Description

Providing the most comprehensive and up-to-date information and analysis of the US Loyalty Programs market, including the behaviours, preferences and habits of the consumer.

Loyalty is the ultimate goal for a brand, especially in an evolving retail landscape. Retailers rely on their loyalty program memberships to drive repeat business and, ideally, brand advocacy. Across the retail industry, retailers are investing more in their loyalty programs, revamping them to add more value in line with what today’s consumers want, removing annoying restrictions and/or adding paid tiers to basic free programs.

The ecommerce market is predicted to rise by 28% in 2020, making up 14% of total retail sales. Ecommerce is also expected to continue rising in the next five years, although at a decelerated pace because of consumers uncertainty of returning to physical stores.

Consumers on the whole are rather apathetic about most current loyalty programs, signaling an opportunity to improve these offerings. Retailers can increase engagement by adding convenience, simplicity and instant benefits that shoppers actually want. 46% of loyalty program members say they would like the option to donate their points and benefits to charities.

Read on to discover more details or take a look at all of our US Retail market research.

Quickly understand

  • The impact of COVID-19 on consumer behavior and the retail industry, inclusive of ecommerce.
  • How the recession can create more value for loyalty programs.
  • How retailers are evolving their loyalty programs to align with consumers’ needs and wants.
  • The number and types of loyalty programs consumers belong to.
  • Consumers’ most liked and disliked loyalty program features.

Covered in this report

Brands: Delta Airlines, Southwest Airlines, United Airlines, Alaska Airlines, JetBlue Airlines, Hilton, Marriott, IHG, Choice, Wyndham, Starwood, Hyatt, American Express, Kiehl, Hive, Amazon, Netflix, Apple, Dominos, Google, Disney, Home Depot, WhatsApp, Samsung, Instagram, Nike, PayPal, Discover, YouTube, Hyundai, Hulu, Trader Joe’s.

Expert analysis from a specialist in the field

Written by Diana Smith, a leading analyst in the Food & Drink sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Whether consumers support a brand and whether a brand can withstand unforeseen circumstances like the COVID-19 pandemic boils down to how much loyalty the brand propagates. While loyalty is generated by much more than a loyalty program, getting the components of the loyalty program right can pay dividends relative to increased engagement, patronage and advocacy. And in today’s retail climate, every little bit helps.
Diana Smith
Associate Director – Retail & eCommerce

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this Report
    • Definition
    • COVID-19: Market context
  2. Executive Summary

    • Top takeaways
    • Market overview
    • Impact of COVID-19 on retail and ecommerce
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on retail and ecommerce, September 2020
    • Opportunities and Challenges
    • Prepare for a digitally led future
    • Adjust value propositions to align with consumer priorities
    • Consider the potential of a premium tiered option
    • Look for ways to support consumers’ wellbeing
    • Foster emotional loyalty through experiential rewards
  3. The Market – Key Takeaways

    • Memberships continue to grow, but true loyalty isn’t guaranteed
    • Garnering loyalty is more crucial – and difficult – than ever in light of COVID-19
    • Supermarkets’ programs most commonly used
    • Reevaluating value propositions is critical amid the pandemic
    • Programs must be omnichannel-friendly
    • Providing access to experiences that consumers so desperately seek
  4. Market Perspective

    • Overview
    • Loyalty is hard to come by
      • Figure 2: Shopper rewards/loyalty program usage, past 4 weeks, April 2014-June 2020
      • Figure 3: Attitudes regarding loyalty programs, July 2020
    • Impact of COVID-19 on retail and ecommerce
      • Figure 4: Short-, medium- and long-term impact of COVID-19 on retail and ecommerce, September 2020
    • Lockdown
    • Reemergence
    • Recovery
    • COVID-19: US context
    • Learnings from the last recession
    • Key metrics
      • Figure 5: Unemployment, by race and Hispanic origin, 2007-Q3 2020
      • Figure 6: Personal consumer expenditures, 2007-Q2 2020
    • Takeaways
  5. Sector Trends

    • Most memberships fall in retail sector
    • Four in 10 have credit cards with built-in incentives; retail outpaces hospitality in participation
      • Figure 7: Loyalty program membership/ownership, by sector, April 2019-June 2020
    • Staples like groceries and gas remain frontrunners
      • Figure 8: Shopper rewards/loyalty program usage, past 4 weeks, April 2019-June 2020
    • Travel-related programs have work to do to recoup guests
      • Figure 9: Frequent flyer program enrollment, by airline, April 2019-June 2020
      • Figure 10: Hotel loyalty/reward program enrollment, by hotel chain, April 2019-June 2020
  6. Market Factors

    • Economic and policy-related factors
    • Driving preference and loyalty becomes increasingly important at a time when consumers are pulling back on spending
      • Figure 11: Consumer confidence and unemployment, January-August 2020
    • Hispanic and Black populations seek out deals, but don’t think loyalty programs are the best way to get them
      • Figure 12: Household income distribution by race and Hispanic origin of householder, 2018
      • Figure 13: Repertoire of loyalty program membership, by race and Hispanic origin, July 2020
    • Second stimulus package TBD
    • Demographic factors
    • Gen Zs and Millennials don’t readily offer their loyalty, but they will pay for incentives that really matter to them
      • Figure 14: Population by generation, 2014-24
      • Figure 15: Attitudes toward loyalty programs, by generation, July 2020
      • Figure 16: Nonparticipation in loyalty programs, by type of program, by generation, July 2020
    • Technology factors
    • Loyalty programs need to be easy to manage online
      • Figure 17: Percentage who value easily accessible apps for loyalty programs, by age, July 2020
  7. Market Opportunities

    • Adjust value propositions based on what value means to consumers, especially now
    • Insight: Consumers are viewing loyalty programs in a new light
    • Value-focused opportunities
      • Figure 18: American Express Twitter post, May 2020
      • Figure 19: Travel-related brands pivot to offer grocery rewards, May 2020
    • Prepare for an influx of online shoppers
    • Insight: Consumers will increasingly look for tech to help simplify the cross-channel shopping process
    • Tech-focused opportunities:
    • Link to wellbeing
    • Insight: Besides essential goods, consumers are prioritizing their health and wellbeing and may be motivated to earn rewards related to this
    • Wellbeing-focused opportunities:
    • Promote brand missions through loyalty programs
    • Insight: A brand’s ethical behavior and stance on social issues can be its own loyalty driver
    • Surroundings-focused opportunities:
      • Figure 20: Kiehl’s rewards customers for recycling empty bottles
      • Figure 21: Hive launch announcement
    • Incorporate experiential rewards that can be redeemed now…and later
    • Insight: Experiential rewards can help to drive emotional loyalty with brands
    • Experience-focused opportunities:
  8. Companies and Brands – Key Takeaways

    • Shopping behaviors amid COVID-19 indicate where the loyalty is, and where it is not
    • Retailers are seeing advantages to offering premium programs
    • New and/or improved loyalty programs infiltrate the retail scene
    • Going beyond the points
  9. Loyalty Leaders

    • Loyalty leaders reflect pandemic behaviors
      • Figure 22: 2020 Top 20 Brand Keys Loyalty Leaders
  10. Competitive Strategies

    • In a class of its own
    • Amazon
      • Figure 23: Amazon Fresh Facebook ad
    • Premium loyalty programs are trending
    • Walmart
      • Figure 24: Walmart+ launch video
    • Panera Bread
      • Figure 25: Panera Bread Free Coffee and wifi promotion
    • CVS Health
      • Figure 26: CVS CarePass promotion
    • Bed Bath & Beyond
    • Extending benefits across company portfolios
    • Gap Inc.
    • Retailers look to sweeten the deal through revamped programs
    • Target
      • Figure 27: Example promotion from a nonprofit partner in Target Circle
    • Walgreens
      • Figure 28: Walgreens email announcement for new myWalgreens loyalty program, November 2020
    • QuickChek
      • Figure 29: QuickChek Rewards tiered program
    • Kohl’s
      • Figure 30: Kohl’s Rewards Facebook post
    • Many upgraded programs include tech improvements
    • 7-Eleven
    • Stop & Shop
    • H&M
    • Going beyond points and coupons to offer more experiential rewards
    • Sephora
      • Figure 31: Sephora, Sephoria: House of Beauty announcement
    • The North Face
  11. The Consumer – Key Takeaways

    • Free programs are good for recruitment, but paid programs drive more engagement
    • Quick gratification is a mandatory
    • Programs must be easy to use and offer relevant incentives
    • Participation does not equate to loyalty
    • Personalization and choices make consumers feel valued
  12. Usage and Participation

    • Little to no risk associated with free programs drives up enrollment
      • Figure 32: Free versus paid membership program enrollment, July 2020
    • Loyalty program membership participation aligns with where people frequently shop
      • Figure 33: Types of loyalty program memberships, July 2020
    • Most people belong to two or fewer types of retailer loyalty programs
      • Figure 34: Types of loyalty program memberships, July 2020
      • Figure 35: Non-paid loyalty program participation, by repertoire of loyalty program membership, July 2020
    • Demographic profile of repertoire analysis
      • Figure 36: Repertoire of loyalty program membership, by select demographics, July 2020
  13. Valued Features

    • Savings, choice and quick gratification are most valued features
      • Figure 37: Valued features of loyalty programs, July 2020
    • Loyalty programs must accommodate a rise in online shoppers
      • Figure 38: Valued features of loyalty programs, by generation, July 2020
    • Young men buck the trend
      • Figure 39: Valued features of loyalty programs, by men 18-34, July 2020
  14. Barriers to Usage and Participation

    • If it’s not easy, it’s frustrating
      • Figure 40: Loyalty program barriers, July 2020
    • One-size-fits-all programs are a turnoff
      • Figure 41: Loyalty program barriers, by generation, July 2020
    • Women have more dislikes
      • Figure 42: Loyalty program barriers, by gender, July 2020
  15. Engagement and Retention

    • Loyalty programs can elicit incremental purchases, but is that enough?
      • Figure 43: Shopping behaviors in light of loyalty program participation, by gender and age, July 2020
    • Loyalty programs don’t guarantee brand loyalty
      • Figure 44: Retailer/brand loyalty, by gender and age, July 2020
    • Consumers want a voice
      • Figure 45: Retailer/brand loyalty, by gender and age and race and Hispanic origin, July 2020
    • Advocacy is the ultimate sign of loyalty
      • Figure 46: Advocacy, by gender and age, July 2020
    • Parents tend to be more heavily engaged in programs
      • Figure 47: Loyalty program engagement, by parental status, July 2020
  16. Attitudes toward Loyalty Programs

    • Consumers express relative lack of enthusiasm for loyalty programs
      • Figure 48: Value-related attitudes toward loyalty programs, July 2020
      • Figure 49: Value-related attitudes toward loyalty programs, by household income, July 2020
    • Usage will quickly drop off after initial sign up if users don’t see value
      • Figure 50: Low loyalty program usage, by generation, July 2020
    • Loyalty program participants want their rewards to be personalized, and want to choose how to use them
      • Figure 51: Personal preferences, July 2020
    • Consumers seek flexibility on redemption policies
      • Figure 52: Opportunities for improvement, July 2020
  17. Appendix – Data Sources and Abbreviations

    • Data sources
    • Consumer survey data
    • Abbreviations and terms
    • Abbreviations
    • Terms
  18. Appendix – Consumer

      • Figure 53: Credit cards with rewards ownership, by financial institution, April 2019-June 2020

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