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What Loyal Consumers Expect: Discounts, Offers, and Free Products

Discounts, offers, and free products continue to be the main motivators for participation in loyalty programs, and earning points for rewards continues to be consumers’ favorite loyalty program structure.

Let’s dive in to what the 2021 Loyalty Barometer Report reveals about consumer expectations and their preferred ways to earn.

Participation drivers

A loyalty program needs to provide consumers with value that motivates acquisition and participation through elements like discounts, offers, and free products. These tangible rewards continue to be the main reasons why consumers participate.

Nevertheless, consumer appeal across all benefit types has decreased from last year, suggesting that satisfaction and loyalty extends beyond the interactions within a loyalty program and instead go across the total experience with the brand.

Providing material value is table stakes in a marketplace that is saturated with loyalty programs. In order to differentiate and incent long-term engagement, the brand experience should incorporate personalized interactions and a needs-based loyalty rewards strategy that uses first- and zero-party data to deliver consistent, contextual, and meaningful moments.

The main reason you participate

Reward utility

The most important component for customer satisfaction with a loyalty program is reward utility. Consumers continue to indicate that their biggest complaints with loyalty programs are that it takes too long or is too difficult to earn a reward.

A program can reduce this perception by balancing the rewards offering with items that are cost effective and quick to redeem with more valuable items that are aspirational and take longer to earn. In addition, a program can reduce the time it takes a participant to experience value by elevating rewards that are within their reach and designing a user interface and experience that reduces friction and guides users to key areas of the program.

Rewards that are not valuable nor relevant are additional leading causes for dissatisfaction with loyalty programs. A brand must know its customers’ needs and wants to curate rewards that are meaningful. In order to do so, a brand must identify and collect first- and zero-party data to drive identity efforts and inform the development of a purposeful reward strategy that meets customer needs.

Preferred Ways to Earn

Earning points for rewards continues to be consumers’ favorite loyalty program structure, and they prefer redeeming these points for discounts.

Since our very first Loyalty Barometer Report, “Earn points for rewards” has been the preferred loyalty program structure. We expanded this year’s question to gain further insight into how consumers prefer to redeem those points: This year’s survey uncovered that consumers prefer to redeem their points for discounts rather than redeeming them for items in a catalog. This likely speaks to the desire to have broader choice around how they use their rewards. For instance, receiving a storewide discount allows consumers a wider selection of how they put that reward to use than does a curated catalog.

We updated our report in July 2020 to get a pulse on consumer sentiment during the pandemic and saw some shifts in consumer preferences on loyalty program structures. “Get a $10 reward when you spend $100” increased in appeal and has remained in second place with the latest data, illustrating the continued importance of consistent and achievable savings. In addition, “Earn points for purchasing across many retailers” gained appeal from July’s update, landing in third place.

As consumers have expanded the number of stores where they shop (due to inventory limitations) and potentially have new purchasing habits (based on a pandemic lifestyle), having the ability to consolidate points across retailers is appealing. It also allows participants to earn rewards sooner by expanding the ways they earn, alleviating the complaint that it takes too long to earn a reward.

Consumers continue to have a heightened sensitivity to the value they receive for their purchases and are actively looking for more ways to save. To ensure your loyalty program is appealing, be transparent on what customers need to do to access rewards and be clear about the value the rewards provide.

Since the July shift in consumer sentiment, participants continue to prefer loyalty programs that provide clear and consistent savings, such as access to discounts and get $10 when they spend $100. In addition, consumers are looking to access rewards or savings sooner by being able to earn across retailers. Consumers enjoy surprises but do not prefer them as a base structure as this type of structure does not provide them with control to achieve rewards through action.

The appeal of following loyalty programs

Vertical-specific engagement trends

As seen in last year’s report, the most preferred loyalty program features continue to trend similarly across industries. As a core program feature, chances to win are less appealing than other benefits. But when it comes to secondary engagement features within a loyalty program experience, chances to win large prizes and instant prizes rise to the top.

Integration of these engagement mechanics can create excitement and encourage increased frequency while creating a perception of freshness to the program and limiting cost liability.

VIP tiers remain an important feature across most industries, illustrating that tiers are a preferred way for brands to show their appreciation for customers’ loyalty and purchases.

The ability to donate or support a charity maintained its fourth place ranking this year for credit card, travel, and retail programs (third for consumer goods). Allowing consumers to donate to a charitable cause through a loyalty program can surface common values between the brand and consumer, and connecting with consumers on common values can cultivate and reinforce an emotional connection.

Favorite loyalty program features

Download the full Loyalty Barometer Report for more detailed insights.

Craft experiences that capture consumers in the moment

As an experienced loyalty and promotions partner for global brands, we provide a white-glove service offering to design and implement engaging touchpoints throughout the consumer journey. A few favorite tactics we’ve used to grow businesses include full-blown loyalty programs, gamification experiences, engagement hubs, purchase-validation programs, and more.

Interested in learning more? Schedule a quick meeting with one of our loyalty and promotions specialists.

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