Retailer loyalty programs ramp up experiential benefits
Author: Lisa Rowan
Source: Retail Dive
Seventy-eight percent of loyalty programs offer experiential rewards compared to 61% last year, according to Gartner's third annual L2 Intelligence Report, emailed to Retail Dive. Such programs are characterized by benefits like birthday perks, early product or sale access, and invitations to exclusive events. This focus on experience drives emotional loyalty, which Gartner notes is the most long-lasting type of loyalty.
Meanwhile, nearly all of the 187 loyalty programs Gartner analyzed across six sectors offer monetary benefits ranging from product discounts to cash rewards. One-third of brands offer specific periods with points multipliers, a 36% increase over last year's findings. Free standard shipping is another growing monetary loyalty benefit, with 49% of retailers offering it over 39% last year.
Overall, adoption of loyalty programs grew 13% over last year, specifically across the activewear, big box and department store sectors.
Just as retailers can choose a variety of methods to build loyalty through formal programs, they can also approach different facets of loyalty. Fundamental loyalty focuses on product quality, brand reliability and purchasing convenience while transactional loyalty is built based on price and purchase frequency. Emotional loyalty, however, is tied to brand trust, happiness with purchases and a willingness to recommend products. "Brands tap into emotional loyalty ... by delivering more than just transactional value via tactics like experiences," Gartner notes.
Retailers have also made it easier to join in loyalty programs and have removed requirements to have a store credit card in order to participate. While low prices may have been enough to keep customers coming back, shopper savvy and the ease of online research have reduced the need to rely on a single retailer in any category to provide value. That's why experiential benefits may be crucial for building loyalty, especially when examined alongside price.
Personalized services are a notable aspect of the experiential benefits highlighted by Gartner's report, whether exclusive concierge services for high-tier customers or even the simple addition of a name in an email campaign subject line. A previous study from personalization software company Monetate reported that 93% of businesses with advanced personalization strategies increased their revenue in 2018.