I recently released the For Love or Money™ 2021 – Australian and New Zealand editions of the consumer research study taking the pulse on customer loyalty and loyalty programs.
After 14 studies (9 for Australia, 2 for New Zealand, 2 comparisons - AUS vs NZ and a B2B study) over 9 years (phew…!!!), I am always looking to be surprised and delighted by the insights research reveals.
This article focuses on the Australian Edition with more to come for the New Zealand Edition.
Lifting loyalty programs out of the sea of sameness
Australia is a mature loyalty program market (the numbers reveal this every year) with an abundance of opportunity to evolve and be better.
As a consequence, these For Love or Money™ research studies have a greater purpose.
They provide consumer insights to inspire the loyalty industry - loyalty marketers of brands, consultants, agencies and technology providers amongst others - to evolve and lift loyalty programs out of the “sea of sameness” (one of a few of my personal mantra’s).
Reviewing the results provides an opportunity to look deeper for insights and reflect on them while considering the wider loyalty program landscape and if relevant, in comparison to existing programs.
Listed below are 7 of many insights, with a point of view (POV) on whether I was surprised, delighted or variations of this theme.
Insight #1: Member activity* in programs is declining
Only 43% of members indicated they are active in all of the programs they are enrolled in. This is lowest result in the 8 years we have been researching this metric of program engagement in the Australian market.
POV: I am a little surprised and I am NOT delighted.
The definition of ‘activity’* in programs varies by program. As one of the more important program measures of loyalty program engagement, monitoring the activity rate of members is critical. Based on this metric alone (there are others), I am a little surprised to see the gradual decline in ‘activity’ and definitely not delighted.
However, this is a call-out to all loyalty program manager to keep an eye on the activity of their members.
My mantra for this metric is “volume is for vanity, activity is for sanity”.
(* An active member in the research was defined as ‘having presented their card or membership number when making a purchase in the last 12 months’)
Insight #2: The influence of loyalty programs while COVID-19 prevails
This year, the research investigated the impact of COVID-19 on brand loyalty and loyalty programs. We researched the extent membership of particular loyalty programs influence shopping behaviour and brand preferences while COVID-19 prevails.
48% of consumers tend to stay loyal to brands whose loyalty programs they are members of and even more so for Gen Z (63%)
POV: Not surprised but I am delighted.
Loyalty programs do have an influence on loyalty to brands which I am not surprised by (mostly transactional loyalty). Even though my bias does kick in here, there are publicly available proof points of programs' transactional performance as seen in these examples.
I was however, surprised by how programs influence Gen Z…my new name for them the ‘LoyalZy’ generation!
Insight #3: Loyalty is not a program. What is loyalty?
Loyalty is an outcome. The ongoing tracking of the 11 dimensions of loyalty as outcomes (beyond enrolling in a loyalty program), revealed a significant shift away from Behaviour Loyalty (transactional outcomes of purchase more often and spend more) vs the results in 2020.
Belief loyalty (emotional outcomes) based on trusting the brand with information, missing the brand if it were gone and recommending the brand have increased since 2020.
POV: I’m am not surprised but I am delighted.
Transactional loyalty is not dead. It will always exist. However, seeing the slow and steady decline in these transactional dimensions and an increase in emotional connections is a sign of where a loyalty program can influence loyalty, the emotional kind.
Insight #4: Loyalty program are improving with more room to improve
Loyalty program members are without doubt seeing an improvement in programs.
We have been tracking this since 2017 and it has increased significantly from 51% to 68% in 2021 of members who agree loyalty programs have improved a lot in recent years.
POV: A little surprised in the significant increase but absolutely delighted.
The top three areas members see programs as improving are in the earn-rate, simplicity and use of technology.
There is more room to improve! The three areas programs still need to improve are in earn-rate (not surprising), surprise and delight (whooo…hooo) and non-financial rewards. Loyalty program managers, please take note!
Insight #5: Loyalty cards are still in the table!
We have been tracking member interaction, identification and payment integration since 2017. From 2017 to 2020, the preference for loyalty cards to interact with loyalty programs declined (81% to 47% respectively).
In 2021, this preference was reversed with an increase in the proportion of members preferring to interact with their loyalty program with a loyalty card (55%).
POV: A massive surprise for me!
Loyalty cards were on a steady decline and then OMG! here we are in 2021 with an increase in preference. (This is one of the more controversial results as all loyalty marketers have an opinion on cards vs no cards!)
Why is this happening? I am not too clear as we did not ask ‘why’ in the research (2022 question) and can only hypothesise that some of the bigger programs still have cards out there in numbers.
Also, digging a bit further into the results, I have noticed a high proportion of Baby Boomers (82%) who prefer cards vs Gen Y at 36%.
Insight #6: Preference for card linking increased 400% since 2017
Interestingly, while loyalty cards have had a resurgence in popularity since 2020, for members keen on moving to digital interactions, a mobile app with rewards and payment integrated (card-linking) has increased 400% in preference over the 5 years of tracking.
POV: Not surprised but I am delighted.
Card-linking is becoming more mainstream and so I am not surprised by this. It's easy for members. This trend is sure to continue to rise.
It reminds me of the quote… “the future happens very slowly and then all at once” – Technology writer Kevin Kelly.
Insight #7: The 12 moments of a member’s experience with a loyalty program
This was the first year we have researched the 12 moments of a member’s experience with a loyalty program and it’s also part of one of my consulting frameworks (sharing the love).
Two moments of a member’s experience with a loyalty program stand out as far more important than others.
- Earning a reward: Earning rewards is worthwhile. The reward is greater than the effort required.
- Redeeming a reward: Process to redeem has no hurdles, no waiting, no need to follow up “where’s my reward?”.
Comment: Not surprised but I am delighted to now have a deeper understanding of which moments matter to members.
Each moment is an opportunity to build trust with the member, so in my view, they are all important. The sum of the parts make the whole!
That’s a quick overview of 7 out of many more insights.
The complimentary Executive Summary of the For Love or Money™ 2021 – Australian Edition has a little more detail, however the depth of all the results across gender and the generations are available in the comprehensive report which is available to purchase.
Have a happy loyalty day!