Reward Program Strategy

Essential Customer Loyalty Statistics 2019

Editor’s Note: This post was originally published in October 2017 and was updated for accuracy and comprehensiveness on Jan 17, 2019. 

If you’re painstakingly trying to prove the value of customer loyalty to your team, your boss, or even to yourself, you can relax — we’ve done all the work for you. Seriously, close all those tabs.

We’ve collected the essential customer loyalty, rewards, and retention statistics and put them all in one place for you. Why? It’s simple: because we want to help you make your customers smile.

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Customer loyalty and profitability

In case you didn’t know, your repeat customers are incredibly valuable to your business and there’s an almost endless supply of data to back it up.  According to Adobe, the top 10% of your customer base is spending 3x more per order than your average customer while the top 1% is spending 5x more per order. The same study also found that repeat customers:

  • Are buying nearly 30% more items per order than first-time shoppers

  • Are 9 times more likely to convert than first-time shoppers

  • Generated three to seven times more revenue per visit

  • Spent  47% more than first-time shoppers during the holidays

Not only are repeat purchasers spending more, but they’re also much more likely to return with every purchase.

  • After 1 purchase: 27% chance of returning

  • After 2 purchases: 45% chance of returning

  • After 3 purchases: 54% chance of returning

  • Customers who spend more on their first purchase are twice as likely to convert

Simply put, loyal customers are profitable in a variety of ways. While some organizations value their loyal customers, these statistics really put into perspective how imperative loyalty is to the longevity and success of any business — including yours.

Customer loyalty by demographic

You’ve heard the stereotypes: Millennials are fickle and Generation X is cheap, men are from mars and women are from venus, but is there really any credence to these claims? 

First we need to make sure we’re all talking about the same thing when we reference each the different generations:

  • Baby Boomers: born 1945-1960 (age 58-73)

  • Generation X: born 1961-1980 (age 57-38)

  • Generation Y (Millennials): born 1981-1995 (age 37- 23)

  • Generation Z: born after 1995 (age 22 and under)

Now that we have that straightened out, let’s explore the various dimensions that influence brand loyalty across generational cohorts — the results may surprise you.

Generation Z is all about quality

According to a survey of 1,000 consumers, quality matters most to Generation Z:

  • 57% indicated quality as a brand loyalty driver

  • 50% said their last purchase decision was made on quality

  • 28% are self-described “quality-first” shoppers

Findings from Colloquy indicate that while Generation Z is still maturing, it appears to be less enthusiastic about shopping when compared to Millennials:

  • 41% view shopping as a relaxing experience, compared to 45% of Millennials

  • 24% claim to make impulse purchases, compared to 33% of Millennials

  • Only 46% claimed to often use coupons and discounts, compared to 55% of Baby Boomers

Millennials are the most loyal

The same 1,000 customer survey indicates Millennials are very engaged with rewards programs.

  • 22% indicated rewards programs as a brand loyalty driver, more than any other generation surveyed

  • 15% said rewards were a purchase-driver in their most recent purchase

  • 34% consider themselves price-savvy, while another 34% consider themselves quality-first

Millennials also appear to be the least sensitive to negative experiences:

  • Only 74% would switch brands after negative customer service experience, the lowest of any cohort compared to 86% of Generation X and 85% of Baby Boomers

  • 58% stating they would stay with a brand no matter what

A report by Colloquy corroborates the above findings on Millennial sensitivity:

  • Only 33% would be unlikely to return to a store due to lack of appreciation from sales associates

  • Only 36% would be unlikely to return to a store if it was messy or disorganized

  • Only 32% would be unlikely to return to a store due to inconvenient returns

Generation X values price above all else 

Unlike Millennials and Gen Z,  Generation X is more price conscious:

  • 30% indicated price as a brand loyalty driver

  • 85% said discounts influenced their most recent purchase

  • 44% consider themselves price-savvy consumers

Generation X is also quite tech-savvy:

  • 27% will voice their feelings on social media after a negative experience

  • 36% enjoy shopping online to avoid going to a store

Baby Boomers seek convenient shopping experiences 

Boomers are one of the more convenience-driven demographics:

  • 30% indicated convenience as a brand loyalty driver, more than any other generation

  • 36% said convenience influenced their most recent purchase

  • 16% consider themselves quality-first shoppers, the lowest of any generation surveyed

Unlike Millennials,  Baby Boomers are more sensitive to negative customer experiences:

  • 54% would be unlikely to return to a store due to lack of appreciation from sales associates

  • 50% would be unlikely to return to a store that was messy or disorganized

  • 54% would be unlikely to return to a store due to inconvenient returns

Men value a combination of convenience and quality 

Just like how different generational groups have loyalty and shopping preferences in common, men and women also share some characteristics.  However, there are some areas where men tend to lean more in one direction than their female counterparts:

  • 54% of men rank quality as the more important factor when making a purchase

  • 30% of men say that if they experienced a rewards redemption mishap, they would talk negatively about the incident online

  • 42% of male shoppers have three or more active recurring product subscriptions

 All that being said, male shoppers tend to value quality and convenience over quantity.

Women want to shop with brands they can engage with

Women tend to like the process of shopping more than men, and you can see that in the ways the engage with brands and reward programs:

The above statistics and findings prove that there is no one-size-fits-all solution in customer loyalty, but rather that marketing segmentation is key.  Understanding your customers and what they value most is ultimately the best way to make them happy and, as a result, extremely loyal.

Increasing customer loyalty

It’s not enough to know that customer loyalty is profitable — you also need to actively focus on increase it. Thankfully, there are a number of methods with proven results!

Stop wasting money on ads

Your customers don’t want to see your ads. Even though everyone uses them, they can actually do significant damage to the relationships you have with your customers.

In fact, the research on the state of consumer trust in advertising might surprise you:

  • 83% of people say advertising is disruptive to the online experience

  • 69% of users distrust online advertising

  • Online advertising hasn’t gotten any better according to 80% of web users  

As you can see, ads are universally disliked and untrusted. On top of that, they are an incredibly expensive way to try and increase revenue:

  • Total US website traffic has declined 0.4% since 2014 but the cost of advertising has risen 12% (over 5 times the rate of inflation)

  • Advertisers have increased ad spend by 42% but those ads only resulted in a 11% increase in individual website traffic

  • Users are spending 6% less time on websites year-over-year   

Continuing to dump your marketing budget into advertising is a surefire way to waste money on expensive acquisition while also damaging your customer relationships.

Focus on exceptional customer service

It might be dated, but a 2011 report from Oracle on the relationship between customer loyalty and customer service found some interesting things that still ring true:

  • 73% of customers commit to a brand because of strong customer service

  • 89% of customers changed to a competitor after a poor customer service experience

  • 50% of customers allow a company one week to respond to an inquiry before abandoning the service

  • 86% of customers are willing to pay more for an improved customer experience

In addition, 57% of respondents said that an unaddressed negative review was the primary reason they left the brand.

50% of customers allow a company one week to respond to an inquiry before abandoning the service.

These surveys make it clear that how well you do (or don’t) support your customers can make or break the complete customer experience. Failure to provide a supportive atmosphere can reduce your customer loyalty, so make sure you’re putting in the effort to delight customers every chance you get.

Show your customers how much they are valued

While many customers might not mind a self-serve shopping experience, no one likes being ignore. John Gattorna, a visiting professor at the Macquarie Graduate School of Management, claimed that 68% of customers feel companies are indifferent to them. When your goal is to make customers feel valued, indifference is definitely not the emotion you should be going for.

In a study on gratitude by TD Bank, researchers discovered several linkages between customer engagement and gratitude:

  • 77% of customers appreciate when companies express their gratitude

  • 60% of customers said personally addressed acts of gratitude are more genuine

  • Women (64%) are more likely than men (55%) to desire personally addressed gratitude

  • 44% said personalization is the key to genuine gratitude

  • 36% of customers commit to a brand because of those personalized experiences

Not only do customers like to be thanked, but it’s actually in your best interest to be thanking them! At Donors Choose, a not-for-profit organization, donors who were thanked were 38% more likely to donate again. Thanking customers is a great way to show them how much you value them, and in turn helps makes them more loyal to your brand.

Build customer loyalty with a rewards program

82.4% of customers have said they are more likely to shop at stores that offer some type of rewards program. This desire then translates into loyalty program members spending 12-18% more revenue than non-members.

In their 2016 Loyalty Report, Bond Brand Loyalty has also uncovered various insights into the customer perception of loyalty programs:

  • 77% of shoppers say a rewards program make it more likely they will make additional purchases with a brand

  • 70% of customers are more likely to recommend companies with strong loyalty programs

  • 71% of consumers say loyalty programs are a meaningful part of their relationship with a brand

  • 27% more members increase their spending habits with brands who establish emotional connects with members

  • 63% of consumers modify purchase amounts in order to maximize points earned

  • The average consumer is registered in 13.4 different loyalty programs, while active in 6.7

It’s clear from this research that taking a holistic approach to the customer experience at every touch point is imperative to building customer loyalty. Increasing customer service and gratitude while decreasing advertising is imperative to increasing customer loyalty in your brand.    

Improving a rewards program

The numbers don't lie — reward programs are a surefire way to build customer loyalty into your brand community, and we should know — we're experts!

While launching a rewards program has never been easier thanks to Smile.io, you need to keep in mind that customer expectations are constantly evolving. The following data reveals the elements that will make-or-break the modern rewards program.

Offer a diverse range of rewards

Monotony in anything is pretty boring, and the same can be said for your rewards program. 57% of consumers are more likely to participate in rewards programs with VIP tiers and exclusive rewards.

Similarly, 63% of program members believe a wide range of benefits and rewards is the most important part of a rewards program. This is proof that your customers are looking to be rewarded in ways beyond simple discounts.

57% of consumers are more likely to participate in loyalty programs with VIP tiers and exclusive rewards.

In this age of innovation, customer expectations are high for reward programs. Punch cards and basic program benefits just don’t cut it for the modern consumer. So whether you reward customers with free shipping, exclusive products, or letting them influence your future product development, just think about what you want from the programs you participate in yourself!

We all love receiving rewards that mix things up, and the numbers don’t lie - your customers want the same thing too!

Make program personalization a priority

Back in 2016, the Loyalty Survey by Bond Brand Loyalty also touched on the clear correlation between personalization and loyalty program satisfaction:

  • 79% of customers are very satisfied with loyalty programs with high personalization

  • Loyalty programs that make customers feel special and recognized had 2.7 times more satisfied members

Even more data collected by Virtual Incentives shows the value of personalized incentives: 

  • Only 40% of respondents had ever received a personalized incentive

  • 56% said that a personalized incentive would increase the likelihood of considering a brand

  • 63% of respondents prefer a personalized incentive based on purchase history

Every human has an innate desire to be known, so making sure your rewards program doesn’t make members feel like just another customer can go a long way. Loyalty begins by creating connections between customers to your brand, and personalization will encourage a deeper relationship between you and your customers.

Cracking the customer loyalty code

The first step to improving anything is understanding it. I hope this all-inclusive post saves you some time and effort, allowing you to take action to start building your own brand community with rewards right away. Building customer retention and loyalty doesn’t have to be complicated - it’s just a matter of being informed about what your customers value, and reflecting those values back to them..

If you’re looking to learn more about customer loyalty and loyalty programs, we have a wealth of resources available in our Resource Center.

You can also start building your own community with rewards in just a few clicks!

No matter what you’re ready for, we hope you now feel prepared to tackle your customer loyalty goals.

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