Last month I signed up for two new loyalty programs – REI’s lifetime membership (sweetened with the promise of a $20 gift card) and David’s Bridal Diamond Loyalty Program (hello “exclusive savings” on a bridesmaid dress).
So, when I came across Newsweek’s article, “America’s best loyalty programs in 2022,” I wasn’t surprised to read that the average U.S. household is enrolled in 18 different loyalty programs.* To be honest, given the number of loyalty cards I keep in my physical and mobile wallets, my household may be above average.
Loyalty programs are common – even my favorite local coffee shop has long offered a buy 10 get one free punch card – and according to Newsweek, they are an “essential part of an enormous number of everyday transactions” as loyalty members spend more than nonmembers.
In the article, Newsweek quotes Starbucks CEO Kevin Johnson: "Starbucks Rewards now represents 53% of the spend in our stores, which is at an all-time high... Rewards members [...] are spending at an elevated rate and visit our stores at three times the frequency rate versus our nonmembers."
The pandemic’s impact on shopping behaviors
According to Newsweek, loyalty programs are becoming more essential, and many brands are adopting new strategies – gamification, merging with payment systems, etc. – to make their programs stand out.
The increased importance of loyalty programs may be due to pandemic-related shifts in consumer shopping habits. For example, 43% of American households tried a new brand in 2020, compared to 32% in 2019, according to an Oracle study.
Inflation is also impacting customer loyalty. According to Ipsos, when asked how, if at all, inflation or current price increases will impact purchasing habits over the next few months, 35% of respondents selected that they will buy cheaper brands. The report also states that “shoppers are very likely to pick and choose among different retailers and brands even more than they’ve done in the past.”
So how will companies keep customers engaged in the years to come? Will the pandemic continue to impact loyalty programs and customer retention strategies? Only time – and quality research – will tell.
*Newsweek defined loyalty programs as “all reward programs that provided the customer with a benefit when purchasing or using the products or services of the associated brands.”