Table of Contents
Overview
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- What you need to know
- Key issues covered in this Report
- Definition
- COVID-19: Market context
Executive Summary
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- Top takeaways
- Market overview
- Impact of COVID-19 on retail and ecommerce
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- 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
The Market – Key Takeaways
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- 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
Market Perspective
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- Overview
- Loyalty is hard to come by
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- Figure 2: Shopper rewards/loyalty program usage, past 4 weeks, April 2014-June 2020
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- Figure 3: Attitudes regarding loyalty programs, July 2020
- Impact of COVID-19 on retail and ecommerce
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- 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
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- Figure 5: Unemployment, by race and Hispanic origin, 2007-Q3 2020
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- Figure 6: Personal consumer expenditures, 2007-Q2 2020
- Takeaways
Sector Trends
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- Most memberships fall in retail sector
- Four in 10 have credit cards with built-in incentives; retail outpaces hospitality in participation
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- Figure 7: Loyalty program membership/ownership, by sector, April 2019-June 2020
- Staples like groceries and gas remain frontrunners
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- Figure 8: Shopper rewards/loyalty program usage, past 4 weeks, April 2019-June 2020
- Travel-related programs have work to do to recoup guests
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- Figure 9: Frequent flyer program enrollment, by airline, April 2019-June 2020
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- Figure 10: Hotel loyalty/reward program enrollment, by hotel chain, April 2019-June 2020
Market Factors
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- Economic and policy-related factors
- Driving preference and loyalty becomes increasingly important at a time when consumers are pulling back on spending
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- 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
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- 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
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- Figure 14: Population by generation, 2014-24
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- Figure 15: Attitudes toward loyalty programs, by generation, July 2020
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- 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
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- Figure 17: Percentage who value easily accessible apps for loyalty programs, by age, July 2020
Market Opportunities
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- 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
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- Figure 18: American Express Twitter post, May 2020
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- 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:
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- Figure 20: Kiehl’s rewards customers for recycling empty bottles
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- 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:
Companies and Brands – Key Takeaways
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- 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
Loyalty Leaders
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- Loyalty leaders reflect pandemic behaviors
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- Figure 22: 2020 Top 20 Brand Keys Loyalty Leaders
Competitive Strategies
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- In a class of its own
- Amazon
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- Figure 23: Amazon Fresh Facebook ad
- Premium loyalty programs are trending
- Walmart
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- Figure 24: Walmart+ launch video
- Panera Bread
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- Figure 25: Panera Bread Free Coffee and wifi promotion
- CVS Health
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- 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
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- Figure 27: Example promotion from a nonprofit partner in Target Circle
- Walgreens
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- Figure 28: Walgreens email announcement for new myWalgreens loyalty program, November 2020
- QuickChek
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- Figure 29: QuickChek Rewards tiered program
- Kohl’s
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- 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
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- Figure 31: Sephora, Sephoria: House of Beauty announcement
- The North Face
The Consumer – Key Takeaways
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- 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
Usage and Participation
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- Little to no risk associated with free programs drives up enrollment
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- Figure 32: Free versus paid membership program enrollment, July 2020
- Loyalty program membership participation aligns with where people frequently shop
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- Figure 33: Types of loyalty program memberships, July 2020
- Most people belong to two or fewer types of retailer loyalty programs
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- 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
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- Figure 36: Repertoire of loyalty program membership, by select demographics, July 2020
Valued Features
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- Savings, choice and quick gratification are most valued features
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- Figure 37: Valued features of loyalty programs, July 2020
- Loyalty programs must accommodate a rise in online shoppers
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- Figure 38: Valued features of loyalty programs, by generation, July 2020
- Young men buck the trend
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- Figure 39: Valued features of loyalty programs, by men 18-34, July 2020
Barriers to Usage and Participation
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- If it’s not easy, it’s frustrating
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- Figure 40: Loyalty program barriers, July 2020
- One-size-fits-all programs are a turnoff
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- Figure 41: Loyalty program barriers, by generation, July 2020
- Women have more dislikes
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- Figure 42: Loyalty program barriers, by gender, July 2020
Engagement and Retention
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- Loyalty programs can elicit incremental purchases, but is that enough?
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- Figure 43: Shopping behaviors in light of loyalty program participation, by gender and age, July 2020
- Loyalty programs don’t guarantee brand loyalty
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- Figure 44: Retailer/brand loyalty, by gender and age, July 2020
- Consumers want a voice
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- Figure 45: Retailer/brand loyalty, by gender and age and race and Hispanic origin, July 2020
- Advocacy is the ultimate sign of loyalty
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- Figure 46: Advocacy, by gender and age, July 2020
- Parents tend to be more heavily engaged in programs
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- Figure 47: Loyalty program engagement, by parental status, July 2020
Attitudes toward Loyalty Programs
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- Consumers express relative lack of enthusiasm for loyalty programs
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- Figure 48: Value-related attitudes toward loyalty programs, July 2020
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- 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
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- 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
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- Figure 51: Personal preferences, July 2020
- Consumers seek flexibility on redemption policies
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- Figure 52: Opportunities for improvement, July 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – Consumer
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- Figure 53: Credit cards with rewards ownership, by financial institution, April 2019-June 2020
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