Brands and consumers are reaping the rewards of loyalty programs. However, new data from Bond Brand Loyalty suggests loyalty programs are falling short when it comes to personalization.
The 2016 Bond Loyalty Report, produced in collaboration with Visa, found the vast majority of Canadians (80%) say loyalty programs make them more likely to continue doing business with brands. In addition, 68% of consumers modify the brands/companies they purchase from to maximize points—up from 65% in 2015—and 63% of consumers modify amounts spent to maximize points.
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While one in two members agree that personalization from loyalty programs is important, only 12% report being “very satisfied” with the level of personalization they’re getting.
The report, which surveyed 7,000 Canadian consumers and 12,000 U.S. consumers, points to a big opportunity for marketers to increase return on investment.
“Satisfaction [with a loyalty program] is 14 times higher when programs are highly personalized,” says Sean Claessen, executive VP, strategy and executive creative director at Bond Brand Loyalty.
When customers are satisfied with a program, several things also rise including likelihood to spend, likelihood to say positive things about the brand, and likelihood to stay with a loyalty program. “That gets pretty material at the bottom line of the business,” says Claessen.
The things that consumers would deem personalized are not that complicated, adds Scott Robinson, VP, design and strategy at Bond Brand Loyalty. “They’re familiar with things like birthday offers and using participants’ first names.”
Robinson says it’s important for brands to demonstrate they’re using the customer data they collect. “There is nothing more frustrating for a consumer to offer up [information] and then not have [a return] such as an improved service or an improved communication,” he says.
In addition, brands can’t just “set it and forget it,” says Robinson. “Consumer needs change, so if brands are still taking guidance from preferences that were important in the past, the personalization isn’t as effective as it could be. It’s important to check back often and make sure that the ways in which brands are using information is in sync with consumer needs and preferences at the time.”
Loyalty programs are also missing the mark on customer experience. Only 14 % of respondents feel the program experience is consistent across varied touch points (such as online, by email, by phone and in person). In addition, only 9% of Canadians strongly agree a brand or program representative makes them feel special. Yet program satisfaction is three times higher among members whose program representatives make them feel special and recognized.
Mobile engagement is also linked with higher program satisfaction, and 44% of Canadians would like to engage with programs via mobile phone, up from 37% in 2015.
Outside of a program app, consumers are most interested in using their mobile device to check their points balances (50%), read program emails (45%), find a location/store (45%) and redeem rewards points (44%).
The study also looked at demographic differences, including the differences between millennials and baby boomers. Millennials are 1.5 times more willing than boomers to pay a premium for products and services if they can also earn points.
In addition, 44% of millennials are comfortable receiving product recommendations based on their purchase history, compared to only 30% of boomers. Substantially more millennials value programs that offer special services like concierge (46% of millennials vs. 22% of boomers.)
“As a marketer, if you can find the right service level difference that doesn’t cost your brand a fortune to deliver, it can punch well above its weight with a millennial consumer,” says Claessen.
Other key findings
- More than a quarter of members have never redeemed points. Non-redeemers are 2.1 times more likely to defect than recent redeemers, suggesting that brands should focus on the redemption experience, not just the reward itself.
- Canadians belong to an average of 11.3 loyalty programs, but are only active in 7.3 programs.
- 66% of members are more likely to recommend brands with good loyalty programs. Top retail programs that members are very likely to recommend include MEC (Mountain Equipment Co-op), Metro & Moi, Scene and Costco Membership.
- Program satisfaction has held steady—32% of Canadian program members are very satisfied with their loyalty programs.
Top loyalty programs
Here’s who ranked number one and number two in four categories with the top drivers being brand alignment, meeting needs and program enjoyment:
1) My Starbucks Rewards
2) McDonald’s McCafé Rewards
1) Johnson & Johnson Healthy Essentials
2) P&G Everyday/BrandSaver/BrandSampler
Drugstore & Grocery
1) Shoppers Drug Mart Optimum Program
2) Metro & Moi
1) My Canadian Tire ‘Money’ Card
2) Amazon Prime
Source: Canadian Grocer
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