Go to any store or visit a brand’s website and you’re likely to see an invitation to join their loyalty programs. These offers, which typically allow customers to save money or gain points through purchases, are far from new. But do they actually work to create brand loyalty? How much do customers value the perks and discounts offered by the programs?
As it stands, CivicScience data show the majority of Americans (66%) belong to one or more loyalty program. The largest group – 34% – belong to two or three, and loyalty program membership in general is slightly more common amongst women.
Many shoppers are likely to consider the benefits of a loyalty or rewards program when making purchases. Among loyalty program members, 62% report that loyalty programs are at least ‘somewhat important’ when deciding where to shop and what to buy, while conversely 38% of members are unlikely to factor them into their purchasing decisions.
Who are the biggest users? Among members, adults aged 18-24 are the most likely to value loyalty programs, while adults aged 55+ are the least likely – 28% of Gen Z adults say they’re ‘very important’ when making purchases, compared to just 13% of Baby Boomers.
And when it comes to motivations for using loyalty programs, members are nearly evenly split between enjoying the perks and rewards and saving money, while an additional third say they would buy from the business regardless of the program. However, those who say loyalty programs are important are much more likely to be enrolled for the perks and the chance to save money.
When asked about the importance of brand versus price when shopping, 55% of U.S. adults reported that both are equally important. This further suggests motivation to join loyalty programs and win returning customers, since members can access the brands they love for perks or a more affordable price.
But how does this play out in the real world?
Dunkin’ and Starbucks
In a look at Dunkin’ and Starbucks brand loyalty programs, 21% of respondents who order from Dunkin’ were Dunkin’ loyalty members, while 35% of Starbucks orderers were Starbucks loyalty members. Those who order the most frequently from either chain are the most likely to be loyalty program members – 63% of customers who ordered at least once a week from Dunkin’ are Dunkin’ Rewards members, while 65% are Starbucks Rewards members.
Data also show Dunkin’ members are more likely to say they would buy from Dunkin’ anyway, so being a loyalty member is just convenient. On the other hand, Starbucks members are more likely to be enrolled for the perks and rewards.
Not only does the data suggest that loyalty programs help to create brand loyalty in theory, this brand comparison suggests that this is likely what happens in reality.
Yet, with many brands scaling back their rewards, especially on birthday perks, brand loyalty could be tested, as customers reassess how and where they choose to spend their cash. So if businesses are seeking to retain clients for the rest of the year and beyond, they may want to rethink their brand loyalty strategy.
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