As more and more brands create loyalty programs, consumers are paying increased attention to what direct value the programs will provide them and if the time to join and participate is worth it. In fact, today’s Gen Z consumers will often think about the quid pro quo of trading their private data to a brand in exchange for more “perks” whether that’s a more customized experience or unique offers.
Recently, I dropped in to the CRMC conference and was able to speak with several of the leading strategists and marketing leaders behind some of today’s most popular loyalty programs including Adidas’ adiClub, Delta Airlines’ SkyMiles, AMC Theatres’ AMC Stubs, GNC Nutrition’s myGNC Rewards, Starbucks Rewards and many more.
One of the core themes that emerged was flexibility. Consumers today value being able to choose how they use or spend their rewards and points – where they want, when they want and as frequently as reasonably possible.
“Everyone is really wanting flexibility in how, perhaps, they’re using their points or if they’re given cashback,” said Stephanie Meltzer-Paul, EVP of Global Loyalty at Mastercard. “So that’s something we talk to our customers about all the time.”
Meltzer-Paul said that the average consumer is in 17 loyalty programs, eight of which they’re active in.
“Loyalty consumers are much more sophisticated now and make it a point to run the math on a program’s value,” Meltzer-Paul added. “Years ago, just a few of your top consumers would take the time. Now, the majority evaluate the numbers and say, ‘is this really worthwhile for me to join?’”
“Flexibility is key.”
43% of respondents in a 2022 PWC study said that a loyalty program that has flexibility in rewards is one of the most important parts of a company’s personalized experience.
When I asked if anything was more important than flexibility, Meltzer-Paul said that “the value of the program still needs to be there. Flexibility and redemption will only get you so far if it takes you three years to earn something. The proof is if people see the value of the burn.”
I followed up with Michael Stevens, MarTech Practice Lead of Retail & Consumer Goods at SAS, a data software that provides consumer insights. SAS partners with several professional leagues and teams and explained the importance of flexibility in loyalty programs for sports fans.
“I would say that for leagues like the NBA and NHL that have so many games… they’re trying to understand their consumers better,” he said. I couldn’t attend all NHL games in a season, but if you present me something with more flexibility, I’m more likely to jump into that,” he said talking about season tickets, using ticket exchanges and seat upgrades as examples of being flexible.
And for brands who do have good loyalty programs, consumers are catching on.
“We’re noticing more and more that people are signing up for more loyalty programs because they know it’s the quickest way to get value – and especially with inflation, programs can be used to offset that,” said Meltzer-Paul.
That’s good news for businesses: a 2021 McKinsey & Co study found that customers who join loyalty programs are 64% more likely to purchase from that company multiple times and 50% more likely to recommend it to a friend, plus 31% will pay more to shop with that brand.
We live in a world where more consumers seek affordable adventures also called “The Experience Economy.” This means everything from a hot air balloon ride to a festival or professional sports game is at the center of how I want to live my best life. And brands are integrating more experiences into their loyalty programs.
According to the Mastercard Economics Institute, spending on experiences in the U.S. was up 35% while spending on things was up just 16% in May 2023 compared to the same time in 2019.
“The demand for live events has never been higher,” said Nathan Williford, SVP at TFL. “Between millennial consumers who value experiences over things and everyone in a post-Covid era who wants to get out, we’ve never seen more people buying tickets for events – including everything from concerts and sporting events to theater and comedy shows.”
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