2016 is expected to bring more integration of loyalty programs in mobile payments and increased development of program apps. Retailers are also moving toward encouraging 100% redemption of loyalty points.
For customers, the benefits of being a loyalty program member become the most salient when the customer redeems a reward (e.g. gets discount, product or preferential service). Yet, as much as one-third—billions and billions of dollars’ worth of loyalty program points—go unused, which also equates to less customer trips to that retailer.
“When customers redeem points, they’re coming back and they spend typically about 25% more on top of the free redemptions,” said Jeff Berry, editor-in-chief for Colloquy, a publishing, research and education practice that focuses on the loyalty market. To encourage reward redemption, retailers are issuing points without expiration dates or issuing gift cards for unused points.
When it comes to rewards, fuel price roll back and grocery-fuel partnerships are increasing. Customers are demanding tangible value from loyalty programs that allow them to extend their wallet further in the form of cash or cash equivalent rewards, Berry noted. That said, a large U.S. segment hopes to earn points toward travel and merchandise.
Today, loyalty programs are looking for ways to engage Millennials. Baby boomers are looking for discounts and savings, but Millennials enjoy experiential rewards, such as tickets to a local sold-out concert, Berry explained.
Another trend is an increase in loyalty partnerships between businesses to extend value to customers.
“You see programs like Plenti, where multiple non-competing retailers are issuing the same points currency and there seems to be a real consumer demand on receiving the same benefit from a number of different partners so customers don’t have to carry 29 different cards,” Berry said.
VERC Enterprises with 24 locations in Massachusetts and New Hampshire participates in the Gulf loyalty program at its Gulf-branded sites and the Plenti program at its Mobil stations.
“The big difference is that the Gulf program is an actual credit card, where the Mobil program is just a loyalty card that earns points. I think customers are more likely to sign up for a program that doesn’t have a credit card attached to it. In both programs customers can earn points at multiple locations, not just the gas station,” said Courtney Vercollone, district manager for VERC Enterprises in Duxbury, Mass.
Plenti points can be redeemed at many locations, including Mobil, Macy’s, Rite Aid, AT&T, Hulu, etc.
“As a retailer, I find this program easy because a lot of people already have the Plenti card from another retailer. So once you mention that we accept it, they know exactly what we’re talking about. But at the same time, there is some confusion because not many loyalty programs are valid at different retailers,” Vercollone said.
Stay tuned to Convenience Store Decisions‘ March issue, where we delve into 38 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect for 2016 and beyond.