperform their peers and the market.

    Examples of loyalty leaders include American Express, Delta Air Lines, Nike, Sephora and of course, Amazon, which has over 100 million customers paying them $119 per year to be members of Prime.

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