Marketers continue to rely on loyalty programs as a way to jumpstart business growth and strengthen customer ties. In fact, adoption of loyalty programs has increased 13% across activewear, big box, and departments stores verticals according to Gartner L2’s recent report on the topic. While the average consumer participates in 14 memberships, over half of memberships are inactive, underscoring the need for brands to create a distinct value proposition.
Two factors the report identifies as critical for loyalty performance are enhancing program awareness and re-engaging customers post-acquisition through marketing efforts and a streamlined experience. The report benchmarks 187 brand and retailer loyalty programs based on their program visibility and promotional tactics (Awareness) versus their engagement approach using benefits, email marketing and mobile app features (Engagement). Here’s how the distribution shook out:
Leaders (20%) successfully acquire and retain their customers by delivering best-in-class loyalty features and rewards while leveraging key channels for program visibility. Brands in this category, including long-standing leaders like Nike, Nordstrom, and Starbucks, create opportunities for members to provide input on loyalty programs, ensuring the relevancy of benefits.
Awareness-Oriented (18%) brands focus on customer acquisition and membership growth, taking a multichannel approach to program visibility. Brands in this category—often including restaurants and department stores—devote valuable real estate on sites and apps to their loyalty programs and leverage search marketing to enhance program discoverability.
Engagement-Oriented (31%) brands prioritize their investments for customer retention, consistently updating their loyalty programs. These brands, especially within the specialty retail and big box sectors, focus their efforts on blending digital loyalty with in-store features and real-world experiences. Brands in this category leverage app functionalities and email communications to grow member engagement and understand how to clearly convey a loyalty membership’s value.
Laggards (32%) do not have pronounced loyalty programs with distinct value propositions. These brands may have well-structured programs but forgo marketing tactics that support program visibility. Brands in this category include beauty brands and retailers that haven’t made consistent program updates.