The Top Loyalty Programs of 2023
Retail loyalty can be fickle, particularly amid a difficult environment. For example, while mammoth retail marketplace Amazon made the list last year for having one of the largest loyalty membership counts — and the overall segment does continue to grow (now at over 200 million globally) — data shows its U.S. numbers are down.
According to Insider and estimates from Consumer Intelligence Research Partners (CIRP), Amazon ended last year with 168 million Prime members in the U.S., down from 170 million at the end of 2021. This is the first time that the company generated no annual Prime growth in its largest market, per CIRP.
However, Brian Olsavsky, chief financial officer at Amazon, shared during the company’s last earnings call, that while membership does vary by geography, “Prime membership remains strong and so has the dollars purchased per Prime member.”
How has loyalty changed over the last year? As many shoppers face economic hardship, loyalty isn’t as strong as it once was. In fact, according to research by marketing platform Blackhawk Research, as of July 2022, 25% of consumers said they were spending less on the brands they usually buy from.
It is especially difficult as more and more retailers introduce loyalty programs as a way to better connect with their audience. This is creating a glut in the market, and not all offerings stack up. According to McKinsey & Company, on average, a U.S. consumer belongs to 17 loyalty programs, and engagement is low with less than 50% actively participating.
According to Garter, there’s an increasing focus on the supply chain — both from the end-consumer perspective and from a retailer’s point of view. Consumers demand expedited delivery, while retailers are heavily investing in fulfillment technology to overcome economic and environmental challenges.
Per Gartner’s Consumer Priorities 2022 Survey, shipping benefits make up the third most preferred loyalty benefit that consumers want from brands. More consumers are paying attention to on-time delivery, stock-outs, accurate order fulfillment, convenient returns, and more. McKinsey & Company reports that 50% of consumers said they will switch product, brand, or retailer when faced with shortages.
Retailers seem to recognize the building crisis. In fact, RIS’ 2023 Retail Technology Study found that 19% of retailers are investing in technology to accelerate fast, flexible shipping and fulfillment capabilities.
“Understanding customers’ needs and expectations for their service experience is integral for improving loyalty and creating customer value, especially when organizations are up against economic headwinds,” said Jonathan Schmidt, senior principal, advisory in Gartner’s customer service and support practice, in a statement. “Executing on this vision requires investment in customer data and analytics, knowledge management, and an enduring partnership with IT.”
According to a blog from Debrup Jana, senior director analyst at Gartner Supply Chain, a successful loyalty program relies on personalization, creating frictionless unified commerce experiences, and aligning with the values of consumers.
Consumers are focused on cost savings in order to balance their budgets against skyrocketing inflation. Retailers need to keep subscription pricing and discount models low to better resonate with today’s wallet-conscious consumers.
Getting products to consumers quickly and efficiently, and without sacrificing quality and cost, should be a top priority. This may mean investing in supply chain innovation in order to boost loyalty retention.
Digital is more intertwined into the loyalty experience than ever before. Retailers should strongly consider whether their current offerings are up to par to what competitors are offering, especially as more brands dip their toes into the metaverse, Web3 experiences, interactive apps, and more.
Even the biggest membership providers are at risk of losing out on valuable, high-spending customers. This environment gives small- and mid-level retailers the opportunity to catch up and make a name for themselves in contrast to high-budget companies despite the volatile landscape.