87% of loyalty members open to being ‘watched, monitored and tracked’

Dive Brief:

Customers are increasingly willing to offer up personal information in order to receive rewards, according to a study by Bond Brand Loyalty emailed to Retail Dive. The study found that 87% of loyalty program members were open to having their activities and behavior "watched, monitored and tracked" in exchange for personalized rewards.
Shoppers are also increasingly willing to pay for better benefits, with 37% of consumers affirming they would pay a fee for enhanced program benefits, compared to 30% last year. That tendency was the highest among Gen Z (47%) and millennials (46%).
The report found that, among other things, investments in technology and personal connections with members could do much for loyalty programs: 95% of loyalty members said they wanted to engage with brands through tech, including AR and VR. Brands with a positive emotional impact on loyalty members saw 27% of them increase their spending, according to the study.

Dive Insight:

Loyalty programs have faced a lot of shakeup lately, not least of all at department stores. J.C. Penney and Macy's, for example, have revamped their loyalty programs within the past year, and Macy's dropped out of the Plenti program in January, after several other major members did the same.

According to the Bond Brand Loyalty study, one of the problems with many loyalty programs is that they offer points that expire and don't give other rewards. Alternative "currencies" like free Wi-Fi or quicker checkout lines for members are "highly valuable" to 85% of consumers, and loyalty programs with paid tiers drive higher member spend and longer-term brand loyalty, per the study.

The study cites GameStop and Restoration Hardware as two retailers with good paid membership programs, and the oft-cited Amazon Prime is on the list as well. It's not hard to see why, with the retailer's massive free shipping perks, members-only holiday and success drawing in trials over the holidays.

Mobile is also a key aspect of loyalty program success, with 85% of respondents saying their experience was improved by mobile redemption capabilities, as well as by in-store location-based offers (83%), card-on-file (85%) and AR features (63%). One need only look as far as Starbucks to see the impact of mobile friendly loyalty programs. The coffee retailer saw mobile transactions rise to 11% in January, around the same time the company launched a cashless store pilot, followed by an innovation center just this week.

In addition to the convenience of the mobile experience, retailers can improve loyalty programs by fostering human interactions, similar to those encouraged by Sephora's Beauty Insider program. The beauty retailer launched a members-only social platform to go along with that program in August, which not only allows customers to chat about everything from beauty tips to favorite looks but also encourages shoppers to talk to other customers about how well a certain product worked before committing to the purchase.

Small changes can go a long way in making a loyalty program more effective, and with younger generations increasingly interested in brand interaction, retailers have rising incentives to invest in those changes.