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According to Kobie Marketing’s recent “Loyalty in the Age of the Connected Consumers” report, 75 percent of consumers actively earn and redeem rewards in just three or fewer programs. The report found that successful loyalty programs consistently engage shoppers to keep them interested and don’t simply offer the occasional scheduled discount.
The report also outlined four key steps to increasing long-term interest in loyalty programs: analyze generational preferences, consider a points-based program, prioritize convenience and clear value, and clearly communicate the steps to earning awards.
In terms of generational differences, the report found that members of Gen Z are more protective of their data than other generations, with 28 percent of the group saying that giving up personal information was a barrier to joining a loyalty program. In addition, Kobie found that Baby Boomers and the Silent Generation are less receptive to cardless loyalty programs, as 72 percent rated swipe card-based programs among their top preferences.
Regardless of other differences, all generations are interested in points-based loyalty programs. 86 percent of shoppers said they’ve joined a loyalty program to collect points for rewards.
“They didn’t specify what rewards, it was just about the dynamic of collecting points,” said Kate Hogenson, Senior Loyalty Consultant at Kobie Marketing. “That’s fascinating to me, because a lot of retailers say points programs are dead. I would say badly-designed points programs are dead.”
The report found that Starbucks had one of the most popular loyalty programs, with over 23.4 million people using the app to make a purchase at least once every six months. This usage is ahead of both Apple Pay (22 million users) and Google Pay (11.1 million users).
The report found that with loyalty programs, clarity is the key to success, especially when targeting Gen X. The report found that 48 percent of Gen Xers prefer programs that send fewer emails or irrelevant notifications.
“It may seem boring for you to say, ‘This is your reward,’ but cuing people in is very powerful,” said Hogenson. “We’ve seen redemption and clickthrough rates that are at least 50 percent higher, and sometimes as much as 300 percent higher, when you have been very specific about saying ‘here’s what you’ve earned.’”
The report also found that tiered loyalty programs with larger selections were the most successful and had the most positive customer feedback. The combination appeals to a broader selection of shoppers, letting them choose which kind of benefit they prefer.
“The idea of a tiered reward means that you have a selection of rewards, and you have rewards that can be earned at different levels,” said Hogenson. “There’s something that’s easy to get to, and maybe there’s something aspirational that you save up your rewards for. Some people like to bank, and save up for a bigger reward, some people like to burn it quickly.”
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