Loyalty can’t always buy you love: Why loyalty programs only go so far…

Originally posted 2018-11-19 11:21:45

By Christina Severino | amdlawgroup.com

Loyalty ProgramsIn an effort to build consumer loyalty, brands are increasingly putting more focus on loyalty programs more than price promotions and other discounts. A recent report by MarketingWeek indicated that promotions typically circulated through loyalty programs tend to be the most successful method of converting customers to their brand, through coupons or other reward point systems.

The report highlighted a recent marketing research survey conducted by fast.MAP, which found that 56% of respondents would “sometimes or often buy a different brand” as a result of loyalty program promotions. The survey also indicated that 71% of respondents would purchase from promoted brands, in general. However, 48% of the respondents were more likely to make a purchase from a different brand if offered a pure pricing discount. In addition, 45% of respondents indicated they would “sometimes or often switch” if they were mailed coupons; 42% said samples would persuade them to make the switch. “Bogo” promotions were also noted as a strong selling point, with 85% of respondents “quite likely” or “very likely” to switch brands. Discounts of 10% or more were favorable to 75% of respondents. In contrast, incentives which were unlikely to attract new customers included prize drawings and competitions.

Based on these numbers, it appears as though no one method necessarily keeps loyal consumers from straying when they find a better deal. Other interesting findings of fast.MAP’s research indicate that 39% of respondents would purchase the lowest priced items, regardless of the brand.

But, there is a ray of hope in the data: 33% of those surveyed said they would continue to purchase the same brand, even if there was a cheaper alternative; 30% said they would stay loyal to a brand if others were on promotion at the time of purchase.

So how do brands strike a balance between building a loyal band of followers and maximizing profits?

The trick is ensuring that brands place equal weight on promoting through a loyalty scheme and through other discounting promotions, especially if the brand is trying to avoid flighty consumers or “voucher tourists” who only shop when there is a coupon or other promotional code circulating on the Internet. Depending on the industry, brands may also consider loyalty incentives such as “early access” or “V.I.P.” treatment to new products or lines, in order to solidify a sense of belonging with the brand.


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