Why Customers Participate in Loyalty Programs

Why Customers Participate in Loyalty Programs

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Customer loyalty is one of the fastest growing gamification segments, and it makes sense. If gamification principles can be used to engage workers and website visitors, there are no reasons why they cannot be used to help modernize the traditional customer loyalty card. When we started our directory of gamification vendors on TechnologyAdvice a year ago, a lot of the companies listed had just launched or were still finding their focus. Since then, enough vendors have begun to market themselves as loyalty platforms that we recently created a customer loyalty sub-category to highlight them. We also decided to launch a nationwide survey to explore what exactly customers wanted from loyalty programs, and what motivated them to participate. You can read or download the full report here, and we have included some of our key findings below.

Customers Want More Than Just a Card

This was one of the most interesting (and actionable) findings. When asked whether they would be more or less likely likely to participate in a loyalty program that offered a smartphone app, customers overwhelmingly responded that they would be either “more likely” or “much more likely” to do so. This not only fits in with nationwide mobile device usage rates, but suggests that customers are interested in moving beyond simple card-based loyalty systems.

But They Aren’t Ready for Fully-Digital Programs (Yet)

Despite customers’ preference for loyalty programs with corresponding smartphone apps, there was a much larger divide when survey respondents were asked whether they preferred fully-digital programs to card-based programs. It seems that, while customers want brands to incorporate smartphone apps (and emerging technology), a large percentage are not ready to completely give up physical cards. We expect that such preferences will move further towards digital-based programs in the coming years as mobile device use becomes even more prominent.

 

Loyalty Programs Drive Repeat Business

This may not be a surprising result, but it confirms the continued relevance of loyalty programs to today’s businesses. When asked how much more likely they were to shop at stores with loyalty programs, over four-fifths of survey respondents indicated they were “more likely” or “much more likely” to do so. Only 17.6 percent indicated they were “less likely” or “much less likely.” Additionally, this result suggests that consumers who participate in loyalty programs look for other stores with such programs when shopping. Businesses that fail to offer loyalty programs may be missing out on this demographic.

These results shed light on why consumers join loyalty programs to begin with, and what features they look for in such offerings. Companies looking to implement a loyalty system, or improve their current program, should be able take away actionable advice these findings. Of course, any large investments should also be supported by research on their specific client base.

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