It’s Time to Reboot Loyalty Rewards Programs

Loyalty rewards programs have become an integral part of business strategies across industries, to incentivize both customer engagement and continued patronage. That’s not likely to change: now valued around $5.6 billion, the market value of the global loyalty management industry is expected to surpass $24 billion by the end of the decade. 

Many loyalty programs offer rewards that participants don’t fully appreciate. Consumers are increasingly seeking to redeem the value of their purchases in alternative ways. Adapting loyalty programs to better reflect consumer preferences can give businesses the edge they need to better compete and retain their customers. 

The question is, how? In short, businesses need to know the kinds of things consumers look for when choosing a rewards program in the first place. 

To shed some light on customer preferences, our company, Runa, carried out a comprehensive survey to ascertain the attitudes and behaviors of 900 consumers across the US, UK, and Germany. Not only did it show that programs aligned with varied preferences drove engagement, helped with customer retention, and cultivated brand loyalty, but the findings also uncovered valuable insights into the ways in which businesses can design and optimize loyalty programs most effectively.

Not So Rewarding

Consumers actively collect rewards from the places they frequent the most, which our data revealed to be grocery stores and supermarkets. 69% of those surveyed made significant efforts to amass as many rewards as possible from such places.  

Rather than accept rewards in the typical form of discounts or promotions, 61% prefer rewards that take the form of prepaid, branded gift cards, as they allow them to spend their rewards on products that are actually useful or meaningful to them. However, despite their popularity, gift cards currently only account for 38% of the rewards customers earn. 

This discrepancy ultimately presents a valuable opportunity for businesses. By acknowledging the greater appeal of gift cards and adapting rewards programs accordingly, businesses can foster higher customer satisfaction and engagement, as well as deeper emotional bonds.

Redemption Flexibility 

Instant gratification is a virtually unanimous expectation amongst consumers and convoluted earning structures diminish the appeal of any loyalty program. Moreover, many rewards are only claimable for limited periods of time, which is often frustrating for participants. Therefore, it’s not just efficiency that consumers seek, it’s also flexibility. 

Consumers value the freedom to choose when and how they redeem the rewards they earn – 55% of consumers said they desire flexibility when making their choices. As such, they gravitate towards loyalty programs that guarantee seamless and  accommodating redemption processes. 

Offering consumers the flexibility to redeem their rewards how and when they want should be a critical staple for any loyalty program, and businesses should minimize barriers when it comes to earning rewards. 

Loyalty is Earned 

Consumers are not married to any one loyalty program – 40% of consumers said they would consider switching to a better program. This indicates that consumers are actively seeking programs that will cater to any need that may arise at any time.    

39% of respondents also said they would consider switching to a program that offers gift cards that may be redeemed at small businesses, indicating a growing desire amongst consumers to support and give back to their local communities. 

Although consumers may initially join a program because of its benefits and incentives, their decision to stay or leave lies in the perceived value they find in the redemption choices available. If a business’s loyalty program fails to provide attractive reward options, they risk losing customers to the competitors who do. 

Time for a Rewards Reboot 

Loyalty programs still serve as a viable way of encouraging customer engagement, but more and more consumers are beginning to have other spending options in mind for the air miles, member points, and grocery discounts they accumulate. 

Businesses therefore have a prime opportunity to strengthen their bottom lines by giving these programs a much-needed rewards reboot, providing consumers with the freedom and flexibility to redeem their rewards as they please – a win-win for both parties. 

But for this to work, loyalty programs must have access to rewards networks that simplify the consumers’ redemption process. This, in turn, will enable businesses to bolster customer engagement through their loyalty and cashback programs, helping boost their brand and offer greater value to the people they serve.