Web Exclusive - May/June 2019

Report: Loyalty Program Expectations on the Rise


Loyalty continues to deliver positive outcomes for brands, and the impact on advocacy, retention and spend remains as strong as ever, according to the 9th Annual Loyalty Report from global customer experience marketing, management and measurement company, Bond Brand Loyalty. At the same time, the data reveals that expectations of loyalty programs continue to steadily rise, year over year. Top programs differentiate and lead by prioritizing the program experience over the end reward itself.

In the travel industry alone, Bond estimates billions of dollars in customer spending is left on the table when brands fail to address the 14 percent gap in customer expectations versus current experience along the travel journey. By retooling travel loyalty programs and closing the gap to better meet expectations, customer spending in the travel category alone could grow by $5 billion.

Bond also announced its top program rankings by industry. According to U.S. consumers, some of the top loyalty programs based on overall member satisfaction over the past year include Amazon Prime, Alaska Air Mileage Plan, Nordstrom Nordy Club, Hilton Honors and Domino's Piece of the Pie Rewards. Additional brands trending well in customer loyalty include Airbnb, Netflix, Waze, Lyft and Nike. Member satisfaction is highest in the category sectors of credits cards, gas/convenience and cruise line. Retail apparel, car rental and hotel sectors make up the bottom of the member satisfaction rankings.

According to the study gamification is a driver of program enjoyment. Enjoyment of participating in a program beats the actual end reward. Some 53 percent of program members say game mechanics would make the program more enjoyable, and when gamification is present, 81 percent of members take advantage of it. More than half (56 percent) of programs employ game mechanics in their loyalty programs, and when programs use gamification (such as goal-setting, countdowns and virtual rewards), programs see an almost twofold (1.7x) lift in enjoyment.

The data also suggests that consumers have a high expectation that when personal data is shared, it will be used to make a better and more personalized experience for them. Only two in 10 members say they are very satisfied with the level of personalization they get from their loyalty programs, and only 24 percent of members say that programs keep their preferences up to date. When personalization is done well, there is a 6.4-times lift in member satisfaction with the program. Successful execution of program communications can result in up to a 10-times lift in personalization.

Unlike their gen X and baby boomer parents, the data finds gen Z and younger millennials (ages 24 to 29) are highly influenced by loyalty programs. More than half (59 percent) are comfortable with programs capturing their information in exchange for authenticity, purpose and meaning. Even though young consumers are at the beginning of their earning potential, they're willing to pay a fee to receive enhanced benefits from loyalty programs. Gen Z and younger millennials are also beginning to change the payments ecosystem, and they will likely expect a digital experience wherever they go.

According to Bond's data, program members have the capacity to be actively involved in only seven programs, representing an opportunity for brands to come together in a partnership when program participants have similar traits or buying patterns. Some 60 percent of members expressed interest in partnerships introduced to them through their loyalty program.

"This year's report substantiates the experiential elements of a brand's program as the key to unlocking greater profitability." Said Sean Claessen, chief strategy officer at Bond. "It's the journey, not just the destination—when it comes to customer loyalty. The experience the program facilitates is what differentiates leaders from laggards. Personalized experiences, elements of game-science and strong brand partnerships—that deliver along the entire customer journey—are what make members more likely to increase spend, stick with and say good things about the brands they do business with."

For more information, visit http://info.bondbrandloyalty.com/loyalty-reort-2019.