More consumers are dumping their loyalty program memberships, but that hasn’t stopped Pampers from trying.
The leading maker of diapers recently upgraded its mobile app to include loyalty rewards for Canadians and Americans. In doing so, it joined a burgeoning industry of which less than half the participants are even active. Of the 3.8 billion reward program memberships in the U.S., 54% (or roughly 2 billion) have been abandoned, many before doling out their first rewards.
These are among the key findings of the 2017 COLLOQUY Loyalty Census, an audit of reward program memberships across industries, combined with consumer sentiment on program relevance. For retailers, the results should be a tip-off to potential future failings, as the industry accounts for more memberships than any other — 1.6 billion, up from 1.3 billion in 2014.
However, the report also highlights an encouraging development: the emergence of disruptor programs, such as the Pampers Rewards app. Disruptive programs are collectively reshaping the loyalty value equation through more personalized, simplified customer experiences that optimize technology and data collection.
Whether retailers should learn from these new players is a forgone conclusion. As the report states: “Disruption has become the new normal in the industry.”
28% Walk Away Before Rewarded
Another normal in the industry is the power of the consumer, who increasingly chooses brands based on convenience and need. Often, the brands that require fewer taps of the screen win.
Key among the Census findings:
- Overall loyalty memberships rose 15% since 2014, the year of the last census research.
- 42% of all memberships are in the retail sector, up from 39% in 2014.
- Grocery memberships declined by 24%, to 142.2 million, largely due to acquisitions.
- Across all industries, 28% of consumers dropped out of a rewards program before redeeming a point or mile.
Among the reasons for dropping out of programs: 53% of respondents abandoned programs because they did not provide rewards that interested them; 57% said it took too long to earn a reward.
Love, Then Disruption
The report also provided one very important reason consumers do use loyalty programs: emotion. The top motivator for participation in a loyalty program is “I love the brand, company, retailer or service.”
Consumers also are motivated to use programs that are easy to understand, give great discounts and make them feel valued. Here’s how a few disruptive loyalty programs are tapping into these qualities.
Pampers Rewards: Babies go through so many diapers one can equate the value of a paycheck to the number it can buy. The Pampers Rewards app gives shoppers a little something in return for this necessary investment. Users take a photo of or manually enter a Pampers package code into the app and instantly earn points that can be redeemed for gifts, coupons and charitable donations. Important feature: The rewards extend beyond Pampers products to include baby clothing, toys, photography and meal-delivery services.
Kiip: A mobile advertising network, Kiip (pronounced keep) describes itself as a “moment-based rewards platform that targets significant moments in the apps people use every day.” What that means is it rewards members with product samples, discounts, gift cards or contest entries for completing games and other activities (often happy ones) in partner apps. Partners include Home Depot, Coca-Cola, Kraft and McDonald’s.
Travelling Connect: Here’s one way to take the bite out of international roaming fees. This app bestows miles for mobile phone calls, as well as for some texting and data use, made while traveling abroad. It works through the loyalty programs of partners such as Marriott Hotels & Resorts and Hilton Honors. Bonus: No additional charges or taxes.
Takeaways From the Report
Want to cause a little disruption? The Census report closes with four pieces of advice for standing apart in the loyalty arena:
- Create loyalty to your brand, not just your program. Consumers are motivated to engage with brands with which they have an emotional connection, yet many reward programs build their member relationships on transactions. In short: Focus on emotion, not transaction.
- Make the redemption itself an experience. Much energy is put into the rewards loyalty members earn, but very little is invested in that important moment when the member redeems. These moments could be celebrated with games, contests and videos.
- Keep the friction out. Beyond discounts, a program needs to offer solutions to be a keeper. This takes mapping the customer experience to detect common scenarios and pain points the program can address. Think of the Starbucks prepay feature on its loyalty app — no more lines!
- Push your loyalty program to be better. Simply put, the work is never done. As the report states: “It is time to be more thoughtful about the other purposes points serve, as well as their limitations.”
Excelling at loyalty is a day-to-day endeavor. Retailers that systematically re-evaluate their data and how it is used will arrive at more relevant experiences, as well as efficiencies. These efforts will prevent a program from being dumped, and they can prepare it to become a disruptor.