Deloitte Shares Loyalty Trends and Best Practices for 2024

Deloitte research reveals that in addition to financial perks, consumers expect unique services and experiences from loyalty programs.
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To drive customer retention and loyalty, most brands and retailers continue to rely on purchase discounts (77%) and loyalty program points (61%), according to Retail TouchPoints research.

However, a Deloitte survey reveals that consumers’ loyalty program preferences and expectations are evolving. While financial benefits are still top of mind — largely thanks to inflation pressures and tightened household budgets — consumers are increasingly seeking services and experiences that truly reflect their journey and growing relationship with a brand.

The most significant shift in the loyalty sphere is consumers’ attitudes toward co-branded credit cards. Deloitte found that consumer interest in co-branded credit cards dropped 11% between 2022 and 2023. Additionally, less than 40% of Gen X or older respondents are looking to enroll in a credit card connected to a loyalty program. In some cases, they don’t even recognize the exclusive benefits these cards offer.

But there are other emerging opportunities for brands to differentiate and optimize their loyalty programs. Bobby Stephens, Principal at Deloitte Consulting and a leader in Deloitte Digital’s Retail & Consumer Products practice, shared insights to help guide retailers’ priorities in 2024 and beyond.

Paid Loyalty Programs Will Become More Prevalent

More than half (53%) of consumers pay to participate in a loyalty program, up from 32% in 2022 and 17% in 2021, according to the Deloitte Survey.

“The financial piece is important, where people get access to additional discounts, special prices or free stuff. There’s often a calculus in some programs where if you pay a certain amount a month, you automatically get a coupon for a certain amount per month,” Stephens said. “The hope is that you are driving traffic, driving attachment and other purchases that then drive up the lifetime value of that customer.”

Despite greater interest in paid programs — participation rates have more than tripled since 2021 — Deloitte found that these programs are not driving higher engagement rates. Brands and retailers can level up paid program participation and engagement by testing rewards and benefits that are substantially different from their free loyalty programs, according to Stephens. For example, Deloitte found that consumers across industries are more willing to pay for additional financial benefits, such as special pricing and personalized experiences.

“The other two big things are increased flexibility and enhanced services,” Stephens said. “Flexibility entails things like free shipping, no cancellation fees, extended return windows, all the things that make it much more convenient to shop with a brand or retailer. Or [it could be] similar to the hospitality industry where, if I commit to a paid program, you work with me differently as a member. Do I get upgraded or enhanced service [compared to] someone who shops with you just one or twice?”

Ease, Simplicity and Transparency will be the Foundation of Successful Programs

For most consumers, simplicity is the cornerstone of a successful loyalty program. In their minds, this entails two key attributes: 1. It must be easy for them to sign up for and participate in these programs, and 2. It must be easy for them to earn and redeem financial rewards. These were not only the most critical attributes for the second year in a row; their importance also grew year over year by 4% and 5%, respectively.

“We have seen that if you make [programs] too complicated, if you add too many tiers and you make it hard to calculate how much a purchase is worth in terms of loyalty points, customers really shy away,” Stephens said. “Brands and retailers need to think about how they can keep it simple; how they can make it easy to earn and redeem, while still being creative around the edges of the program to keep it fresh.”  

Consumers also will demand more transparency around how brands and retailers use their data to inform loyalty program tiers and perks. Their overall willingness to share personal information has fluctuated over the years: in 2021, 33% said they were willing to share their personal information, while 53% said the same in 2022. That number dropped slightly, to 48%, in 2023.

A major reason for this drop? Consumers don’t believe they’re receiving the personalized content and experiences they expect. “We are seeing this lower willingness to share at a time when consumers do not believe programs provide sufficient personalization,” the report stated. “This creates a catch-22 for some brands that need to deliver more personalized offerings with less consumer data.”

Another big piece of the puzzle: the lack of trust around data security and use.

“Consumers are getting more educated in the value their personal data provides to businesses,” Stephens said. “At a bare minimum, they will expect businesses to keep that data safe and use it responsibly. There are regulatory aspects of that, but we will see brands and retailers be more overt with the customer, showing them appreciation and acknowledgement that they’re sharing important data and, as a result, they’re giving them something back. Are the benefits of them sharing their data clear? Are you explaining what you’re able to unlock in your program because they shared certain categories of data?”


Consumers will Expect Tiers to Combine Financial Rewards and Value-Added Experiences

Consumers consider loyalty programs to be a value exchange. They expect clear and compelling financial rewards for the time, money and data they share with a brand.

“The vast majority [of consumers] still expect a financial reward or financial exchange, whether it be discounts or cashback points that can be exchanged for something over time. It is the bare minimum of a successful program,” Stephens said. However, Stephens noted that as consumers participate in different loyalty programs, they will increasingly seek more differentiated financial rewards and value-added services.

For example, more than 60% of consumers surveyed by Deloitte agree, or strongly agree, that status tiers allowing members to earn more rewards at higher levels are an important part of a loyalty program. Additionally, 62% agree or strongly agree that this is a valuable way to make consumers feel appreciated. Other notable benefits include white-glove service and access to upgraded or premium experiences.

Stephens has seen brands and retailers test these different rewards and benefits but not fully market them as part of a loyalty program. Instead, they first identify loyal customers by their shopping frequency and total spend, then directly communicate with them about these special benefits to determine their relevance.

“They’re experimenting with tiers, but not yet sharing with the customer or publishing these tiers externally until they feel like they have the right mix of benefits or [are] establishing the right transition points between each tier,” Stephens explained. “A lot of brands and retailers are reticent to publish tiers before they actually see how consumers interact with the program year over year.”

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