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Chapter 2: Loyalty is the new brand differentiator

Brands and retailers are finding ways to drive customer lifetime value in an increasingly complex and competitive landscape.

November 2021 | 5.5 minutes

Michelle Grant
Senior Manager, Strategy and Insights, Retail and Consumer Goods

Chapter 2: Loyalty is the new brand differentiator

Shoppers say incentives like free shipping (75%), simple and/or free returns (60%), and loyalty or rewards programs (56%) all increase their likelihood to buy. Taking retailers out of the equation, when it comes to the top traits of shoppers’ favorite brands, loyalty programs top the list. Shoppers also seek tailored engagements that are genuine and meet them on their terms, such as exclusive shopping experiences, early access to products, and sustainability.

1,600

shoppers surveyed worldwide

1,025

retail executives surveyed worldwide

Top five traits of shoppers’ favorite brands*

Offers a loyalty program

Offers exclusive shopping experiences and/or promotions

Caters to unique needs

Engages in the places they prefer, like over email, social media, shopping app, etc.

Offers early access to new products and has sustainable business practices [tied]

*Multiple responses allowed. “Brands” is defined as those that embrace D2C selling.

Spotlight on loyalty programs

In 2021, shoppers belonged to an average of 4.3 loyalty programs. While points-based programs are the most popular type today, data suggests that younger generations crave experiential programs that instill a genuine and authentic connection.

Millennials and Gen Zers value exclusive access to limited products and experiences, nearly two times more than Silents/Baby Boomers when it comes to loyalty programs. They are also more likely to join a fee-based loyalty program. Nearly one-third of Gen Zers report belonging to one, such as Amazon Prime or DoorDash’s DashPass.

Shoppers overall belong to the following types of loyalty programs:

Shoppers are interested in taking various actions in exchange for perks

Beyond earning special discounts and free shipping, many shoppers are interested in rewards for engaging and promoting the brand or retailer. This includes downloading an app (57%) or writing an online review (47%). One in three shoppers are willing to go so far as to share the brand on social media in exchange for rewards.

Chart that shows actions shoppers are willing to take to earn rewards

Shoppers are willing to exchange personal information for tailored rewards

Shoppers are also interested in providing certain personal information in exchange for relevant experiences and benefits. Sharing their birthday is the most common information that they are willing to share, but shoppers are also interested in providing their sizes and style preferences.

Chart that shows information shoppers are willing to provide in exchange for rewards

Data suggests that shoppers’ expectations around loyalty programs are changing and that brands and retailers have the opportunity to evolve loyalty programs in terms of types of rewards as well as actions taken to earn them.

“The path to purchase has become fragmented and immersive. Brands must develop one-on-one relationships with consumers across platforms such as social media, messaging apps, and livestreaming to remain relevant.”

Angelica Munson, Global Chief Digital Officer, Shiseido

Gen Zers and Millennials are 2x more likely than Gen Xers and Silents/Baby Boomers to discover brands and retailers at the edge.

Chapters

01

Shoppers continue to define the new rules of engagement

02

Loyalty is the new brand differentiator

03

Brands and retailers are evolving their customer experience strategies

04

The store will become central to a unified shopping experience

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Discover where retail executives are investing in order to meet changing shopper expectations.

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NEXT CHAPTER

Trend #1: Shopping journeys get more complex

Between 2019 and 2021, three types of digital channels grew transaction share by nearly 40%: brand websites and apps, retailer websites and apps, and online marketplaces. Emerging channels like delivery apps, social media, and messaging platforms have also become serious commerce players, with their share of transactions increasing more than 20%. (Rate of change = (2021-2019)/2019)

Three types of digital channels grew transaction share by nearly 40%: brand websites and apps, retailer websites and apps, and online marketplaces.

With the variety of channels continuing to increase, shopping journeys have gotten more complex. There is an acceleration of “shopping at the edge,” where consumers start — and even complete — the shopping journey outside of a brand or retailers’ physical and digital spaces.

Angelica Munson Global Chief Digital Officer, Shiseido

“The path to purchase has become fragmented and immersive. Brands must develop one-on-one relationships with consumers across platforms such as social media, messaging apps, and live streaming to remain relevant.”

Angelica Munson Global Chief Digital Officer, Shiseido

Social media, influencers, and messaging apps are the most popular methods for product discovery. When it’s time to make a purchase, mobile wallets, email, and social media are the top digital destinations. And when shoppers reach out for customer support, 28% turn to chatbots and 23% use social media.

Associate reviewing store inventory on an iPad

Social media, influencers, and messaging apps are the most popular methods for product discovery. When it’s time to make a purchase, mobile wallets, email, and social media are the top digital destinations. And when shoppers reach out for customer support, 28% turn to chatbots and 23% use social media.

Trend #2: The store goes digital

While transactions through brick-and-mortar stores decreased 27% between 2019 and 2021 according to our research, the store still plays a critical role in the shopping journey. In fact, 82% of the $23 trillion* worth of sales occurred in physical locations in 2020. The top reasons shoppers visit a physical store are to touch and feel the merchandise, access purchases immediately, and avoid shipping fees.

However, many shoppers are blurring the lines between digital and physical channels while in the store. For example, nearly one in three shoppers have researched a product online using a mobile device while in store, and one in four have scanned a QR code to learn more about a product.

In response, brands and retailers are unifying the in-store experience with a growing number of physical and digital touchpoints.

The role of the associate is evolving as well. During the height of the pandemic, associates went from greeting, scanning, and bagging to becoming customer service agents, virtual stylists, pickers and packers, and brand influencers. Many of these responsibilities are here to stay, which makes the role of the store associate more diverse, strategic, and appealing.

“Store associates are our biggest brand ambassadors. We must do everything we can to make them more productive, empowered, and happy.”

John Hazen Chief Digital Officer, Boot Barn

Trend #3: The loyalty game reaches a new level

Shopper expectations around loyalty programs are evolving. While points-based programs are the most popular type today, data suggests that younger generations are craving experiential programs that instill a genuine and authentic connection. Millennials and Gen Zers value exclusive access to limited products and experiences nearly two times more than Silents/Baby Boomers when it comes to loyalty programs.

Millennials and Gen Zers value exclusive access to limited products and experiences nearly two times more than Silents/Baby Boomers.

Shoppers are also interested in earning rewards for more than just transactions. They are willing to take actions such as downloading an app (57%) or writing an online review (47%) and exchanging certain personal information — like their birthday (67%) or phone number for text messages (51%) — for more personalized experiences and benefits.

This data indicates that brands and retailers have the opportunity to revamp their loyalty programs in terms of types of rewards and actions taken to earn them.

Trend #4: Retailers and brands accelerate unified shopping experiences

While 66% of customers expect companies to understand their unique needs and expectations, only 32% of retail executives say they have the full ability to turn data into personalized prices, offers, and products in real time across channels and touchpoints. A big reason why? The average retail organization uses an estimated 44 different systems to engage customers across touchpoints.

The average retail organization uses an estimated 44 different systems to engage customers across touchpoints.

To overcome these challenges, retail executives are taking a threefold approach:

Hiring more data scientists

“Data’s important, but we’re using it in places that are not accessible, and in today’s digital transformation, it needs to be there for everyone.”

Karen Beebe CIO and SVP, Operations of vineyard vines

Adopting a unified engagement platform

Fifty-five percent of retail executives say their organization is in some form of the planning stage for this type of platform, which enables retailers to access and operationalize customer data across marketing, commerce, and service.

of retail executives say their organization is still in the planning stage for a unified engagement platform.

Upgrading the point-of-sale (POS) technology

The next-generation POS will become an integral component of a unified engagement platform, with the majority (54%) of retail executives planning to replace their legacy system with a cloud solution by 2024.

of retail executives plan to replace their legacy POS system with a cloud solution by 2024.

Get more insights in the Connected Shoppers Report

These findings are just a snapshot of the trends ushering in the age of unified shopping experiences. Read the Fourth Edition of the Connected Shoppers Report now to dive deeper into what’s impacting shopper expectations and see how brands and retailers are responding.

About the Author

Jill Wagner, Editorial Lead - Senior Manager

Michelle Grant
Senior Manager, Strategy and Insights, Retail and Consumer Goods

Michelle Grant is a seasoned researcher who helps global organizations build the future of their business. At Salesforce, she blends data and analysis to create thought-provoking content that helps companies understand how new technologies will impact their business.

More Resources

State of the Connected Customer

Report

State of the Connected Customer

The Retailer’s Guide to Customer Loyalty

Read why high performing construction firms are investing in digital article

Guide

The Retailer’s Guide to Customer Loyalty

The Shopping Index

Research

RESOURCE CENTER

Chapter 2: Loyalty is the new brand differentiator

Brands and retailers are finding ways to drive customer lifetime value in an increasingly complex and competitive landscape.

Chapter 2: Loyalty is the new brand differentiator

Top five traits of shoppers’ favorite brands*

Spotlight on loyalty programs

Shoppers are interested in taking various actions in exchange for perks

Shoppers are willing to exchange personal information for tailored rewards

Shoppers continue to define the new rules of engagement

Loyalty is the new brand differentiator

Brands and retailers are evolving their customer experience strategies

The store will become central to a unified shopping experience

Chapter 3: Brands and retailers are evolving their customer experience strategies

Trend #1: Shopping journeys get more complex

Trend #2: The store goes digital

Trend #3: The loyalty game reaches a new level

Trend #4: Retailers and brands accelerate unified shopping experiences

Hiring more data scientists

Adopting a unified engagement platform

Upgrading the point-of-sale (POS) technology

Get more insights in the Connected Shoppers Report

About the Author

More Resources

State of the Connected Customer

The Retailer’s Guide to Customer Loyalty

The Shopping Index

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