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Loyalty Program Usage Drops Significantly During the Pandemic: Study

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A new consumer survey finds that loyalty program usage has not yet returned to normal in Canada. 

The fifth edition of the LoyalT study, by Leger and R3 Marketing in collaboration with Dialog Insight, said that in 2018, 87 per cent of members regularly presented their loyalty cards. Since the pandemic, 69 per cent have done so.

Although Canadians are members of more programs (13.5 programs in 2021, compared to 10 in 2020), only 53 per cent of them are actually used, explained the study.

LoyalT 2021 Ranking

“Loyalty programs are being challenged by new consumer behaviours as well as the impact of COVID-19. Loyalty programs are maturing, and only the best will remain relevant and profitable,” said Hans Laroche, Partner at R3 Marketing.

Hans Laroche

“In terms of frequency of shopping we still don’t see a return to the normal. What the retailers are seeing in terms of frequency, we’re not back to the level that we had before the pandemic and it shows in loyalty programs because the frequency dropped.”

He said the reason for the increase in more programs is because consumers have changed brands and retailers over the last two years. 

“It’s also easier to join a program than it was like five or six years ago or 10 years ago when you had to fill out a form. Now it’s mainly with the mobile app, it’s online, and they just ask for your email. So it’s quick,” added Laroche.

Image: Proxi Extr

Anne-Marie Delisle, Senior Research Director at Leger, said while consumers are going shopping less frequently than prior to the pandemic their baskets are bigger.

Anne-Marie Delisle

“They spend a lot. They’re doing like shopping lists. That is still possible to see this kind of behaviour since the pandemic. They are using their cards. Last year we saw some people that were saying that they were not showing the cards, they just wanted to pay and get out of the store quickly. Now, they’re using a little bit more their cards. Using their hands. They’re not afraid like last year to show their card to get points or maybe they have the cards on their phone,” said Delisle.

The LoyalT study said there is a direct correlation between content personalization and the program’s ability to modify the purchasing behaviour of its members (more frequent visits and annual purchases). The same is true for the correlation between the perceived generosity of the program and the impact on changes in purchasing behaviour.

The report said the generosity of a program is based on two dimensions: the accumulation of points on total purchases (base points) and the possibility to obtain additional points related to engagement (using the mobile app, participating in a contest, writing a review or giving a rating). Therefore, it is becoming essential for a brand or retailer to understand its customers and their purchasing behaviour, and to use this data to personalize the content offered, which, when relevant, adds value for members, added the study.

Image: Chipotle Loyalty Rewards

“We’ve known this for many years. In fact, what we’ve known is the two main factors that will drive behaviour change the first one is the generosity of the program. So the capacity to accumulate points rapidly and to exchange points rapidly,” said Laroche.

“But also the personalization and the relevance of the content. Those two factors are directly correlated to the change in behaviour. But what is interesting is they have the same weight. So now content and relevance of content and personalization is as important as generosity in terms of the ability of a program to increase your frequency or concentration of purchases.”

Laroche said high frequency retailers tend to have better results in the LoyalT study – gasoline stations, pharmacies, supermarkets.

“But we’re seeing now more and more for example restaurants and specialized restaurants like McDonald’s, Starbucks and also we’re more and more traditional dining restaurants like Chipotle. Those programs are getting to be more and more popular,” he said.

Laroche said three factors drive the loyalty score – the ability of a program to modify the behaviours; the engagement into the program; and the ‘affection’ index measuring how much consumers like the program. 

The 10 Best Loyalty Programs in Canada according to the study are:

  1. Chipotle Rewards
  2. Proxi Extra (Harnois Energies)
  3. PC Optimum (Loblaws)
  4. Milliplein (EKO)
  5. Starbucks Rewards
  6. Irving Rewards
  7. Piece of the Pie Rewards (Domino’s Pizza)
  8. Inspire (SAQ)
  9. PC Optimum (Esso)
  10. Metro & moi (Metro)

Some highlights of the study include:

  • 47 per cent of members primarily use a mobile device to view program communications. This is a five per cent increase from 2020;
  • 22 per cent of 35-54-year-olds say they often participate in a program’s gamification activities. This is similar to 18-34-year-olds, 26 per cent of whom participate;
  • 44 per cent of respondents are members of Amazon Prime. In two years, the program has seen a growth of almost 20 per cent in membership.

Article Author

Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior National Business Journalist with Retail Insider in addition to working on his own as a freelance writer and consultant in communications and media relations/training.

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