What Consumers Expect From Loyalty Programs in 2021 and Beyond
Over the past year, we’ve seen unprecedented disruption in the retail space as COVID-19 forced store closings, disrupted supply chains, and pushed more consumers online than ever before. And with customer behaviors and expectations changing rapidly, their loyalty is becoming more difficult to earn.
To better understand consumers’ mindsets at this critical point in time, Clarus Commerce surveyed 2,500 U.S. consumers about their shopping habits and expectations for loyalty programs, with a focus on premium loyalty.
Premium loyalty programs offer immediate, enhanced benefits and experiences in exchange for a membership fee. Examples include Amazon Prime, Walmart+, and CVS CarePass.
This loyalty data study offers key insights for retailers looking to build more loyalty in 2021 and beyond. Here are the biggest takeaways:
1. Seventy-nine percent of consumers say they don’t want to accumulate points anymore, and retailers’ loyalty programs should provide immediate benefits to maintain their loyalty.
It’s no secret that your customers want everything now. We live in an instant society. Therefore, requiring your program members to transact now for benefits and rewards later is becoming less effective.
According to the study, free shipping (64 percent), instant discounts (53 percent), and faster shipping (51 percent) are the top benefits that motivate consumers to join or renew premium loyalty programs.
Traditional points programs can still play a role in your overall loyalty strategy, however. They’re great at collecting valuable first-party data and they can act as an entry point into your loyalty ecosystem.
However, consider giving your best customers the option to join a premium tier to access the instant benefits they desire. Eighty-one percent of traditional loyalty members say they would join a premium loyalty program at their favorite retailer, assuming that the benefits were valuable.
2. Ninety percent of consumers say they’re likely to choose a retailer where they’re a premium loyalty member over another one offering a lower price.
In addition to increasing engagement, purchase frequency and average order value, these programs build overall loyalty to your brand. And this has been especially true throughout the pandemic, which is no small feat.
In addition to that, the study found that these programs help create brand ambassadors. Eighty-eight percent of premium loyalty members are likely to recommend a retailer with valuable benefits to a family member or friend. This helps tremendously with word-of-mouth sales and therefore increases traffic to your website and stores.
3. Seventy-three percent of premium loyalty members shopped more with their favorite retailers during the pandemic.
Maintaining loyalty continued to be a major challenge for retailers during the pandemic. Our study found that 49 percent of consumers have tried shopping with a new brand since March 2020, as the shift to online shopping made it easier to switch brands.
But even throughout the pandemic, members of premium loyalty programs stuck with those brands. Nearly three-quarters (73 percent) shopped more with retailers whose premium loyalty programs they were part of during the pandemic, and 41 percent shopped significantly more with those retailers.
Loyalty in 2022 and Beyond
As we come out of the pandemic, where should retailers focus their loyalty efforts?
As this research dictates, consumer habits have drastically changed and will continue to do so. With higher expectations for more convenience and better experiences, and with more choices than ever before, retailers will need to step up their loyalty efforts going forward.
While traditional loyalty programs aren’t going away, consider offering the option to join a premium tier — it’s a win/win for your customers and your brand.
Tom Caporaso is the CEO of Clarus Commerce, the only company specializing in building, managing, and optimizing premium loyalty programs
Tom Caporaso is the CEO of Clarus Commerce, the only company specializing in building, managing and optimizing premium loyalty programs. He has been in the loyalty and subscription space for over 25 years, empowering brands to build better relationships with their top customers for the long-term. A solidified thought leader across the retail and loyalty sphere, Caporaso has been quoted in national publications like CNBC, Reuters and U.S. News & World Report. In addition to his loyalty expertise, Caporaso also has a 100% CEO approval rating on Glassdoor, a 2020 leadership award from The Hartford Courant, and has helped Clarus Commerce earn the Connecticut Top Workplaces award every year since 2013.