Shopper Insights

Are Customer Loyalty Programs a Win for Brands and Retailers?

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What brings shoppers back for more? Is it price? Quality? Assortment? Or something else? At Wiser, we were curious what were the major factors behind brand and retailer loyalty, so we turned to our network of smartphone-enabled shoppers.

Here is what they said.

Brick-and-Mortar or eCommerce?

To begin, we wanted to know if online or in-store shopping was more popular among our mystery shoppers. Their response? Brick-and-mortar shopping remains the preferred channel, as 75 percent of respondents do most of their shopping with physical retailers.

This is important because strategies to build consumer loyalty can evolve depending on the channel. Free one-day shipping like what Amazon offers for millions of products is a strong eCommerce play, while buy online, pick up in-store (BOPIS) is one brick-and-mortar option.

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How and Why Consumers Shop

On a related note, existing customer behavior is also a driving force behind loyalty. To get deeper into that, we asked our smartphone-enabled shoppers whether they currently used discount codes, coupons, or loyalty points while shopping at an eCommerce or brick-and-mortar retailer.

Of our survey group, 88 percent said yes, they do use those rewards features while shopping. Furthermore, our shoppers identified several retailers who excelled at both an online and in-store experience:

Online Stores

  • Nike – 28 percent of respondents said Nike had the best online experience
  • Victoria’s Secret PINK – 18 percent
  • Sephora – 14 percent

Brick-and-Mortar Stores

  • Victoria’s Secret PINK – 18 percent
  • Nike – 17 percent
  • Ulta – 17 percent

Other than price, these brands and retailers did so well with consumers because of the promotions and sales offered, ease of shopping, and easy returns and exchanges for online retailers. For brick-and-mortar stores, key attributes are location and convenience, brand reputation, and the store layout.

Loyalty Programs: Yes or No?

To recap, consumers still do most of their shopping at physical stores. They are willing to—and currently—use discount codes, coupons, and loyalty points in their everyday shopping. And they prefer simplicity and convenience, whether buying in-store or online.

Is this a recipe for loyalty programs success?

According to our network of smartphone-enabled shoppers, yes. An overwhelming 93 percent of respondents said that loyalty programs were appealing. The big reason why is because they like the perks, specifically:

  • Free gifts
  • Extra rewards points
  • Exclusive sales

They also enjoy the loyalty benefits such as early notifications of promotions and the simple fact that shoppers have their favorite brands.

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Obstacles to Loyalty Programs

On the flip side, there are plenty of shoppers who don’t want to use a loyalty program. We wanted to know why.

In total, four reasons stood out when we asked the 7 percent who said loyalty programs were not appealing:

  1. They rarely buy from the same brands, so loyalty programs have less value
  2. They don’t see any value in loyalty programs in general
  3. They find the enrollment process to be tedious and time-consuming
  4. They prefer to keep their personal information private

Of course, this is a minority of our shoppers, given the 93 percent in favor of loyalty programs. The consensus is that more perks are better than fewer perks.

What does that mean for brands and retailers? Loyalty programs should be on the table, if not in use already. There is an opportunity to attract new customers and retain existing ones by offering customizable perks and rewards, especially free gifts, extra points, and exclusive sales.

Curious which loyalty programs work the best? Check out our blog on what shoppers need from customer loyalty plans, with responses from our network of more than 700,000 smartphone-enabled shoppers.

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Better decisions can only come from better data.

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