The first report in a two-part series from digital marketplace Upside on loyalty programs and their effect on consumer behavior found gaps between loyalty membership and the desired behavioral shifts that retailers anticipate from those programs.
The report draws insights from a comprehensive survey of nearly 2,000 consumers, according to a news release.
“Consumers are actively seeking value, and retailers are wise to use tools like loyalty programs that don’t cannibalize existing profits to address that need,” Alex Kinnier, CEO and co-founder of Upside, said in the release. “These survey findings indicate that today’s loyalty offerings have become table stakes for customers, and retailers have an opportunity to do things differently to get more out of their existing investment.”
The survey uncovered encouraging insights regarding loyalty programs. For instance, more than half of consumers enrolled in a loyalty program base their shopping decisions — including where to shop, which items to purchase and how much to buy — on those programs, the report said. Furthermore, according to the survey, nearly 40% of loyalty members indicated that they would stop shopping at a specific location if the store terminated its loyalty program.
However, certain findings from the survey shine light on unexpected loyalty shortcomings for grocery, restaurant, fuel and convenience store retailers, the release said. Varying based on buying category, insights from Upside’s data indicate that:
- As many as half (41% to 51%) of respondents do not factor in a loyalty program when choosing where to buy.
- More than a third (33% to 46%) of respondents have not increased their purchasing frequency since joining a loyalty program.
- Almost two-thirds (58% to 63%) stated that the absence of a loyalty program at a store would not affect their shopping habits.
Upside said that while some of the findings may seem counterintuitive, its findings on consumer indifference may stem from various factors, including:
- Loyalty proliferation — Comparing data from the 2015 and 2023 Bond Loyalty Reports, the average shopper has nearly doubled the number of loyalty memberships in their wallet over the past decade.
- Lack of differentiation — Loyalty programs have become increasingly similar to one another, hindering retailers from distinguishing themselves among customers.
