When they say old habits die hard, this applies to good habits as well. During the recession, many consumers became adept at searching for deals and finding ways to get the best value on the things they buy. Even as economic conditions have improved, businesses can attract and retain customers through the use of specials offers. A recent study showed that loyalty programs are an increasingly useful way to use discounts to promote a business.
For more than 20 years, COLLOQUY has conducted research into the loyalty program market. Their most recent results show continued interest and growth in loyalty programs. U.S. consumers hold 3.8 billion memberships in customer loyalty programs, according to the 2017 COLLOQUY Loyalty Census.
The 3.8 billion tabulation shows that membership growth continues, and it's clear that many consumers have joined several loyalty programs since there's no where near 3.8 billion U.S. consumers. Though there is still growth in the loyalty program market, the rate has slowed to 15 percent annual growth compared to the 26 percent growth rate achieved in the 2015 Census when total memberships were 3.3 billion.
There are several possible explanations for the decline in annual growth. For example, some businesses have started to join larger, multi-company loyalty programs so customers could turn three separate loyalty programs into one. Similarly, customers are finding programs they want to stick with from businesses they wish to shop for.
"The membership growth slowdown signals the U.S. loyalty market is maturing and retailers need to up their game on how to attract and retain members within their loyalty programs," said Melissa Fruend, LoyaltyOne Global Solutions partner and COLLOQUY Census author. "In order to improve loyalty marketing, brands must optimize the overall experience by creating more personalized and relevant experiences for their best customers."
The study also provides helpful information for creating loyalty programs that customers will sign up for and use. The majority (53 percent) of U.S. consumers identified being "easy to use" as the main reason for participating in a loyalty program. Other reasons that were cited by many loyalty users as reason for participating included "gives me great discounts" (39 percent) and "easy to understand" (37 percent).
When it came to figuring out why consumers stop participating in a certain loyalty program, the top reason given for abandoning a program was "it took too long to earn points or miles;" which was a concern cited by 57 percent of respondents.
Privacy issues are also on the minds of consumers. There is an almost equal split between the the 51 percent of Americans who still trust loyalty programs with their personal information and the 49 percent that don't.
There are certainly challenges to creating an enticing loyalty program that encourages people to shop at one business over another. But this research (and probably your own personal experience) shows that loyalty programs can be an effective draw for deal-minded consumers that creates long-time fans of a business or brand.
For more recent research that can help business owners better market their business, read this article on how a business's reputation affects email marketing efforts.