THE CLARUS Blog

New Data Reveals What Most Consumers Want from Loyalty Programs (Hint: It’s Not More Points)

We live in an instant society where consumers want and expect everything now, but most traditional loyalty programs make members wait too long to receive benefits.

That’s because they’re based on accumulating points through purchases, where members earn rewards at an indefinite point in the future.

And while these programs are still great at collecting customer data, many consumers feel that it takes too long to earn rewards.

It’s getting harder for retailers to attract and retain loyal customers. Consider nearly two-thirds of consumers say their loyalty is more difficult for retailers to maintain than ever before.

So, where does that leave retailers looking to launch successful loyalty programs?

What do consumers want in a loyalty program?

We surveyed 2,500 consumers as part of our 2021 Premium Loyalty Data Study and here’s what they had to say.

 

Your Loyalty Program Members Want Instant Benefits

According to the study, 79% of consumers indicated they don’t want to accumulate points anymore.

While traditional free points programs have their place for many consumers, more and more of them are looking for instant benefits.

One of the enticing attributes of a premium loyalty program is it offers instant benefits to members. And that’s why consumers join these programs.

In fact, more than three quarters (76%) of consumers are willing to pay for premium loyalty programs for a wide variety of products and services, including groceries, clothes and accessories, health and beauty, gas, travel and hospitality, entertainment, and furniture.

Three top benefits premium loyalty members are attracted to are: free, faster shipping; instant discounts; and free giveaways.

In fact, 40% of consumers expect benefits immediately from premium loyalty programs.

To illustrate the impact, most (86%) retailers who offer benefits within the first week say their loyalty program members shop at least once a week — that number drops to 63% for those who offer benefits within the first month.

 

Experiential Benefits Elevate Your Loyalty Program

So, while instant, transactional benefits are something that more consumers want, they’re really becoming table stakes.

More than 90% of companies offer some type of loyalty program. But so many of these programs are similar.

Experiential benefits complement transactional benefits and elevate your program to a distinct level. Consumers love this combination of benefits and creates deeper connections with your brand.

Experiential benefits (i.e., REI, lululemon, Sephora) drive deeper connections with consumers and make them feel special.

For example, Lululemon’s premium loyalty program has an annual fee of $128 that includes a free pair of yoga pants, curated events, and workout classes.

Sephora’s Beauty Insiders program not only includes points and discounts, but also exclusive experiences like in-store makeovers for higher tier members.

REI charges a minimal $20 lifetime membership fee, which earns customers various transactional benefits. But REI’s program is built around once-in-a-lifetime adventures that transform customers into lifelong brand advocates.

Consumers who use experiential benefits in a loyalty program are more likely to engage with you and tell their families and friends about you.

If your loyalty program members have an emotional connection to your brand, they have a 306% higher lifetime value, stay with a brand an average of 5.1 years vs. 3.4 years, and will recommend brands at a much higher rate.

These are your best customers who want to build great relationships with your brand.

 

Examples of Programs with Valuable Benefits

So, what are some examples of brands that offer valuable loyalty program benefits?

In March Urban Outfitters started testing a new premium loyalty program called UP, to complement its free UO rewards program.

The new program, which company officials plan to run six to 12 months, offers free shipping and returns as well as other benefits from its store brands Urban Outfitters, Anthropologie, and Free People.

The UP program will test price points of $48 and $98.

Other UP benefits include: 15% discount on purchases, a $10 coupon every month, and a discounted subscription to clothing rental service nuuly.

Read more about why it makes sense to complement your free loyalty program with a premium tier.

CVS CarePass, a premium loyalty program, launched two years ago and offers consumers elevated benefits like instant discounts, free shipping, and 24/7 access to a live pharmacist.

Sephora’s Beauty Insider program provides points for purchases, but also offers experiences not available to non-members.

In-store beauty services, free beauty classes, and access to the Beauty Insider Community come with membership and strengthen relationships between members and brand officials.

Retailers need to use their loyalty programs to really showcase what makes them special and unique.

Amazon’s Prime premium loyalty program, with more than 150 million global members, is arguably the greatest. Consider too that Prime members spend twice as much as non-members.

It’s not just fast, free shipping that attracts members. Prime has a slew of benefits and that list grows every year. Prime Video is one of the most popular benefits.

Consumers want valuable loyalty program benefits, but the problem is you must provide those benefits quickly after someone signs up.

 

We Live in an Instant Society – Don’t Make Your Loyalty Program Members Wait

While free points programs can still be a valuable part of your overall loyalty strategy, your best customers want to feel special and valuable loyalty program benefits like free, fast shipping and instant discounts achieve that.

In the instant society we live in, more and more, your customers expect instant gratification and they’re willing to pay for it. Consider that 70% of those not in a premium loyalty program would join if any of their favorite retailers offered one.

So, give them what they want. Give them the option to choose their experience. Free or premium loyalty.

 

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