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79% Say Loyalty Programs Lead to Higher Frequency of Purchase

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By Published On: December 15, 20220 Comments

The latest consumer survey takes a look at retailer loyalty programs. How do they actually impact AOV, frequency of purchase and retention?

Each fortnight, Power Retail surveys over 1,000 online shoppers to find out exactly how consumer behaviour is changing. In Trajectory Report 59, we took a deep dive into retailer loyalty programs. How does being a member of a loyalty program shift behaviour?

Only the tiny minority (2%) of survey respondents say they aren’t a member of any loyalty programs at all, while a massive 24% have 10 or more retailer loyalty memberships. In fact, shoppers are more likely to be a member of 10+ loyalty programs than one or two loyalty programs (24% in the former and just 13% in the latter). It does show that shoppers do have loyalty memberships with multiple retailers. In some ways it’s a double edged sword. It shows there is always room for growth—if you don’t yet have a loyalty program, the opportunity is still available to you—but also, the level of competition when it comes to engagement is high.

Source: Power Retail Switched On Trajectory Report #59

IMPACT ON PURCHASE BEHAVIOUR

Shoppers clearly have multiple loyalty memberships, but do they lead to….loyalty? The majority (51%) say that in the last three months alone, they have made a decision about where to make their purchase based on a loyalty program offering.

The vast majority (84%) say they have recently used a loyalty program in order to receive a discount or other reward. Only the minority (16%) haven’t utilised the advantages of loyalty programs. Essentially, loyalty incentives work.

There is also a connection between higher AOV and use of retailer loyalty programs. 56% of shoppers say they have spent more on a single purchase because they are a member of a loyalty program.

Not only do loyalty programs impact where shoppers purchase from and how much they spend, but there is also a connection to higher frequency of purchase. The majority (79%) said they are more likely to purchase more often from a retailer they have a loyalty membership with.

Source: Power Retail Switched On Trajectory Report #59

WHAT DO SHOPPERS WANT?

What do shoppers actually want from their loyalty programs? In terms of most important elements, being easy to use online and in-store comes in first place (at 58%) with easily understanding how the program works in second place (42%). Being confident that personal data is secure (37%) and getting regular points updates (37%) are in equal third position.  Less important? Wishlist features (7%) and being able to access order history (25%).

In terms of features, having points that never expire is most important to shoppers (65%). In second position, getting points for every dollar spent (62%) with easy to earn rewards in third position (60%). Being able to transfer points to others (4%) or having different member tiers (6%) are far less important.

A common theme we see in each survey we conduct is just how important free shipping is. The same applies to loyalty programs. When asked what their favourite reward was in a loyalty program, the number one pick was Free Shipping (65%). This came ahead of redeeming points for products (56%) and redeeming points for cash or vouchers (55%).  If you’re a retailer with a loyalty program looking for ways to increase engagement, Free Shipping is it.

Want to find out more? Download Trajectory #59, filled with actionable insights for retailers and brands, and FREE for Power Retail Switched On Members.

The e-commerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more

About the Author: Natasha Scholl

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