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New Study Shows Consumers Are Willing to Pay for Enhanced Loyalty Program Benefits




As much as the pandemic tried to alter the way consumers shop for their goods and wares, a few things remained consistent in the habits of shoppers: they want to be treated well, and they want things now.

A new study on premium loyalty programs, where members pay a fee to join in exchange for enhanced benefits, by Clarus Commerce shows that consumers have some strong buying habits that are often hard to break — pandemic or otherwise — that retailers need to pay heed to:

  • 79% of consumers say they don’t want to accumulate points anymore, but instead, look for brand loyalty programs that provide immediate benefits to maintain their loyalty.

  • 90% of consumers say they are likely to choose a retailer where they are a premium loyalty member over one that is offering a lower price.

  • During the pandemic, 73% of premium loyalty members shopped more often with the retailers whose premium loyalty programs they belong to.

Carlos Dunlap-Beard, Vice President of Business Development and Loyalty Strategy for Clarus Commerce, says their 2021 Premium Loyalty Data Study shows that loyalty strategies need to focus on saving time, adding convenience, improving the lifestyle of the member, providing exclusive access, and giving the consumer the option of a better experience with the brands they choose.

“It’s a lot,” Dunlap-Beard says of the challenges brands face in meeting those needs. “But broken down into pieces, it’s very achievable.”

The most significant takeaway from the study — which followed up on Clarus Commerce’s similar studies in 2019 and 2020 — is that consumers aren’t looking to play the points game any longer, it’s all about instant gratification and customized engagement.

“They don’t want to spend $500 just to get a $5 coupon,” Dunlap-Beard says, “consumers believe they deserve immediate benefits for their loyalty.”

In addition, consumers want to engage with brands at a higher level of relationship as premium customers. The latest Clarus Commerce study found that premium loyalty gives customers the option to choose a relationship that is the best the brand has to offer.

Throughout the course of the past few annual studies, the report has demonstrated three megatrends in consumer shopping habits that have developed – noted not just in retail, but in all industries across the board.

  • Empowered consumers have more choices than ever, so brand differentiation is even more critical, especially post-pandemic.

  • Customers want — and expect —everything to be instant, which has been amplified by the COVID-19 pandemic.

  • Customers are also more comfortable with subscriptions than ever before and are willing to pay more for additional value, immediate benefits, and convenience.

Clarus Commerce says it sees these trends every day as it helps retailers build, manage, and optimize customizable premium loyalty programs with a full suite of services needed for a successful program, including technology platforms, client services, strategy, creative, marketing, analytics, IT and operations.

Dunlap-Beard says their clients are seeing consumer behavior constantly evolving, and some of it started well before the pandemic altered many shopping habits.

“Traditional programs are free to sign up for, and most brands have one, which is a great entry point into a larger loyalty ecosystem,” he says. “Premium loyalty programs obviously have a membership fee associated with them, but they provide the best of the brand for a customer who chooses that relationship. It’s instant benefits and rewards and VIP experiences.”

The 2021 Clarus Commerce study found other extremely interesting data about consumers:

  • 64% of respondents said free shipping is the top benefit that would motivate them to join a premium loyalty program.

  • 53% said it was instant discounts.

  • 51% said faster shipping.

Dunlap-Beard says most of what gets people in the door of a retailer is the easy-to-understand transactional benefits, but he adds that people still love getting a good deal.

“They do the math very quickly when you present the offer to enroll,” he says. “But the experiential benefits are what make each program unique and can drive renewals.”

In light of these findings, the loyalty strategies retailers need to focus on most, Dunlap-Beard says, are saving consumer’s time while also adding convenience. Other top strategies they should direct more resources to are improving the lifestyle of the consumer in a way that is meaningful to them, as well as providing exclusivity.
“Access is important to a lot of consumers, otherwise why be in the program?” Dunlap-Beard says. “Overall, they just want to have a better experience with the brand. They want status, and they want to be made to feel valued by the brand.”

In fact, the Clarus Commerce 2021 Premium Loyalty Data Study showed that 81% of consumers that belong to a retailer’s free loyalty program would likely upgrade to a premium tier if it was an option.

“A lot of retailers ask us about their existing loyalty program and what to do with it,” Dunlap-Beard says. “Although there are some cases where only having a premium loyalty program makes sense, we recommend having both as a part of a tiered program structure.”

Overall, the study showed that loyalty would become increasingly more important as brands come out of the pandemic. With third-party cookies going away, driving the increasing need for good first-party data to deliver on personalized communications, loyalty programs — whether free or premium — will be critical in providing this for brands.

In addition, the study also found that premium loyalty programs turn good customers into brand advocates:

  • 73% of premium loyalty members shopped more with their favorite retailers during the pandemic.

  • 90% of consumers say they are likely to choose a retailer where they’re a premium loyalty member over another one offering a lower price.

  • 88% of premium loyalty members say they are likely to recommend a retailer with valuable premium loyalty benefits to a family member or friend.

“Brands had the ability to be aggressive over the last year and a half,” Dunlap-Beard says. “But they still have the opportunity to start taking risks, because consumers have been looking for options and ways to get what they want, when they want it. Some brands have already taken advantage of it, and some brands have not. But there is still a great opportunity there.”

Download the Clarus Commerce – 2021 Premium Loyalty Data Study here.


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