The current business climate, struck by inflation and the potential for a looming recession, faces an uncertain future. But even in such turbulent times, customer loyalty can be the critical customer retention tool omnichannel retailers need.
Our 2023 annual Omnichannel Retail Index (ORI) study confirms loyalty programs are among the top best practices adopted across all retailers and brands surveyed — helping overcome consumer reticence in a challenging environment. The eighth annual ORI study takes the pulse of digital commerce and omnichannel retail, identifying which tactics become table stakes and what innovations transform into best practices.
This year, the loyalty category was expanded due to retailers’ and brands’ renewed focus on loyalty programs and offerings. At 73% adoption of all best practices across the Index, best practice criteria for loyalty include having a tiered loyalty program and getting special benefits for participating in the loyalty program. Of all verticals, department stores led the industries with almost 90% of all loyalty best practices adopted. The vertical lagging behind was jewelry, with 51% of the best practices criteria adopted.
The ORI study finds a rise in the popularity of loyalty programs and an increase in the variations of initiatives. Not only do more companies offer different flavors of loyalty programs tailored to their customers' wants and needs, but some are also being more creative about the design of their loyalty programs, incorporating apps and strategic partner loyalty programs.
In the report, 77% of benchmarked companies offer a loyalty program, up from 70% in 2022. Of those with loyalty programs, here are the top 9 loyalty program tactics gaining omnichannel traction:
- 89% give customers special benefits for being a part of their loyalty program (pre-sale, early releases, exclusive offers, etc.)
- 80% offer “earn & burn” or point-based loyalty programs
- 83% of those with mobile apps have a loyalty component on their app to check their points, loyalty shop, etc.
- 65% allow shoppers to redeem points for discounts
- 44% have credit cards as part of their loyalty program
- 42% offer a tiered loyalty program
- 39% give shoppers points for actions (writing reviews, following the company on social media, referrals, etc.)
- 19% offer a paid loyalty program
- 17% offer experiences as loyalty program redemption
How brands are using loyalty programs in-store and online
Fueling your marketing strategy and continuing to drive customer lifetime value, even in a turbulent economy, is possible with innovative customer loyalty programs. Organizations should focus their time, human capital, and budget wisely, using technology to realize the company’s vision. Here are some examples of retail organizations in the ORI study maximizing loyalty programs.
Dick’s Sporting Goods allows customers to team up and connect with a Nike membership, allowing customers two loyalty memberships with just one click while scoring exclusive products, member experiences, and loyalty benefits.
The toy manufacturer Lego allows customers to earn up to 2x VIP points by following them on social media, telling the company more about themselves, and buying their favorite Lego sets. VIP points work wherever customers want to shop.
Office supply retailer Staples encourages in-store shoppers to check rewards before checking out, which also serves as a reminder to sign up for their loyalty program to get started.
A tiered program offers customers of the luxury beauty retailer bluemercury a chance to earn immediate free shipping and money off $250 spent, online or in a store. The tiered program with a variety of membership levels entices ongoing loyalty spending.
Baby and kids’ apparel brand Carter’s will send birthday gifts to each child in a customer’s loyalty account up to 14 years old for households that have purchased in the last 24 months.
Pet Supplies Plus offers an easy-to-use loyalty dashboard to show members' offers, rewards, and progress.
The future of loyalty programs
AI-enabled loyalty programs and rewards will enable organizations to create predictive loyalty models that analyze customer data to determine personalized rewards and incentives. Gamification elements can be integrated into loyalty programs, increasing customer engagement and fostering brand loyalty.
Want to learn more about other omnichannel best practices? Download the 2023 Omnichannel Retail Index Executive Summary.
