Australians’ use of loyalty programs tested during pandemic
Covid-19 tested many parts of the way Australians interact with the retail industry, and their commitment to loyalty programs was not spared.
According to the most recent For Love or Money 2021 report, published by The Point of Loyalty, while 88 per cent of Australians are a part of at least one loyalty program, only 43 per cent actively used them (at least once) during a 12 month period between 2020 and 2021 – a far cry from the 53 per cent recorded in 2018’s edition.
However, while use of loyalty programs fell they still had an impact on customer loyalty, with 48 per cent of customers staying loyal to the brands whose loyalty programs they are signed up to during the pandemic – even if they didn’t claim the rewards.
A further 39 per cent said they kept shopping with the brands they had a loyalty account with regardless of the pandemic, while 13 per cent said they shopped where they wanted regardless of loyalty programs.
This could be due to a continued, if slow, shift in what customers actually want from their loyalty programs.
According to the report, there are two main types of loyalty in consumers: Behaviour loyalty, and belief loyalty.
Behaviour loyalty is primarily driven by a transactional connection with the brand (i.e. I’ve always shopped there), while belief loyalty is driven by an emotional connection with the brand (i.e. this brand speaks to me).
Since 2019’s report, customers are increasingly moving away from measuring loyalty in purely transactional terms (76 per cent to 69 per cent, from 2019 to 2021), and toward preferring brands that they can personally connect with.
And, according to the report, the best-in-class loyalty programs are able to bring these two consumer types together through a ‘five benefits model’, which presents social, personal, functional, experiential and financial incentives for shoppers to sign up.
The big speedbump, however, is how increasingly wary Australians are of how brands and businesses utilise the data they hand over as part of these programs. A slight majority (51 per cent) are comfortable with the trade off of giving away personal data for a better overall shopping experience, but one in four (27 per cent) say that this is an “invasion of privacy”.
Data security was the big concern, with a number of high-profile data breaches during 2021 likely fueling this fire, followed by how the data is actively being used by the company.