In the evolving customer loyalty landscape, it’s never been more important to understand and act on consumer behavior. Payment technology in the consumer incentives space helps companies better understand their customers and use this knowledge to drive repeat business.
A guest article by Peter Reville, Director of Primary Research, Mercator Advisory Group
Mercator Advisory Group’s recent Buyer Insights Survey showed that customer loyalty programs currently yield big results, with even more potential to come. Each year, we survey a nationally representative sample of 3,000 individuals around the US, to glean insights into changing consumer habits.
Our findings, along with the Wirecard 2019 Consumer Incentives Report, show that not only are customer loyalty programs popular, but they’re a powerful force for companies looking to drive success in 2020 and beyond.
The shifting loyalty landscape
Mercator’s findings show that companies in nearly all merchant verticals use loyalty programs to incentivize customers and drive repeat business. Not only that, but customers see the value of belonging to loyalty programs. According to the Wirecard 2019 Consumer Incentives Report, about 18% of respondents said incentives such as loyalty rewards “always” persuaded them to choose one brand over another. That was true even if they felt loyal to the brand without a reward.
In other words, a new concept of loyalty is shaping up: one that’s fluid and open to influence.
In fact, the Mercator data points to a related trend: consumers often belong to many loyalty programs at once. About 25% of consumers are members of loyalty programs in 12 to 21 different merchant verticals – from supermarkets to airlines. Customers may also belong to more than one loyalty program in the same vertical. So, designing a standout loyalty program is an opportunity to win a larger market share.
Source: Mercator Advisory Group
Loyalty programs drive spending and store visits
Loyalty programs are popular among merchants for good reason: they drive consumer spending and store visitation.
Mercator’s findings show that 50 to 60% of shoppers visit a merchant’s stores more frequently when they are loyalty program members. That means starting a loyalty program could significantly boost store visitation. Since visiting a store and making a purchase are highly correlated, this usually leads to increased sales.
In fact, 58% of customers with loyalty memberships at apparel stores report spending more with those companies. The same was true for 54% of loyalty program members at top department stores.
Having a loyalty program is a step in the right direction, but optimizing that program truly drives value for customers. Wirecard’s survey found that customers wanted their rewards delivered quickly, with 39% saying this should take no more than one day. 62% of customers wanted incentives and loyalty programs to have mobile apps for easier management.
Digital payment technology lets you deliver on these and other consumer preferences. Plus, a digital platform makes it easier to track results and gain ongoing insights into customer behavior. That’s key to fine-tuning your loyalty program for optimal results.
The customer loyalty landscape is going digital, with growing potential for merchants, encouraging consumers visit stores more often and spend more while there.
Customer loyalty programs are particularly important when it comes to driving sales across channels. Mercator’s data showed that 50% of consumers report using the internet more often, when they research purchases. And, about half of consumers report that using mobile devices enhances their in-store shopping experience.
This presents a big opportunity for merchants to meet customers on their preferred turf. That starts with building a loyalty program that seamlessly connects online and offline experiences.
Another important point: shopping is an enjoyable experience for many consumers. That includes browsing products online as well as visiting stores to touch and try merchandise. Building a truly unified retail experience means bringing customers the best of all channels, while removing roadblocks to a pleasant and productive shopping experience. Part of that is upgrading your loyalty program to be easy, brand-consistent, and fun to use.
The benefits of virtual cards
Depending on the merchant vertical, issuing a rebate may make sense instead of, or along with, loyalty points and cash-back rewards. For instance, automotive companies successfully use rebates to drive sales. Rebates can also help build customer loyalty. In this case, ensuring a hassle-free experience for customers is critical.
One game-changer in this space is the virtual card. Just as loyalty apps offer a more seamless experience than the punch cards of the past, a virtual rebate is considerably more customer-friendly than older methods. In fact, Wirecard found that 45% of consumers prefer digital prepaid cards to other kinds of incentives. Since they’re open-loop, virtual cards can be spent anywhere. So, they offer maximum flexibility for customers, which boosts the perceived value of the rebate.
Compare this solution with checks, which require additional actions before customers can spend their rebate. Virtual cards can also be enhanced with merchant branding, keeping your company top of mind. And, they even encourage rewards spend-back.
These findings from Mercator and Wirecard show that the customer loyalty landscape is going digital, with growing potential for merchants ready to get on board. Consumers who belong to loyalty programs will visit stores more often and spend more while there. They’ll also use digital tools and channels to enhance their visits, make informed decisions, and manage their rewards. Brands that design digital incentive programs based around proven consumer preferences are sure to see revenue growth – and happier shoppers.