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Industry NewsGrocery loyalty programs that offer simpler, better redemption drive higher customer engagement:...

Grocery loyalty programs that offer simpler, better redemption drive higher customer engagement: Study

It’s no secret that loyalty programs drive customer engagement but a new study suggests grocery retailers can do even better with their programs.

The study by Valuedynmax, which surveyed 5,500 consumers enrolled in loyalty programs, found that personalized, simplistic, gratifying, and frequent loyalty program reward earning and redemption opportunities strongly align with consumer expectations. They also increase greater satisfaction and more frequent customer interactions since they provide better perceived value for shoppers’ time and money.

“According to our research, forward-thinking brands must obsess over ensuring their loyalty program members derive equal, if not more, value than they invest,” says James Berry, managing director at Valuedynamx.

“To optimize this value exchange, brands must understand their members on a deeper, more personal level to make them feel appreciated and cherished. This means providing ease of use, helpful recommendations, and most importantly, reward options that resonate and drive feelings of gratification. With satisfaction comes engagement — and an increase in the rate at which consumers earn and spend their rewards. This ongoing ‘earn and burn’ cycle directly correlates with more frequent touchpoints that can drive increased revenue potential and loyalty program success for businesses.”

Some key findings of the study:

Consumers want choices, but lack options

There is a substantial opportunity for brands to enhance loyalty programs and satisfy their customers by expanding reward redemption options. This is evidenced by the fact that about two-thirds of loyalty program members are less than completely satisfied with the redemption options available to them. That same number of respondents actively seek to earn loyalty currency when rewards align with their individual preferences (such as the option to redeem for experiences and rewards from a variety of their favourite brands).

There’s a strong demand for value and personalized rewards

Redemption events are not self-sufficient in driving future earning. Instead, the study found that loyalty program satisfaction is derived from a positive redemption event that creates joy when consumers feel the time and effort they have invested in a loyalty program has been sufficiently rewarded. This joy can be nurtured when programs go above and beyond to create it — particularly through personalized rewards.

Approximately 30 per cent of respondents expressed a preference for rewards based on their past purchases and when asked to rank which loyalty program traits increased their redemption satisfaction, helpful recommendations for reward redemptions ranked highest, closely followed by the ability to redeem high-value rewards and being offered unique and interesting reward options.

Consumers use loyalty rewards at high frequency for different purposes

As economic challenges persist, consumers are “earning and burning” rewards frequently; 83 per cent of respondents reported redeeming loyalty currency at least once in the last three months and half reported redeeming in the last month. Supermarket, credit card, airline, and hotel loyalty programs rank among the top-preferred options, likely due to their versatility and ability to offset everyday spending.

Supermarket programs boast some of the most active loyalty program members as 82 per cent of respondents reported redeeming rewards on groceries, while airline and hotel programs appeal to loyalty members looking to earn and burn more often to save on high-value rewards such as free flights or luxury hotel stays.

Read the full report here.

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