Digital channels are playing a more important role in the way customers interact with loyalty programs but shoppers are also concerned over the security of their data, according to a new Australian study.
The study For Love or Money 2019, commissioned by The Point of Loyalty, surveyed 1,000 Australian consumers who are members of at least one loyalty program.
It found there has been a clear decline in the interest from Australians interacting with their loyalty programs via a traditional card.
While the majority of Australians (58 per cent) still prefer to interact with a program via a traditional loyalty ‘card’, this is significantly lower than the 81 per cent preference for a card as identified in the 2017 study.
At the same time, preference for various digital interactions for example, mobile apps and payments integration, has increased significantly since 2017.
Now in its seventh year the researchers added a new section to the report addressing consumer attitudes towards data and privacy in relation to loyalty programs.
The top three concerns for customers when handing over their information are: security – knowing how secure their data is; use – knowing how their data is used and reputation – the reputation of the company asking for their details.
Over half (52 per cent) of loyalty program members are concerned about loyalty programs being hacked or subject to fraud.
“With numerous data breaches being reported world-wide and some on loyalty programs such as Dunkin Donuts – DD Perks and Marriott’s program, loyalty programs are at a pivotal point with member data protection, collection and use,” said Adam Posner, report author and CEO of The Point of Loyalty.
“There is no evidence that consumers are signing up to fewer programs due to concerns over security and fraud. However, the research reveals that members are concerned and therefore brands or businesses with programs who are transparent with why they collect and how they use the data have a greater opportunity to build trust and hence increase program interaction.”
Despite concerns over security, the research found shoppers are still highly engaged with loyalty programs they believe provide them value. 62 per cent of members said they take advantage of most of the rewards and benefits available through their programs, up from 54 per cent in 2015.
“From what I can see in the industry as well as from previous research, programs are making it easier to redeem rewards. An example of this is where flybuys, one of Australia’s largest programs, automatically prompt members at POS in store when they have reached a reward threshold. This means the instant redemption at checkout is seamless and immediate.”
The research also explored the value loyalty programs provide to retailers. It found 28 per cent of members indicated they have purchased something they didn’t really need in order to earn points or maintain program benefits. This has increased from 16 per cent of members when first benchmarked in 2015.
Respondents identified the ‘earn rate’ – ‘I wasn’t earning points/ rewards fast enough’ as the number one reason for abandoning a loyalty program.
The researchers also ranked the Australian loyalty programs most mentioned unprompted by members, as ‘doing a very good job’.
Supermarkets and airlines topped the list, while Mecca’s Beauty Loop and Cinebuzz Rewards entered the list for the first time.
2. Woolworths Rewards
3. Qantas Frequent Flyer
4. Virgin Velocity
= 5. Priceline Sister Club
= 5. MyDanMurphy’s
6. Cinebuzz Rewards (New to ranking)
7. Boost Vibe Club
8. Mecca Beauty Loop (New to ranking)