Tania Anderson, senior content marketing manager, Resonate

Loyalty programs in the U.S. have grown to 3.8 billion memberships, but the growth in these programs is beginning to wane. As the U.S. loyalty market matures, retailers need to up their game to attract new customers, keep current ones and bolster customer lifetime value (CLV). Loyalty programs also represent a smart way for online retailers to build in-roads with digitally savvy shoppers who to date have spent a lot of their time in physical stores.

Here at Resonate, we recently delved into our consumer insights platform to take a deeper look at the 25.7 million U.S. consumers who choose where to shop based on a retailer’s loyalty program. As a part of this analysis, we identified a number of key attributes of this audience that are useful to consider as retailers—whether selling in physical stores, via e-commerce or both—design or refine their loyalty programs for maximum effect.

In general, loyalty program lovers’ shopping behavior favors an in-store environment, but that doesn’t mean they’re not reachable in digital channels. Loyalty lovers’ top shopping behaviors include using coupons and visiting warehouse and club stores. But they’re also highly likely to check prices via mobile when in store and to shop online and pick up in stores. These digital touchpoints represent an opportunity for even online-only brands to connect with these individuals by appealing to the personal values that drive their loyalty behaviors.

Attracting New Loyalty Program Members

Consumers undoubtedly belong to multiple loyalty programs, so brands must be relevant and engaging when trying to attract new members. This is where consumer insights can play a role. Knowing why people buy what they buy, along with a deep understanding of what consumers value most, brands can design and promote their programs in a way that appeals to loyalty lovers’ personal values and preferences. In this regard, our research yielded many useful insights, including the following.

Loyalty lovers’ top personal values that drive their daily decisions:

• Having the opportunity to show one’s abilities and to be admired for what one does
• Caring for nature and preserving the natural environment
• Treating every person in the world equally

 Loyalty lovers prefer companies that:

• Donate to charities
• Support the community
• Reduce energy use

Retaining Loyal Customers

Of course, one of the superpowers of a good loyalty program is its ability to retain customers over time. The best programs do this by basing loyalty member rewards on their hobbies and interests, their daily routines or what they value most from their product and shopping experiences.

According to data from the Resonate platform, loyalty shoppers are mostly women, ages 25-44 (i.e., older Millennials and Gen Xers). The average household income of most loyalty lovers is $25,000 to $50,000 and, therefore, these shoppers use coupons more than the average consumer. They choose where to shop based on the retailer having the best prices and sales, as well as cost-effective and trustworthy products.

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In addition, loyalty shoppers tend to seek out other ways to be rewarded. Fourteen percent of loyalty program consumers have a primary credit card that provides multi-purpose awards rather than specific retail or grocery rewards. They’re also more likely than the average consumer to select an auto insurance provider that offers rewards for no accidents and good driving records.

Nurturing Loyalty Lovers for Life

Retailers have an opportunity to foster customer lifetime value (CLV) by creating dynamic loyalty programs that adapt to consumers’ evolving preferences. In many cases, this might mean tailoring loyalty programs according to common generational differences. For example, younger generations will gravitate to loyalty programs that lead to experience rewards, while older generations want discounts and coupons. Notably:

• Baby boomers are more interested in ease and practicality when making purchases. They’re 27 percent more likely than the average consumer to buy products that are energy-efficient.
• Gen Xers want dependability and good deals. They’re 17 percent more likely than average to want products that are family-friendly, followed by high-quality and dependable products. Gen Xers are the most likely to shop at retailers with loyalty programs.
• Millennials are focused on experience. Their top product attribute is fun, followed closely by exciting, unique and innovative.
• Gen Zers are all about the shopping experience, as well as the trendy products. They’re 134 percent more likely than the average consumer to buy products because they’re popular.

Consumer preferences can be impacted by several factors, including major life changes like a new baby to political and social views based on major national events. A loyalty program that doesn’t evolve with consumers risks losing interest from subscribers. Fortunately, today’s retailers have access to the type of data that can help to inform these programs on a more personalized level. The era of the one-size-fits-all loyalty program is over.

Resonate provides consumer intelligence technology and services designed to help marketers better engage their target audiences.