Building leading retail loyalty programs

Enhanced flexibility, recognition, and exclusivity create a more rewarding member experience

Rewards remain a key piece of the retail loyalty program equation, but can no longer be static. More than 80% of consumers said they desire more flexible or customized ways to earn and redeem benefits. However, less than 30% of the retail loyalty programs we assessed offer dynamic reward structures for members, such as offering accelerated earning opportunities for specific behaviors or allowing members to choose a preferred reward from a set of options.

Consumers also want to feel recognized and have come to expect exclusive member benefits when participating in retail loyalty programs. More than 2 in 3 consumers identified upgraded or premium services, such as expedited shipping, as important to their program satisfaction. In addition, 60% said they desire early or exclusive access to products, services, and experiences not afforded to all consumers. These key drivers of customer loyalty make the experience more compelling, valuable, and convenient for the member, yet of the programs we reviewed, only 40% offer special moments or elevated access for members.

As retailers move beyond loyalty fundamentals, they should consider offering a variety of earn opportunities that extend beyond the transaction and create optionality for members to redeem on their own terms. Embedding elements of exclusivity and access can also drive member stickiness and enhance the emotional value of the loyalty program.

Personal, unexpected connections enhance program influence and foster a sense of belonging

Consumers continue to crave personalization. More than 80% of consumers indicated they would be willing to share their data for a more personalized retail loyalty experience, depending on what data is collected and how it is used. However, less than 25% of the retail programs we evaluated are personalizing their member experience based on previous interactions, purchase history, and stated or inferred preferences. While data privacy concerns continue to rise, our survey reveals that increased transparency, the ability to opt in or out of data collection, and clearly articulated value for sharing information are often a tipping point for consumers to participate.

Members are also seeking opportunities to engage with a retailer’s partners through the loyalty experience. More than 2 in 3 desire the ability to earn and redeem rewards with a retailer’s partners, and 60% want access to partner offerings and experiences. Leaders are responding by introducing partners into their loyalty ecosystems, with 30% of the programs we assessed forging partnerships with complementary brands, service providers, or value stream players. These partnerships allow retail programs to create more member touchpoints, deliver more meaningful member benefits, and unlock new data and revenue streams.

A feeling of connection and purpose is additionally important to today’s consumer. Twenty-five percent of consumers desire a sense of community through their retail loyalty programs, and more than one-third want the ability to participate in or contribute to shared missions. Our research reveals, however, that the majority of retail loyalty programs are not actively addressing the social value they can provide members by fostering community-building or uniting members around shared missions, such as allowing members to donate their rewards to charitable causes. These factors will continue to play an important role as consumers desire more human connection and become more socially and environmentally aware.

Looking ahead

For retailers, evolving consumer expectations and changing market conditions are coinciding to reveal a new loyalty landscape. Our research reveals the current environment is ripe with opportunities for retailers to reimagine their loyalty strategies. To win, retail loyalty programs must meet foundational consumer needs while seeking out ways to put the member at the center of the experience and delivering personal, meaningful connections across the loyalty ecosystem. Retailers that succeed will use their loyalty programs as a competitive differentiator to win share of wallet, mind, and heart.

Special thanks to Brendan Boerbaitz and Jessica Julius for their authorship.