Lots of consumers belong to loyalty programs. That may make it seem like there are a lot of loyal customers out there, but these 17 customer loyalty stats say otherwise.
Just about every retailer has a loyalty program and chances are, you’re a member of at least a few of them.
Purchase a bunch of stuff over time. Rack up points. Redeem points for a coupon or a discount on future stuff. Or get a free tchotchke.
Customer loyalty seems straightforward.
But if you start to think about it, does the above scenario make someone brand loyal? Are points and discounts creating an emotional connection between a brand and a consumer?
Well that seems great, right?
Millions of consumers belong to traditional loyalty programs, which act as a great acquisition tool for your brand.
Traditional loyalty programs serve a distinct purpose. They get customers in the door of your loyalty program and introduce them to your loyalty ecosystem. They also allow you collect key data from your members.
But just because millions of consumers are members of traditional loyalty programs, does that mean they’re engaging with your brand?
That’s an eye-opening stat for any brand. Less than half of consumers in loyalty programs engage with them.
According to our 2022 Customer Loyalty Data Study, less than one third (32%) of consumers participate in their favorite brand’s loyalty program.
To further illustrate consumers’ lack of engagement with loyalty programs they belong to, the study shows:
Only 24% provide feedback or fill out surveys from their favorite brands.
Only 19% share personal data with their favorite brands.
And 17% post about their favorite brands using their hashtags/handles.
This stat supports the one above, but it’s quite impactful when spelled out this way. Don’t you agree?
Companies spend billions of dollars on loyalty programs every year, but if most members aren’t engaging, that seems wasteful.
Yikes! It makes sense if you think about it, though.
With so many similar offerings to choose from, who can blame them? Your customers are evaluating your brand all of the time and shopping the competition for the best prices and offers. The only real differentiator in that scenario is timing. It’s fleeting.
A customer may shop at your store one week, but then switch to a competitor the following week because they got a coupon.
They’re simply going wherever the price is the lowest at a specific point in time. There’s not a lot keeping consumers loyal.
Loyal customers are getting rare, but it’s not their faults. It’s because brands aren’t giving them any reasons to be loyal.
Although many people are in loyalty programs, they’re not loyal. Can you think of a brand that you stick with no matter what even if a competitor has a better price? Are there any retailers that offer something valuable enough to keep you from perusing the competition?
If there’s nothing about your loyalty program, or brand in general, that improves the lives of your customers, or builds an emotional connection, then they simply shop around.
The customers that do stick around tend to be your best customers that get the most value out of your loyalty program. Amazon Prime is a fitting example of this.
Prime members don’t abandon their carts for this reason because there are no points to expire. Members get their rewards on every purchase. There’s nothing to keep track of, either.
That’s why Prime members spend almost five times as much as non-members every year.
Give your customers 24/7/365 benefits and they’ll have a reason to engage all the time.
That’s why it’s important to make it as easy as possible for someone to access their benefits all the time.
Now that consumers have become trained to wait for discounts, they’re likely to hold off shopping until they receive some sort of coupon or offer. It’s annoying, but they want to feel like they’re getting a good deal.
However, if customers could access and use their benefits whenever they wanted to, especially on their mobile devices with no need for a physical coupon, they would engage much more.
Instant gratification is a powerful thing.
While traditional loyalty programs are great at getting people to sign up, premium loyalty programs that customers pay for tend to show higher AOV, cart size and engagement over time.
Members are also more likely to shop with you over a lower price elsewhere, more likely to recommend you to family and friends, and more likely to advocate for you.
That’s why members of these programs are exponentially valuable than non-members.
There’s nothing worse than trying to use a loyalty card and realizing you left it in a different wallet or pocketbook. The same also goes for coupons.
Not getting the discount or rewards that you earned can turn an exciting experience into a bad one.
It’s why personalization is so important.
Consumers are more likely to engage with brands when they receive personalized messages that are relevant to them. If they receive other types of messages from brands, they will often delete them.
Loyalty programs can be used to collect member that brands can leverage positively through personalized messages.
Consumers are more likely to delete messages from brands that aren’t relevant to them.
But if your brand sends personalized communications with loyalty program members based on past behavior, they are much more likely to respond.
With the pandemic pushing more consumers online than ever before, competition has never been fiercer. Differentiation is more critical and a loyalty program that is similar to the competition just won’t cut it.
In a world where consumers want everything instantly and expect a high level of value, it’s no surprise that loyalty is the hot topic of discussion for most retailers.
Many consumers believe loyalty programs should provide immediate benefits to maintain their loyalty.
Offering immediate benefits as part of your premium loyalty program helps you form emotional relationships with members.
Premium loyalty members are so valuable to brands because they use the program so frequently that it becomes part of their daily lives. And premium loyalty programs make your best and most loyal customers exponentially more valuable.
When your best customers feel this way about your brand, they will be your most engaged and loyal customers. And they will become brand advocates.
It also reveals a unique opportunity.
If you find ways to make deeper connections with your customers, your brand will always be top of mind with them and they will spread the good word to people they know.
In a time when data is so critical for personalization and learning about shopping habits, it’s amazing that more companies don’t reward for this.
Consumers accept data collection to a degree. Profile information such as age, location and preferences can be used to tailor a loyalty program and make it valuable.
The good news is that loyalty programs do work.
The customers that do engage tend to shop around less and stick with a brand more. The key word, however, is participate. Loyalty program members are more loyal, but it’s the retailer’s job to get members participating by offering terrific value.
This is crucial because your best and most loyal customers also function as your brand advocates. They spread the message about your loyalty program and your brand messaging by telling their families and friends.
These customers are truly your best because, outside of their transactional and experiential loyalty, they also shower your brand with praise to family, friends and anyone else who will listen.
Loyalty is not a tactic, but a long-term strategy connecting your brand with your customers.
While many brands might think having a loyalty program and communicating with members is enough to drive engagement, consumers want their favorite brands to know and understand them.
Loyalty is a two-way street for brands and consumers alike. The better you understand your customers, the more they will appreciate you. And the more consumers engage with a brand, the more a brand will personalize communications and experiences.
The Customer Loyalty Stats Have Spoken – Are You Listening?
It’s clear that loyalty is broken, but it can be fixed.
Luckily, these customer loyalty stats have laid out the road map to building real customer loyalty.
- Listen to what your customers want. Give them easy access to benefits they can use all the time.
- Give them a reason to advocate for your brand and reward them for it.
- Don’t harass them. Be there for them when they need you, but don’t be spammy. Make it personal!
Remember that loyalty is not just some points programs. It’s not a tactic, but rather a living, breathing strategy to connect with your best customers on a deeper level and keep them around.
If you’d like to talk about your loyalty program and how you can amplify it with incentives, reach out to our loyalty experts any time.