Loyalty Market Survey - Brand Loyalty (3/3)

In my third and last digest, we zoom in on how consumers look at brand loyalty. The conclusions stated in this article are based on the yearly loyalty market research (we interviewed 800 consumers in Belgium and the Netherlands about their brand loyalty -?FULL REPORT (free download) HERE) conducted by Comarch.

Loyalty Points

Loyalty points and discounts are common practice and became well-established tools for consumers. 84% of them indicate to have used loyalty points or discount vouchers before. Gen Z is the age group where discount vouchers and loyalty points have lesser influence than the older age groups. We also notice a slight increase of usage when it comes to families with children. Counterintuitive as it might seem, its adoption is the lowest in the segments of low-income consumers, and increases in line with the income. According to an article in the NYTimes1 this year, brands and retailers are shifting away from the clipped newspaper discounts, and the digital version hasn’t grown fast enough to catch up. People with lower income have less access to digital tools and therefore are missing the boat.

Expert insight - WeCanMarketing

Bulent Candan - Partner

The report indicates that 84% of consumers have used loyalty points or discount vouchers before. We believe, however, that this is not the right trigger to create (more) loyal customers. Most of the programs are designed as discount programs instead of loyalty programs. It requires a lot of effort and a different way of thinking to change this! We believe it is necessary for a brand to invest in this aspect of marketing, because the war for customers - and especially the young ones - is one you can’t win with the current way of thinking.

Customers (80%) very much expect something in return from brands for their loyalty and engagement but it needs to be thought through as consumers choose carefully in which loyalty programs they want to participate in.

Only 18% of consumers always respond positively to an invitation to join a loyalty program. The vast majority (73%) evaluates it case by case. Additionally, Dutch consumers seem to be even more selective than Belgian consumers when it comes to joining a loyalty program.

Attractive rewards and benefits are the principal incentive to convince a customer to join, followed by the brand’s image in second place. The two main reasons not to participate in a loyalty program are lack of regular purchases at that brand disabling this person to enjoy the benefits of the program, or the loyalty program looks unattractive.

On average, a customer participates in 4 loyalty programs on a regular basis.

Popularity of loyalty programs per sector

Loyalty programs in food retail are the most popular with a penetration rate of 70%, followed by fashion (58%) and DIY chains (56%). An important remark needs to be made here, as the popularity of loyalty programs for fashion brands is boosted by its high penetration in the female segment (72% versus only 43% for the male segment). We also asked the respondents for which sectors they think a loyalty program is essential to have. The answers can be found in the graph below:

Plastic vs. digital identifier

Before zooming in on what customers are expecting from a loyalty program, let’s first see via which means a customer participates in a loyalty program.

In last year’s research, we asked customers what type of loyalty identifier they preferred. A digital card was then slightly preferred over a physical one in both Belgium and the Netherlands. This year, this preference for digital has become much stronger (61% vs 39%) and this trend is clearly pushed by the younger generations. The only exception to this rule is the lowest income tier where people still stick to a plastic card as a preferred identifier.

Looking at the reality, the survey shows that both plastic and digital cards are used equally these days, which could be interpreted as companies do not yet invest enough in digital cards and could be seen as an opportunity to enroll and engage more customers in a program. When we look at country level, it comes as no surprise that physical cards are still more used in Belgium while in the Netherlands, the digital card is better adopted. The research (FULL REPORT (free download) HERE) also shows that lower income groups still make more use of plastic cards than higher income groups who overwhelmingly adopt the digital alternative.

To mobile app or not to mobile app

If we go further into this topic, no less than 60% of respondents indicate that the availability of a good mobile application of a brand raises their engagement to this brand. These results show the enthusiasm of consumers for mobile applications, and indicate a positive fallout on customer engagement between a brand and its client base. A clear shout out to brands to investigate this channel if they haven’t done so.

Another element that respondents seem to appreciate of a brand and increases their engagement is when their feedback is asked about their products and services. Nearly 50% perceives this in a positive way as they like to be more involved. Sending surveys to your customer base and collecting feedback is a very valuable tool to gain insights into your audience and see how you can further optimize your offer to get better results.

Looking at the rewarding part, we asked the respondents which particular rewards they prefer to receive in a loyalty program. The graph below shows a nice overview of the responses.

No surprise here that consumers again choose overwhelmingly for direct discounts and discount vouchers as most preferred rewards in a loyalty program. The third place goes to a gift catalogue. You can also notice that new trends are slipping in like crypto currencies.

When stacking up your reward shop, our research (FULL REPORT (free download) HERE) advices loyalty program owners to focus on experiences (weekend trips, amusement parks, cinema, …) as this rewards category seems to be the most popular one for which respondents want to redeem their points for, closely followed by multimedia products and items for cooking and dining. We also notice a remarkable advance of sustainable and ecological products which is a rewards category that has been growing in the past few years.

Expert insight - Boost Loyalty

Klaus Riemer – International Marketing Manager

As a starting point for the introduction of a new sustainable loyalty concept, we did a survey.

Some of the results: “91% of consumers indicate that they find the sustainability discussion important; 82% undertakes initiatives to support the effort, thinks about recycling, reducing food waste, solar panels and more. 69% of consumers like the idea of making loyalty programs more sustainable. 28% would also be willing to do something extra to obtain sustainable rewards in a loyalty program”.

Are you a loyal customer?

Furthermore, we were also wondering how consumers perceive themselves as a loyal customer. Hereby our findings:

• Spend more / more often to products/services of that brand (25%)
• Talk positively about the brand / program with family & friends (34%)
• Consider themselves more loyal vs competing brands (40%)
• Will behave more loyal vs competing brands (36%)
• Tend to go to that brand’s store specifically to get certain discounts (53%)
• Would not take part in a loyalty program of a competing brand (15%)
• Agrees to spend a little more for those products and services of brands that have a loyalty program vs a cheaper competitive brand that doesn’t have a program (22%)

Being part of a “community” has an influence on some members’ participation in a loyalty program. When zooming in on the younger age groups (Gen Z and the Millennials) as well as on single parents, it seems that being part of a community has more influence on their participation in a loyalty program than other groups. Communities often offer interactive platforms on which consumers can exchange experiences and opinions with other peers. 24% of the respondents indicate these interactive platforms as a valuable asset of the loyalty program. The most interesting type of interactive platforms seemed to be the one where consumers can receive product recommendations.

Gamification mechanics

Finally, loyalty program owners like to go beyond transactional rewarding and often consider to include some type of mechanics – so called “gamification elements” – to make their loyalty program more interactive and engaging towards their members. As we were curious which gamification mechanics would be the most appealing to consumers, they responded to be average to very interested in the following mechanics:

About Comarch’s Loyalty Market Research 2022

This research was (Full report (free download) here) conducted by?VOLT District?upon request of Comarch Benelux. Team Volt assembled a panel of 803 consumers throughout Belgium and The Netherlands, and asked them about their purchasing behavior and how they deal with loyalty to brands and retail chains.

About Comarch

Comarch?is a global designer, provider, and integrator of technologically advanced yet easy-to-use loyalty management & digital marketing tools that companies can use to increase customer lifetime value, drive brand awareness and boost profits.

Having 25+ years of experience in carrying out the most complex loyalty projects, it supports some of the world’s most popular brands, including Auchan, BP, Carrefour, Ford, Heathrow Airport, JetBlue Airlines, Galeries Lafayette, and True Digital.