Retailers fight customer churn with loyalty programs

Two-thirds of retailers offer loyalty programs, according to a Salesforce survey of 8,350 shoppers and 1,700 retail industry decision-makers released last week. Another 29% plan to roll out loyalty programs in the next 24 months.  Over three-quarters of customers belong to a loyalty program, and the average shopper belongs to four. Points-based programs are the most popular model, offered by 57% of retailers. One-third offer cash-back models, and one-quarter offer tiered programs.

High prices are driving brand switching, with two-thirds of shoppers changing brands in the past year alone due to price, according to Salesforce.

Businesses can only keep prices so low for so long to encourage returning customers before they have to raise them. As prices rise, more retailers are looking to rewards programs to encourage loyalty.

While price was the top reason for decreasing brand loyalty, 40% of consumers also point to poor customer experiences and inconsistent quality for their defection.

“When pricing’s done all the heavy work that it can do because of inflation… how do you think about the consumer experience either in the physical environment or in the digital environment that consumers interact with has to play a more important role,” Rob Holston, EY global and Americas consumer products sector leader, told CX Dive.

Loyalty programs are one tool. Four in 5 members –  84% – say such programs make them more likely to repurchase. Among consumers, points are the most popular draw to a program, followed by points to a partner brand, free shipping or delivery, and free or discounted services.

But not every loyalty program is effective. Over one-third of shoppers belong to a loyalty program they’ve never used.

Retail Dive