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Loyalty Programs Need To Step Up The Experience

Brands could unlock billions in consumer spending if they retooled their existing loyalty programs to focus more on the experience with the brand, not just the discount or reward, according to a new report from Bond Brand Loyalty. 

The ninth annual study, conducted in partnership with Visa, explores the loyalty attitudes and behaviors of more than 55,000 consumers across more than 900 programs in 20-plus markets. The findings reveal that in the U.S., some of the top loyalty programs based on overall member satisfaction in the last year include Amazon Prime, Alaska Air Mileage Plan, Nordstrom’s Nordy Club, Hilton Honors, and Domino’s Piece of the Pie Rewards. 

Why are consumers applauding these brands? Because they have figured out that it’s the journey, not the destination, that really matters. 

The study highlights the importance of loyalty programs, with 73% of consumers saying they are more likely to recommend brands with good loyalty programs, 79% agreeing loyalty programs make them more likely to continue doing business with brands, and 66% modifying their spending on brands to maximize loyalty benefits. Those categories have all seen increases year over year since the study began.

The challenge for marketers, and what keeps us up at night, is that rising customer expectations are outpacing member satisfaction. Fairly or unfairly, long lines—in any form—are a buzz-kill on brand loyalty. Mobile ordering, even for pick-up, is now table stakes. Customers are downright indignant about anything that isn’t as easy, fast, and enjoyable as the brand next to it—and the category doesn’t matter. No company is immune.

But as the data reveals, programs that look beyond points and rewards—to the experiences they empower—move the needle the most on customer satisfaction. Four of the five top drivers of member satisfaction and engagement are related to the program experience, including ease, enjoyment, brand alignment, and personal relevance, all of which ranked higher than a cash giveback.

The New Loyalty Story Is Alphanumeric
In this year’s survey, only a third of those surveyed report that they strongly agree loyalty programs make their brand experiences better—and that reveals a significant opportunity.

In the travel industry alone, the data identifies a 14% gap in customer expectations versus people’s current experiences. The study estimates that customer spending in the travel category could conservatively grow by $5 billion if brands simply nudge their loyalty programs toward bringing the experience up to par with expectations.

If these brands could actually exceed expectations, marketers could rewrite the loyalty stories of their brands. They could have happier endings, where people returned more often, stuck around, and evangelized the virtues of their brands.

To close the gap, brands need to identify the moments that matter most. For example, an airline credit card program might already allow members access to a lounge or whisk people through security more quickly, but the brand should start to pay attention to other moments in the journey where the program could fulfill unmet needs. Maybe it could reserve overhead spaces for carry-on luggage, provide an easier process for collecting checked bags at the carousel, or offer customers a glass of wine or another personalized recognition in flight.

Doing experiences well ticks all the KPI boxes. When programs make the experience with the brand on par with expectations, our research shows they could see a 10.4x lift in customer retention and a 6.8x lift in spending on the brand as a result.

Loyalty Leaders
Member satisfaction is highest in the categories of credit cards and gas/convenience, and cruise lines also rank high.

Globally, Amazon Prime is top-ranked in seven out of 10 markets, largely because the program understands and delivers on the needs and expectations of customers. In addition, people enjoy the program, and when people enjoy the program, they have high levels of satisfaction and engagement—you know, like a book you can’t put down.

The new opportunity of loyalty programs gives us a few key things to remember: Loyalty can be used not just for retention, but for acquisition of customers. We have to create a loyalty experience that customers enjoy consuming. And most of all, consumers are telling us how they want their loyalty experience to go. We just need to listen.

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