Experience Matters Most to Loyalty Program Members

Consumers and brands continue to reap the rewards of loyalty programs. However, experience matters more to today’s members than earning points and cashing them in, according to the ninth annual Loyalty Report by Bond Brand Loyalty.

The global study, conducted in partnership with Visa, surveyed more than 55,000 consumers in 20-plus markets and assessed approximately 900 loyalty programs across a range of key sectors. It found that almost three-quarters of what drives member satisfaction relates to the experience, including ease and enjoyment (13 percent), brand alignment (12 percent), recognition and support (11 percent), personal relevance (10 percent), data usage and trust (8 percent), digital (7 percent), meets needs (6 percent), and communications (6 percent).

Credit: Bond Brand Loyalty

The top sectors for member satisfaction include credit cards, cruise lines, gas, and grocery. The retail apparel, car rental, and hotel sectors are at the bottom of the member satisfaction rankings.

For brands, the influence of loyalty is stronger than ever, delivering lifts in what Bond calls “say, stay and spend.” The study found that 73 percent of members are more likely to recommend brands with good loyalty programs, 79 percent agree programs make them more likely to continue doing business with brands, and 66 percent say they modify their brand spend to maximize loyalty benefits.

How Can Retailers Improve Their Loyalty Programs to Drive ‘Say, Stay and Spend’?

One recommendation for brands is to use more personalization. When personalization is done well, there's a 6.4x lift in member satisfaction with the program. However, only two in 10 members say they're very satisfied with the level of personalization they get from their loyalty programs, and only 24 percent of members say that programs keep their preferences up to date.

Another recommendation is to take a second look at gamification, which was once dismissed as a fad. In loyalty programs, game mechanics include status and tiers, leveling up and unlocks, missions and challenges, goal setting, and more. The study found that members who engage with game mechanics enjoy participating in the program almost twice as much as those who don’t, and there's a 1.7x enjoyment lift when game mechanics are used. In addition, eight in 10 members engage with these mechanics when present, yet only half of programs employ them today.

Game mechanics are an element that retail health and beauty programs appear to do well: 62 percent of retail health and beauty programs employ game mechanics, higher than the overall average of 56 percent.

Retailers also might want to consider a partnership with another brand. Sixty percent of members expressed interest in partnerships introduced to them through their loyalty programs. The opportunity for retailers is to look beyond partnerships that just focus on ability to earn points faster, earn in more places, and receive discounts at partners. Instead, retailers should take advantage of partnerships that deliver experience-based components such as a more personalized customer experience and reciprocal status with each brand to drive appeal and increased engagement.

On the demographic front, brands should turn their focus to Gen Z and younger millennials (ages 24–29), as the study found they’re highly influenced by loyalty programs. More than half (59 percent) are comfortable with programs capturing their information in exchange for authenticity, purpose and meaning. They’re also willing to pay a fee to receive enhanced benefits from loyalty programs (52 percent compared to the average U.S. consumer at 43 percent).

While loyalty programs continue to deliver benefits to brands and consumers, the data shows that members’ expectations continue to rise. For brands that don’t keep pace, there's a costly gap between customer expectations and their current experience along the entire retail journey.

Bond’s report estimates that there’s potential for key sectors like retail to unlock billions of dollars of consumer spending by retooling their loyalty programs and closing the gap to better meet expectations. That may sound like a tall order, but the report recommends identifying the moments that matter most across the member journey, and consider the role loyalty mechanics can play to improve the experience.

Top U.S. Retail Programs

Department Store

1. Kohl’s (YES2YOU Rewards)
2. Nordstrom (The Nordy Club)
3. J.C. Penney (JCPenney Rewards)

Apparel

1. The Children’s Place (My Place Rewards)
2. American Eagle Outfitters (AEO Connected)
3. DSW (DSW VIP)

Health and Beauty

1. Sally Beauty (Sally Beauty Rewards)
2. Bath & Body Works (My Bath & Body Works Rewards)
3. Mac Cosmetics (M.A.C. Select)

Grocery

1. Smith's (Smith's Fuel Program)
2. Hy-Vee (Hy-Vee Fuel Saver + Perks)
3. Southeastern Grocers (SE Grocers Rewards)

Drugstore

1. Walgreens (Walgreens Balance Rewards)
2. CVS (CVS ExtraCare)
3. Rite Aid (Rite Aid wellness+)

Scott Robinson is vice president of design and strategy at Bond Brand Loyalty, a global customer experience marketing, management and measurement company that specializes in building brand loyalty for the world’s most influential and valuable brands.