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Should Your Brand Offer Loyalty Programs?

Updated: Nov 13, 2023

How often do you shop at the same stores? Do you choose one brand over another for its loyalty rewards program? Whether it's a grocery store, a favorite clothing brand, or a trendy cosmetics line, many customers are accustomed to loyalty rewards programs as part of their shopping experience. However, the future of these loyalty rewards programs is uncertain.

Graphic design depicting customer loyalty programs

Loyalty programs go both ways

The data supports leaning in, as a 2022 McKinsey study showed that free loyalty program members spend 30% more with a brand after joining - and that number jumps to 60% for paid loyalty programs.

Perhaps the problem isn't with loyalty rewards but with the offers themselves. Simply offering points or discounts may not be enough. A purely transactional "points for purchase" relationship trains customers for deal-seeking behavior rather than inspiring true brand loyalty.

Loyalty rewards programs must evolve to remain relevant in today's ever-changing landscape - or else risk being left behind. And that's something no business can afford.

So, do loyalty rewards have a place in an uncertain economic landscape, especially as costs are rising for both customer and supplier?

The verdict

We say yes, but let's rethink loyalty. Let's recognize that modern consumers often choose products based on a narrative around what a product stands for and what it signals about the people who own it. Brands that earn our love and devotion are the ones who create meaningful and symbolic expressions of identity that reinforce a buyer's sensibilities or aspirations.

While doubling down on loyalty programs might not be right for everyone, it's a viable play in a competitive market.

But take a step back and consider the bigger picture. What possibilities, beyond cash back or points, could your brand offer customers to spark action and nurture long-term relationships?

This article originally appeared in our weekly Paid Media Insights newsletter. For the most up-to-date news and tips to improve your media strategy, subscribe for free here.


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