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Loyalty Marketing Survey: Testing Presents Big Opportunity for Brands

We surveyed brands to better understand the current state of loyalty marketing programs. Although very popular among companies, they're still being underutilized, and brands are missing out on the full benefits of a loyalty marketing program.
Parker Dietz
November 13, 2020
April 11, 2024

Loyalty marketing programs have been around for centuries. When done correctly, they can accelerate your brand to new heights, and often with much less effort than new customer acquisition. However, the pandemic took a significant stab at brand loyalty. Consumers are now more willing to switch away from their usual product choices to whichever brand conveys more value, convenience, or availability (you can read more about that here). 

Given the recent shift in brand loyalty, marketers have been trying to figure out how to turn pandemic shoppers into long-term, loyal customers. To better understand how brands are approaching loyalty in a post-pandemic world, we surveyed Cohley clients to get the inside scoop on their initiatives. 

Benefits of a Loyalty Marketing Program

Before we dive into the survey results, let's take a look at the top 3 benefits provided by a loyalty marketing program. 

1. Loyalty Leads to Higher Profits 

According to Bain & Company, increasing customer retention by 5% increases profits by 25% to 95%. Acquiring a new customer is 5-25% more expensive than retaining a current customer, meaning it's less costly to keep existing customers happy than to attract new ones. 

2. More Customer Data

When a customer signs up for a loyalty program, they typically fill out a profile with valuable information. Marketers can use this information to create personalized messaging that leads to higher engagement. 80% of consumers are more likely to make a purchase when brands offer personalized experiences. To provide personalized experiences, you need data that helps you understand your customers deeply. 

3. Strong Emotional Connections

Well-designed loyalty programs lead to strong emotional connections between brands and consumers. Consumers state that two-way interactions, real-time and varied interaction opportunities, and differentiated shopping experiences contribute to their emotional connection with brands. Additionally, 70% of emotionally engaged consumers spend up to two times or more on brands they are loyal to, compared to less than half (49%) of consumers with low emotional engagement.

Now, About those Results

Are loyalty marketing programs popular?  

Yep, they sure are. 67% of brands surveyed currently have a loyalty marketing program. Knowing that customer retention can lead to increased profits, it makes perfect sense that most brands invest in loyalty marketing programs. Given the upside, it may surprise you that 33% of brands don't. Why? The most probable explanation is that some brands don't have the resources to simultaneously focus on acquisition and retention. Or, they're finding success retargeting current customers without the use of a loyalty program. Apple, for example, drives deep customer loyalty without the use of a specific loyalty program. 

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<img src="" alt="Screen Shot 2021-03-22 at 1.37.37 PM.png">

Points are the Most Popular Way to Reward Loyalty

Loyalty programs come in all shapes and sizes. In our survey, we asked each brand to select the various offerings included in their loyalty programs. According to our research, rewards points are the most popular method for promoting loyalty. 

Next behind loyalty points, we have referral bonuses and gifting at the point of purchase. Referral bonuses are a great way to identify VIP customers, and gifting often costs less than offering a discount. 

Whatever you decide to go with, it's essential to make sure your loyalty rewards are truly valuable to customers. We've all joined rewards programs. Some are great, and some we forget. If your loyalty program doesn't provide value to members, you'll have a challenging time earning sign-ups. For example, Nordstrom has a wildly popular loyalty program in which they invite loyal customers to shop their famous Anniversary Sale early. The program's exclusivity, paired with the huge discounts' perceived value, keeps customers coming back for more. 

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<img src="" alt="Screen Shot 2021-03-22 at 1.37.51 PM.png">

Email Takes the Cake 

As for communicating with loyalty members, email is the most popular channel. Emails are easily trackable, making them a favorite among marketers hoping to cultivate loyalty. Being able to measure the effectiveness of your loyalty outreach is essential to optimization. 

SMS ranks third in communication channels, but it's growing in popularity. 66.5% of shoppers signed up to receive texts from more brands in 2020. Relying on personalization, SMS allows you to take a 1:1 marketing approach. Perhaps unsurprisingly, direct mail received zero votes. 

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<img src="" alt="Screen Shot 2021-03-22 at 1.38.01 PM.png">

Most Used Content for Loyalty Programs? Professional Photography

When asked about the types of content used in their respective loyalty marketing program, professional photography landed the #1 spot among brands. Graphic design was a close second, followed by product reviews, GIFs, professional videography, user-generated photos, and user-generated videos. 

How do you decide what content to use for your loyalty program? We recommend testing various content types and measuring each's impact, which leads us to our next finding. 

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<img src="" alt="Screen Shot 2021-03-22 at 1.38.13 PM.png">

Experimentation is Rare within Loyalty Programs

We asked brands how much testing they perform within their loyalty marketing programs. A whopping 100% reported doing little or no testing. As previously mentioned, improving customer retention has a tremendous impact on profit. So it's surprising that more brands aren't investing in testing to optimize loyalty marketing programs further. 

Many respondents noted that the biggest challenge to their loyalty program was the lack of customer engagement. Testing various content types is the best method to glean insights into what resonates with your customers. A/B testing images within emails can help you find winning assets and enable you to double down on what performs best. At Cohley, we've seen it increase click-through rates by nearly 40%. You can do the same within SMS. For instance, Attentive offers A/B testing for loyalty text messages. No content type will work as a silver bullet for every brand, but testing gives you access to information that can help you make data-driven content decisions. 

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<img src="" alt="Screen Shot 2021-03-22 at 1.38.22 PM.png">

Regardless of what your loyalty program looks like, it’s vital to test different iterations constantly. Consumer sentiment can change on a dime, meaning what works today might not work tomorrow. The best remedy for fickle brand loyalty is using a data-driven strategy that’s derived from extensive testing. All in all, it can’t be denied that brand loyalty will continue to be a key driver of business results for years to come.

Ready to start testing your loyalty program? Contact us to learn how Cohley can help.

level up your loyalty program

Parker Dietz
Head of Content
With a wealth of knowledge about competitors and pricing, Parker is all about exploring the best way to communicate Cohley's benefits. Outside of work, Parker enjoys poorly playing guitar at parties, watching every Adam Sandler movie ever made, and eating Arabic food.