Consumers Say Loyalty Programs Impact Customer Retention

By Marketing Charts

Almost 8 in 10 (79% of) consumers are more likely to continue to do business with a brand because of its loyalty program, and that likelihood is shared by both younger and older adults, according to [download page] a Merkle report.

The results are strikingly similar to past research from Bond Brand Loyalty, in which 78% of respondents claimed that loyalty programs make them more likely to continue doing business with brands.

Among the Gen Z consumers surveyed as part of the report, more said that loyalty or rewards programs would positively impact their likelihood to continue doing business with a brand than said the same about customer service and a consistent customer experience (81%, 69% and 68%, respectively). For Baby Boomers, however, customer service (85%) and a consistent customer experience (80%) emerged as being slightly more important than a brand’s loyalty program (79%).

Previous research has found that consumers associate their favorite brands with those that provide consistent customer experiences and reward them for their loyalty.

It’s worth noting that among other drivers of customer retention, data privacy policies proved much more impactful for Baby Boomers than Gen Zers, while the opposite was true for mobile apps, which Gen Zers were more than twice as likely to point to as Baby Boomers.

What Consumers Want From Loyalty Programs
Overall, two-thirds of the survey’s 1,500 respondents ages 18-65 belong to 1-5 programs, while almost 8 in 10 (78%) are part of a paid loyalty program.

Nine in 10 respondents report having earned or redeemed a reward in the past 6 months. Discounts are the type of reward or benefit that the largest proportion of respondents say they like to receive, with 79% saying as such, up from 70% last year. Next on the list, 65% like to receive free products, while a declining proportion like to receive free samples (47%, down from 51% last year) and free services (43%, down from 48%).

The biggest complaint that respondents have about the programs they currently belong to is that it takes too long to earn a reward, with half saying as much. In the past, Merkle research has found this to also be the top complaint, with most respondents saying they would participate in surveys and polls in order to earn rewards faster.

Other Findings:

  • A great product is the top factor that makes consumers feel loyal to their favorite brand, far ahead of others such as convenience, great service, and its loyalty program.
  • Cash back programs are the most appealing, followed by loyalty programs that allow members to earn points to redeem for discounts.
  • Consumers were most likely to join a paid membership program in order to access consistent discounts as well as extra services and benefits. Free shipping is also a key benefit driving paid membership program participation, per earlier research.
  • A slight majority (54%) of respondents agree that they are more loyal to a brand because of its public stance on societal events.
  • Almost 3 in 4 (73% of) respondents are likely to expect more from a brand if they participate in its paid loyalty program, compared to 61% who expect more from participation in its free program.

Article originally appeared on Marketing Charts.

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