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Six Surprising Facts About Loyalty Programs

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Is your loyalty program keeping up with consumer expectations?

For many brands, the answer is no. Even when acquisition numbers climb, there's no guarantee your new members will remain engaged in your program.

In the largest study of its kind, Bond Brand Loyalty collaborated with Visa to capture responses from roughly 19,000 North American consumers for its 2016 Bond Loyalty Report.

Here are six findings that may surprise you.

1. Enrollment in loyalty programs does not equal engagement


In 2016, consumers are enrolled in an average of 13.4 memberships and active in 6.7. Despite an increase in enrollment, the number of loyalty programs in which members are active has declined slightly. That suggests that though consumers enthusiastically join program after program, they have only so much capacity for measurable engagement. The lack of sustained activity is often not revealed until after a preliminary novelty period. That's a concern for marketers.

Marketers need to identify and address the things preventing their program from findings its way into the active half of a member's wallet vs. the half that goes unused. It's critical that marketers stay ahead of the competition and innovate to ensure their loyalty program becomes (and remains) one of the chosen.

2. The redemption experience means much more than the reward itself

In many sectors, the reward mix varies little across brands, and consumers find differentiation in the redemption experience. How easy is it to redeem? How quickly can they get their rewards?

Focusing on the redemption experience pays off: Members who have recently redeemed are 2X more likely to be very satisfied than those who have never redeemed. Moreover, 70% of members find instant retail redemption appealing.

Neglecting the experience carries consequences. More than one in five members have never made a redemption, and these non-redeemers are 2.3X more likely to defect than recent redeemers.

3. What members want (and aren't getting) from programs is personalization

One in two members agree that personalization is important in the program experience, yet only 22% are very satisfied with the level of personalization they are experiencing—down from 28% in 2015.

Members are asking, "Why don't my favorite brands know me? If I can pre-order my latte from 500 miles away, why can't the barista greet me by name when I pick it up?"

Personalization can challenge marketers who rely on the same old Big Data, but it delivers a dramatic payoff. Member satisfaction is 8X higher when programs are highly personalized. Marketers may feel that personalization is complicated, but the things that members deem most personalized can be as familiar and uncomplicated as using a member's first name and saying, "It's nice to have you back."

4. The best-performing personalization features are the least comfortable

The 2016 Bond Loyalty Report revealed that the features creating the greatest lift in satisfaction were the features that members said felt least comfortable. Higher-comfort features, such as birthday offers, create smaller lifts in satisfaction. The biggest lifts come from lower-comfort features like remembering your "usual" at a restaurant.

Permission makes the difference between lower-comfort features that are "cool" and those that are "creepy." Marketers need to seek permission overtly and often, checking back to determine whether preferences have changed and remembering that customers who want personalized discounts based on previous purchases may not necessarily want you checking their Facebook status to determine benefit eligibility.

5. Programs fall short in regards to customer experience

Only one in five loyalty program members strongly agrees that brand program representatives make them feel special and recognized. Yet those interactions make a big difference in customer experience: brands whose representatives make members feel special and recognized have 2.7X higher program satisfaction.

In addition, all interactions across all channels must be considered when launching or operating a loyalty program. Only 25% of members feel that they have a consistent program experience across channels—brands that create consistency show threefold gains in member satisfaction.

Brands need to achieve consistency across all program and brand touchpoints and enable, engage, and empower their organizations people to delight the program members who represent their most important customers.

6. Consumers are "app"athetic about whether a mobile app for their program even exists

Mobile in loyalty presents a strategic opportunity with 57% of members wanting to engage with loyalty programs via a mobile device. However, 49% don't know whether their loyalty program even has a mobile app.

Before embracing a mobile-first or mobile-only approach, ask what your members need from your brand, what role the loyalty program can play in fulfilling those needs, and then specifically how a mobile device, channel, or mechanism can fulfill those needs effectively.

Then find ways to take advantage of increasing mobile penetration and to use mobile beyond just capturing purchases and tracking points.

* * *

The return on loyalty program investment is higher than ever, but the pace of change has quickened. Savvy marketers must focus less on outspending the competition on rewards and discounts, and more on using their program to create a personalized member experience that's distinctly human.


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Scott Robinson is vice-president of Design & Strategy at Bond Brand Loyalty, a leader in building brand loyalty for the world's most influential and valuable brands.

LinkedIn: Scott Robinson

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