Benchmark Report Reveals Insights Into Top Retail Loyalty Programs
Attaining customer loyalty is perhaps harder today than it has ever been. Consumers have an abundance of choice, both online and offline, when it comes to the retailers they can choose to spend their hard-earned money with. If a retailer doesn’t meet a customer’s high expectations, no matter the reason, that shopper is unlikely to come back to make a repeat purchase. Instead, they will likely go to a competitor that can offer them a better experience. According to Clarus Commerce’s 2021 Premium Loyalty Data Study, 68 percent of consumers say their loyalty is more difficult to maintain than ever before.
Given this environment, retailers are increasingly seeking out ways to retain their existing customers. There are multiple reasons why retaining existing customers is a priority for retailers, but at the top of the list is increased engagement over time, leading to higher customer lifetime values and, ultimately, improved bottom lines. The cost to retain an existing customer can be up to six times less than the cost to acquire a new customer, factoring in rising digital marketing expenses. And that’s just the start. Existing customers are more profitable than new customers, as they’re more likely to shop with your brand over and over again, more likely to convert, spend more on each purchase, among other profit-boosting behaviors.
To help with their retention efforts, retailers are investing resources into creating and operating customer loyalty programs. Those programs are often categorized into two buckets: traditional, which offer free enrollment, but require members to make purchases over time to earn rewards that come later (e.g., by accumulating points); and premium loyalty programs, which offer immediate benefits (e.g., free shipping, instant discounts) that can be used at any time in exchange for a membership fee. Currently, most retailers are offering traditional loyalty programs (59 percent of respondents to Clarus Commerce’s 2021 Loyalty Industry Data Study). Retailers offering a premium loyalty program only totaled only 18 percent of respondents, however, 95 percent of those not currently offering a premium loyalty option have discussed launching such a program this year. Twenty-three percent of respondents to Clarus Commerce’s study are offering both a traditional and premium loyalty program.
The last group may be in the best position to drive future growth for their business. Retailers that are able to successfully blend valued elements of traditional and premium loyalty programs into an overall engagement strategy are poised to win long-term customer engagement and lifetime value. Because they’re free, traditional loyalty programs are a great entry point for consumers new to your brand, who may later decide to elevate to a more committed premium loyalty tier which they’re willing to pay for. Furthermore, loyalty programs are essential for collecting first-party data, which can be leveraged to create the personalized marketing campaigns and shopping experiences that today’s consumers have come to expect. Establishing a premium loyalty program is an effective way to build stronger (and more profitable) relationships with customers who are already members of your traditional loyalty program.
With this in mind, Total Retail, in conjunction with Clarus Commerce, recently assessed the loyalty programs of 50 leading retailers. This was done to identify loyalty best practices that can be implemented across organizations within the retail industry. Subsequently, the 2021 Loyalty Program Benchmark Report was produced, and it features the data and insights derived from that assessment.
The online assessment was conducted in May 2021 and June 2021. The retailers’ loyalty programs were scored on the following six categories: discoverability, benefits, sign-up process, promotions and marketing, customer service, and innovation. In total, the retailers’ programs were assessed on 34 individual criteria. The retailers assessed comprised a mix of product verticals, including apparel, department store, general merchandise, health and beauty, home furnishings, specialty, and sporting.
What did the assessment reveal? Download the 2021 Loyalty Program Benchmark Report: An Assessment of 50 Leading Retailers' Loyalty Programs Leads to Insights and Learnings for the Industry today to find out.
Related story: 2021 Loyalty Program Benchmark Report