The pandemic drastically changed retail and consumer behavior last year and, maybe, forever.
Those new behaviors, along with magnified expectations, have led to a laser focus on loyalty.
- What does the loyalty landscape look like in 2021?
- How do current loyalty programs stand up to new consumer expectations?
- Which aspects of customer loyalty are most difficult to maintain?
To find out, we surveyed 300 marketing and loyalty professionals across the U.S. and put together the 2021 Loyalty Industry Data Study.
Below are the five most important takeaways, but you can download the entire loyalty data study here.
1. Ninety percent of respondents say enhancing or expanding their loyalty programs is a priority for 2021.
Nearly 70% of consumers agree their loyalty is more difficult for a retailer to maintain than ever before according to our 2020 Premium Loyalty Data Study.
So, it’s no surprise that loyalty is a hot topic for retailers.
To make matters more challenging, pandemic pushed more consumers online, making it harder to compete.
That means retailers need to work even harder to earn customer loyalty in 2021.
It will take listening to their customers, identifying their needs, and offering enough value to stay top-of-mind.
Many legacy loyalty programs out there are similar and haven’t been updated, offering few incentives. It’s easy to get customers to sign up, but there’s not a lot of engagement with your brand after that.
Value is the key here and most traditional loyalty programs offer very little.
It’s not surprising that nearly 40% of consumers aren’t interested in joining loyalty programs due to their lack of perceived value.
It will be more important than ever to enhance or expand your loyalty program this year or you’ll be lost in a sea of sameness.
2. Ninety-five percent of respondents with traditional loyalty programs have discussed launching a premium loyalty program in 2021.
Sixty-seven percent of consumers aren’t satisfied with traditional loyalty programs.
The recent McKinsey Paid Loyalty 2020 Survey shows 35% of U.S. consumers have tried a new brand since the pandemic started and 77% have tried new shopping behaviors (new channels, stores, and brands).
According to McKinsey, members of premium (paid) loyalty programs are 60% more likely to spend more on the brand after subscribing, while free loyalty programs only increase that likelihood by 30%.
A large majority of retailers are thinking of launching a premium loyalty program this year because traditional programs don’t create the kind of true loyalty or brand advocacy that premium loyalty programs do.
Instead of earning discounts or coupons after they’ve completed a transaction with a free loyalty program, in a premium loyalty program your best customers pay a membership fee to get access to enhanced benefits they can use any time.
This lets you create greater loyalty and trust with your customers. And it also sparks brand advocacy and builds emotional connections.
3. Fifty-one percent of respondents with premium loyalty programs consider program members to be at least 4x as valuable as non-members.
Value, the most important element of any loyalty program, is the core element and driving force behind premium loyalty.
Members of Amazon Prime, the best loyalty program in the world, spend more than twice as much as non-Prime members.
Consumers will engage with your loyalty program if there is clear value.
Seventy percent would join a premium loyalty program if their favorite retailer offered one and the benefits were valuable.
To further illustrate the value of premium loyalty members, they are 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.
Premium loyalty is all about showing constant and instant value to your members. And in return, they prioritize shopping with your brand over the competition.
4. Seventy-eight percent of respondents anticipate an increase in the number of premium loyalty programs due to COVID-19.
Consumer behavior has changed along with heightened expectations.
COVID-19 caused consumers to flock online to shop.
E-commerce revenue soared to an unprecedented 71% in the second quarter of 2020 compared to the same period in 2019.
That means consumers are buying products that they have bought in-stores before the pandemic. A part of that is subscription-based products and services.
Retailers are finding out that the online shopping surge has left consumers without staunch loyalty. As a result, they see the value in premium loyalty.
Retailers are seeking better loyalty options as they adapt to new shopper behaviors and premium loyalty combines subscription revenue with loyalty programs.
Ninety-four percent of premium loyalty members shop at that program’s retailer at least once a month.
And 88% percent of consumers are likely to choose a retailer whose premium loyalty program they belong to over a competitor that is offering a lower price.
5. Fifty-seven percent of respondents cite lack of budget, internal resources, or IT support as the main reasons for not launching loyalty programs.
There’s a culture shift that needs to happen to run a successful program. Loyalty isn’t simply a tactic. It needs to become a part of everything a company does.
While the largest retailers have the resources to handle this in-house, many others struggle to find the budgets and resources to run a successful loyalty program.
They often look to vendors to build and manage their loyalty programs.
But loyalty programs can be expensive. Not only are there costs associated with launching a program, but also with enhancing it over time and funding more attractive benefits.
At Clarus, we have a different loyalty program pricing model that comes at no cost to the retailer.
Is Loyalty a Part of Your Strategy in 2021?
Customer loyalty is harder for retailers to earn and that’s exactly why it’s so important to focus on your loyalty strategy in 2021.
Consumers are eager to feel instantly gratified and valued by the brands they support.
It’s clear to see why loyalty will be a top priority for retailers in 2021.