Shopper Loyalty Perceptions

In the ever-evolving retail landscape, brands and retailers continuously strive to achieve shopper loyalty. Long-term, repeat clients are the goal of any business; however, CPG brands and retailers need to harness shoppers’ purchasing power consistently, week after week and month after month. Across categories, consumers are continuously bombarded with product options. Does loyalty play a role as they narrow choices and make purchasing decisions?A March 2024 survey of 1,005 shoppers, conducted by the Path to Purchase Institute in collaboration with CVS Media Exchange (CMX), provides insights into shopping behavior, specifically focusing on loyalty program participation and program value drivers. The qualified respondents indicated in-store or online shopping at least once a month in the apparel, department store, drug/health/beauty, outdoor/sports/leisure, homewares/furnishings or online-only retailer categories. So, what is currently driving shopper loyalty and how can brands and retailers adapt to attract and retain consumers as loyal, long-term clients? Shopping BehaviorsAs brands and retailers evaluate the CPG retail experience and the effectiveness of loyalty programs, a general overview of current shopping behavior helps lay the groundwork for decision-making. Starting with shopping frequency, 7-in-10 (or more) consumers say they most often shop in the grocery, mass/big box, online-only and drug categories. They shop these categories at least once a month, with 24%-53% across these categories referencing one, two or multiple times per week. When analyzing opportunities to connect with customers in physical retail, three-quarters of respondents report shopping the drug and grocery categories in-store. Furthermore, across other consumable categories, 50%-60% shop in-store. How can brands and retailers impact shopping behavior? The 2024 respondents cite convenience, product selection and overall value as the most influential factors when selecting brands and retailers. Looking closer at loyalty programs, just over half of the consumers surveyed rated these factors as very to extremely impactful when they think about the retailers and brands they choose to shop either in-store or online. More than half of survey takers also indicated a brand or retailer’s loyalty program is at least somewhat impactful on where they choose to shop. These programs have a similar effect on retailer/brand choice across generations and income levels; however, selection of products, value and the overall shopping experience seem to be especially important factors to Baby Boomers compared to other generations. Loyalty Program ParticipationNearly 4-in-5 shoppers said they participate in at least one loyalty program. Of the respondents who do not participate, 25% identified a lack of perceived value as the reason. That perception is greater among men (32%) than among women (19%). Interestingly, among those who do not participate in a loyalty program, Gen Z shoppers, when compared to other generations, were more likely to say they don’t have a membership because they use someone else’s. These younger shoppers are taking advantage of the shopping perks, but not enrolling in personal memberships. How can the programs be restructured, or what can brands and retailers do to incentivize these shoppers? Examining the consumer threshold for loyalty programs, on average, respondents noted participation in four programs. The highest self-reported participation occurs in the grocery, drug and mass/big-box categories. From a generational perspective, Gen Xers and Baby Boomers we spoke to made up a larger proportion of the loyalty members in the grocery, drug and hotel categories. Meanwhile, Gen Zers and Millennials made up a good portion of the loyalty members in categories, including quick-service fast food, apparel, and health and beauty.There are several influential factors for brands and retailers to explore when strategizing how to motivate shopper participation. Access to lower prices, the ability to be rewarded for everyday purchases, rewards that do not expire, and free standard shipping top the list of motivators. Delving into the mindset of younger shoppers, Gen Z respondents are significantly more motivated by birthday rewards. Furthermore, Gen Z and Millennials also over-index for saying the ability to view purchase history is a motivator to join a program.In the debate over free or paid memberships, respondents report most often participating in free loyalty programs or receiving promotional messages from the retailer or brand. On the other hand, nearly one-third of shoppers pay to participate in one or more premium programs. The average monthly spend for premium loyalty program participants is $36 per month. And while young shoppers report lower levels of engagement, when it comes to paid premiums, Gen Z, Millennial and Gen X shoppers spend approximately $40-plus per month. Baby Boomers report paying significantly less ($19 per month).As brands and retailers navigate the differing generational participation and paid premium levels, they have a variety of ways to successfully engage with program members. According to the survey, respondents review membership details via multiple touchpoints, including retailer or brand websites (35%), emails (34%), on receipts for purchases (27%) or via text/SMS messages (26%). However, engagement via a mobile app tops the list at 57%. Furthermore, younger Gen Z and Millennial shoppers are more likely to engage with the mobile app and text/SMS messaging.Loyalty Program Value DriversThe success of a loyalty program is based on attraction, retention and action. Are you able to acquire new members, maintain their membership and encourage consistent purchasing behavior? What loyalty features and offers does your program leverage? Understanding current value drivers may reinforce your program perks or help you make needed adjustments. Based on the survey, two-thirds of shoppers say it is important that loyalty programs offer reward redemption flexibility and have rewards that do not expire. In addition, respondents greatly value rewards on everyday purchases, access to lower prices and free standard shipping. As referenced earlier, younger shoppers are interested in additional perks beyond earning and redeeming rewards. Surprise offers, access to purchase history, personalized promotions, recognition of loyalty status and birthday rewards are highlighted by around half of Gen Z and Millennial shoppers.Customization and personalization are part of everyday life as consumers are fed relevant information based on browsing habits and other behavioral tracking. People are accustomed to regularly receiving product messages and content to meet their specific needs. As such, it is no surprise that nearly half of shoppers indicated a high level of interest in a loyalty program providing personalized promotional offers. In addition to personalized promotions, Gen Z and Millennial respondents reflected a greater interest in a variety of features and benefits beyond earning rewards and redemptions. They also value:Access to exclusive product releasesPriority in-store checkout and pick-up areasExclusive access to VIP eventsPersonalized tiers/status levels based on spendingAbility to pay to upgrade status/tier levelUnderstanding these motivators may help brands and retailers attract younger shoppers, including those who are using other people’s memberships. They need to strategize how to leverage these features to transition younger shoppers into personal loyalty program memberships.When it comes to premium memberships, survey responses indicate that brands and retailers need to package a variety of benefits to entice shoppers to pay for loyalty programs. Once again, Gen Z and Millennial responses demonstrate areas of opportunity. These younger shoppers seem to be a more captive audience for premium memberships, indicating a higher level of interest in several features compared to their older counterparts. This list of options includes exclusive access to VIP events, in-store spaces for members only, games and challenges to earn additional rewards and access to expert advice or an online community of like-minded people.For shoppers who currently pay for one or more premium programs, free standard shipping tops the list as the most motivating feature with freebies, birthday rewards and personalized shopping experiences also standing out for Gen Z and Millennial shoppers.Whether focused on attracting or retaining loyalty program members, developing a unique mix of value drivers can reinforce brand values, enrich the in-store and online shopping experience and provide distinct points of differentiation.Winning the Loyalty GameThe survey demonstrates opportunities for brands and retailers to expand their loyal customer base. With convenience, selection and value still at the top of consumers’ minds, respondents currently find the most value in loyalty programs offered by grocery, drug, mass/big box, online-only and QSR/fast food retailers. This mindset is why brands and retailers like Walmart, Target, Kroger, Safeway, and Amazon are the specific programs named by shoppers. Respondents also referenced valuing the Walgreens, Kohl’s, Sam’s Club, Sephora, Starbucks, CVS, Costco, Nike and McDonald’s loyalty programs, to name a few. While discounts, free shipping and rewards are important perks, the responses revealed interest in a variety of benefits that will elevate the shopping experience and entice participation in both free and premium memberships. Most importantly, there is an opportunity to engage younger shoppers. Who better to target as long-term loyal customers?