Why do so many people say ‘no’ to retailer loyalty programs?
Photo: @south_nostalgia via Twenty20

Why do so many people say ‘no’ to retailer loyalty programs?

A significant number of customers are just not interested in joining loyalty programs, according to a new study, a fact that to some suggests how retailers might engage that cohort.

A full 38 percent of consumers are not interested in joining loyalty programs due to their lack of perceived value, according to a study conducted by CFI Group and Radial. 

The study suggests that to get hesitant customers on board, retailers should offer faster delivery, personalized customer service options and more flexible returns. In the study, 63 percent of survey respondents said that the option of speedier delivery influences them to sign up for a loyalty program, 41 percent said that recognition as a loyalty member from a customer service associate would incentivize them to buy more and 55 percent said that multiple exchange options made them more likely to repeat purchase.

Incentivizing loyalty membership based on shipping and service-related perks offers an alternative to more traditional deal-oriented programs, which give customers discounts on specific products in return for membership. 

Restricting such perks merely to loyalty program members as the study suggests, however, might require a more nuanced approach. Many customers now see free shipping, easy returns and personalized customer service as table stakes for doing business with a retailer and would balk if a membership price was attached. Amazon.com extends its liberal and convenient return policy to all its users, for example, even though it has Prime, one of the most popular loyalty programs in retail. 

Getting customers on board with loyalty programs should be a priority, according to the study. It indicates that loyalty members have a greater rate of satisfaction and willingness to recommend a business.

In the case of Amazon Prime, loyalty membership also demonstrates a willingness to spend more, with members parting with more than double that of non-members, according to Fortune.

BrainTrust

"These kinds of value exchange relationships need to be perceived as a good bargain, just like deals on merchandise; they are evaluated the same way."

Liz Crawford

VP Planning, TPN Retail


"Loyalty programs, led by loyalty marketers and CMOs, have failed to innovate after nearly four decades."

Phil Rubin

Founder, Grey Space Matters


"Sometimes that simple concept is hard to execute, but now is the time for retailers to invest further, not regress back to price-based strategies."

Bill Hanifin

CEO, Hanifin Loyalty LLC


Discussion Questions

DISCUSSION QUESTIONS: What do you think are the reasons why many Americans choose not to join loyalty programs? What are your recommendations for getting people who are skeptical about these programs to join them?

Poll

41 Comments
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Mark Ryski
Noble Member
4 years ago

The key reasons people don’t join loyalty programs are because: 1.) there is low received value to the shopper, 2.) it’s too onerous/inconvenient to sign-up and 3.) it’s poorly executed, spamming customers with unwanted offers. There’s no question that effective loyalty programs can have a significantly positive impact on the lifetime value of customers and increase satisfaction, however a poorly conceived or executed program can have the exact opposite effect. The keys to an effective loyalty program are: simplicity for the customer, meaningful rewards and just the right amount of communications – preferably something the shopper can regulate.

Dick Seesel
Trusted Member
4 years ago

I can think of a few reasons:

  1. First, if the retail brand itself is not compelling, no amount of perks or extra discounts will provide an incentive to join a loyalty program;
  2. Many shoppers would rather concentrate their “perk collection” on a smaller number of loyalty cards already in their wallets, including reward credit cards;
  3. The more loyalty programs, the more complexity … some consumers would rather simplify the number of retailers they need to track and manage.

Maybe the most important reason is the first one. If retailers think that loyalty is generated just by price incentives (instead of added service and other benefits), they are making a big mistake.

Mohamed Amer
Mohamed Amer
Active Member
Reply to  Dick Seesel
4 years ago

Spot on, Dick!

Carol Spieckerman
Active Member
4 years ago

Oddly enough, the tool that would seem to take loyalty programs over the finish line may be inhibiting participation. Shoppers only want to use so many apps and retailers need to find ways to clearly articulate loyalty program benefits within the mobile environment and outside of it. As the article pointed out, with so many convenience capabilities becoming table stakes these days, retailers need to be honest about, and get creative with, value-add loyalty benefits. I’m not sure that all Amazon Prime members regularly think about the fact that they are paying for the benefits that Amazon offers to them. Yet receiving them sets the bar high for other retailers that may not get away with charging for them.

Nikki Baird
Active Member
4 years ago

When the programs are too complicated, or it’s difficult to track the benefits, I think that’s when people are more likely to just opt out all together. I think it’s also important to remember the “rule of seven”: people in general can’t hold more than seven things in their mind and that translates to loyalty programs too (as well as credit cards). If every retailer has a loyalty program, and consumers are only willing to participate in up to seven of them because that’s about all they can keep track of, then there are going to be retailers who are going to lose no matter how straightforward their benefits are. Rather than asking, “how do I get more consumers to sign up?” retailers need to ask “how do I make sure my loyalty program is the most important loyalty program to the consumers I care about having the most?”

Bob Phibbs
Trusted Member
4 years ago

Shoppers are on to the trick: join our loyalty program so we can mine your data. Those benefits to the retailer far outweigh the perceived value to the shopper.

I’m a United 1K loyalty member for one reason. If I get stuck in a snowstorm I know they’ll do anything possible to get me to my destination which they won’t do for non-loyalty customers.

A recent example was them paying over $400 for a cab ride to LAX for a different flight. Until retailers can give that much value, I’d say it’s an uphill climb to get shoppers to join when benefits are so unbalanced.

Richard J. George, Ph.D.
Active Member
4 years ago

As I have stated before in this space, loyalty programs per se make no sense. Let’s call them continuity of purchase programs. How do you become successful with continuity of purchase programs? Simple, be loyal to your promises to your customers. The article notes several factors that customers believe are important before they seriously engage in a long term relationship with a seller. These represent the ante. If you want loyalty in life, get a dog. If you want customers for life, meet their needs better than your competitor does and you’ve got a shot.

Liz Crawford
Member
4 years ago

Consumers are hip to the fact that loyalty programs benefit the retailer. Some are wary of feeling “used” to fuel the profitability of the business. Others feel that the benefits of the loyalty program simply aren’t worth the hassle of getting spammed.

These kinds of value exchange relationships need to be perceived as a good bargain, just like deals on merchandise; they are evaluated the same way.

Bob Amster
Trusted Member
4 years ago

Lack of exclusivity! People (not just customers) like to feel special. The loyalty programs that make the consumer feel special are the programs that will thrive. Special can mean a free gift, an invitation to a VIP event, a limited-offer product, etc., etc. Airlines offer different levels of loyalty members and that is yet another way to sell a program. Paid-membership has worked successfully for a small number of retailers as well. Paid membership also can make customers feel exclusive.

Gene Detroyer
Noble Member
Reply to  Bob Amster
4 years ago

Paid loyalty programs have worked well for one large retailer, too. Amazon Prime accomplishes exactly what loyalty programs are designed to accomplish. People pay for it and it has 101 million members.

Evan Snively
Member
4 years ago

#1 is trust, plain and simple.

Customers won’t open then door to a deeper relationship (especially one that requires them to provide more data) if they don’t trust your brand.

That said, trust can manifest itself in different ways – from having an alignment on social views, to having provided a past track record of good experiences, to simply making it abundantly clear what the value prop is of the loyalty program.

Rob Gallo
Rob Gallo
4 years ago

There are all sorts of reasons why consumers don’t join in addition to privacy issues: Too much loyalty clutter in their “wallets” already, not enough value from the program, it’s tied to a credit card they don’t want, it’s not a retailer they plan to shop often, etc. Retailers and other companies with loyalty programs need to design (or redesign) programs that offer compelling value and do an excellent job at quickly and clearly communicating that value. Sign up needs to be simple, fast and not intrusive. Then they need to (over) deliver on that promise.

Cathy Hotka
Trusted Member
4 years ago

The biggest turnoff is a loyalty program that requires a customer to literally buy in. What could be more off-putting than sale signs in Whole Foods advertising discounts for people who have paid for Amazon Prime?

Georganne Bender
Noble Member
Reply to  Cathy Hotka
4 years ago

That’s me with Barnes & Noble. You want me to give you $25 to get free shipping and discounts? I can get that anywhere for free.

Dr. Stephen Needel
Active Member
4 years ago

Maybe the question should be reversed – why do retailers seem to automatically think shoppers care about their loyalty program? And in many categories, everyone seems to have a program, which either negates the value for the retailer (it becomes a cost of doing business) and is not more or less likely to attract shoppers than a competitor. As everyone will say here, make it valuable and unique to the shopper or don’t expect them to care.

Neil Saunders
Famed Member
4 years ago

The reluctance to join loyalty schemes is twofold: there are too many of them and signing up and managing them can be a hassle and, alongside that, the perceived benefits are not good enough to persuade consumers. The fact that so many retailers seem to use loyalty membership as an exercise to build an email list which they then spam is not helpful either!

Shep Hyken
Active Member
4 years ago

Let’s start with three reasons:

  1. First, there are too many loyalty programs. It can be overwhelming for consumers to keep track.
  2. The loyalty programs offer minimal value. Often the loyalty program is a way to get an email address or mobile phone number to promote to. Consumers are overwhelmed with too many emails and messages.
  3. The loyalty program isn’t really a loyalty program. It’s a marketing or discount program. Big difference.

If retailers are to get more consumers to join their programs they must offer true value. And the best loyalty program of all is to create an experience that offers so much value that the customer wouldn’t want to do business with anyone else.

Jeff Sward
Noble Member
4 years ago

I used to join by default. Then I discovered that meant I was signing up for one or several spam emails per day. Ludicrous. The daily emails I still tolerate are for professional reasons. I want to see how this retailer walks and talks on a daily basis. For personal shopping reasons, please just give me a heads up a couple times a month. If I have signed up, then I like your store, your brand, your products. But I am not in the market for them every day. No need to be so needy.

Mohamed Amer
Mohamed Amer
Active Member
4 years ago

I think Dick captured the key reasons well! Certainly without a compelling brand or the right assortment, a loyalty program is a waste of time, effort, and money.

I would emphasize the need to reduce complexity. Just make it simple to understand and be rewarded. Don’t focus solely on the transaction with discounts; although appealing, they’re not differentiators or loyalty builders. Design a program around exclusivity, convenience, personalization, and ease of use that creates a value engagement that speaks to the individual customer and not an entire cohort.

Georganne Bender
Noble Member
4 years ago

41% of those surveyed said recognition from an associate would incentivize them to buy more. Come on. Who’s buying that?

A loyalty program must be transparent, easy to understand, and provide value – as in instant gratification, what’s in it for me value.

If you flash your loyalty card 100 times and still don’t earn anything, what’s the point? I stopped automatically joining loyalty programs because some of them are too hard to understand or they are full of perks I don’t need or care about. Keep it simple: spend a dollar, get a point – something you can explain in a sentence, not a tri-fold brochure.

Jeffrey McNulty
4 years ago

Many retail loyalty programs do not incentivize their offerings to create a compelling option to join. I do not see enough value, convenience, or savings from most loyalty programs to share my personal information.

When I think of engaging and personalized loyalty programs, Starbucks Rewards comes to mind. Their program is personalized, inclusive, and rewarding.

I am looking forward to seeing more retailers improve their loyalty programs in the near future.

Stephen Rector
4 years ago

The consumer expectation for a loyalty program is that they are getting some sort of value from it. Many of the programs are very complicated and take too much time for the associates to explain (if they try to explain at all!). Retailers need to keep it simple!

Lisa Goller
Trusted Member
4 years ago

Shoppers hesitate to trade their privacy for short-term perks like a modest discount. Also, data breaches affecting companies like Macy’s, Adidas and Saks Fifth Avenue make shoppers extra protective of their personal information. Even spectacular personalized service, exclusive deals and faster delivery won’t convince them to share their data.

Gene Detroyer
Noble Member
4 years ago

I am not sure why anyone would not sign up for a retailer’s loyalty program. You don’t have to do anything and if you get lucky you get a few discounts.

For me, the best loyalty programs are the airlines and hotels. In those cases it is not about the miles or points, it is all about the perks that go along with your level, including upgraded rooms, free lounge access, special check-in lines, 4 p.m. check out for hotels; for airlines upgraded seating or class, special check-in lines, club access, expedited luggage handling, early boarding and expedited security lines.

Cynthia Holcomb
Member
4 years ago

Loyalty programs have become email noise; a nuisance. Who has time or interest to track so-called loyalty rewards from multiple programs? Who has time to search their email inbox or go to a retailer’s website to search for their rewards? Time is much more valuable than almost all loyalty “rewards” with very few exceptions, which are rewarded only to mega-loyalists. Not to mention customers are concerned about the additional threat of privacy.

Bill Hanifin
4 years ago

If someone invited you to join their social club, you probably wouldn’t make that big commitment for just a free drink on the first night. Sadly the depth of the initial, not to mention ongoing, offer is just as weak for many loyalty programs.

Consider that we are asking our customers to take time to commit to “something” that is going to account for some of their time and require they give up personal data. To create the perception of fair value exchange, there’s got to be much more than “points.”

Retailers need to think about the unique brand elements that can be used to attract customers, and press in more deeply to create packages/bundles of in-store service and delivery that sets them apart from competitors. The loyalty program should be the icing on top of a solid offer and build trust over time, making more of a difference than periodic discounts.

Sometimes that simple concept is hard to execute, but now is the time for retailers to invest further, not regress back to price-based strategies.

Ralph Jacobson
Member
4 years ago

Since their inception, the vast majority of “loyalty programs” have been, and continue to be “mass, untargeted discount programs.” Combine services, which can often be of little or no cost to the retailer, along with targeted, relevant offers leveraging technologies available, to make people feel individual.

Ken Wyker
Member
4 years ago

I cringe every time I see stats suggesting that getting a customer to join a loyalty program will make them a better customer — it’s the other way around! Frequent shoppers are more likely to join a retailer’s loyalty program, so of course members are better customers than non-members.

It is all about value. The secret to expanding loyalty enrollment beyond your core customer base is to provide value that appeals to everyone, including your lighter (currently less loyal) shoppers.

Heidi Sax
Member
4 years ago

The rise of apps like Honey and Rakuten make it so much easier for consumers to save without having to enroll in loyalty programs that a.) stalk them and b.) provide no regular value or benefits. Aside from pharmacies, big box stores, and Amazon, how often are shoppers really patronizing these brands to make joining the program worthwhile?

Ananda Chakravarty
Active Member
4 years ago

Loyalty works when customers have already built a relationship with the retailer – either through familiarity, regularity, or reciprocity. Several of the folks on this thread have already highlighted many good reasons why people say “no” to loyalty – but the overwhelming culprit is value-add. Despite the many loyalty programs, customers don’t need to think about all of them at once and usually aren’t even thinking about loyalty unless there’s some way it’s making a sale better (lower cost, saves time, etc.) When I’m buying a new jacket, I’m not thinking about loyalty points or programs, but I might be thinking about a retailer if it’s nearby or I’ve gotten a great deal or if I have experienced super service there from a talented associate.

Loyalty programs need to be invisible and improve the customer’s experience. Moving this along is the only way to acquire and retain loyal customers – those who would buy from you before a competitor. Business 101.

Gib Bassett
4 years ago

Loyalty programs are usually presented as a “give to get” whereby there is a value exchange. If the consumer perceives less value from the “get” they won’t join.

Unfortunately for the retailers trying to grow their programs, the equation includes giving more than just an email address and some basic information. It includes giving you my attention and opening the door to more email in the already full inbox.

It might be a good idea to look at your loyalty program in two ways. One, think about your existing loyalty base. Each person has already given you something of value. Why not treat this as a treasure as opposed to a commodity to basically spam each week? If you really want me to do more than redeem a coupon, why not try a bit harder? Is it any wonder why loyalty program success examples are few? The ones that reportedly do best seem to have a few more dimensions to them.

The other way is to look at how to grow your program membership while reducing attrition. What are the reasons I should spend time giving you my information, looking at your emails, downloading your application? Is it really just to get a few dollars off a purchase which may be architected to give the retailer the most margin – like pushing an offer on a shirt but not the big brand shirt, or an offer for dollars off my first purchase of a service that includes an ongoing fee?

None of this sounds interesting, certainly not enough to bank on. Instead of “loyalty programs,” most of these should just be called “communication programs” because they inspire nothing resembling loyalty in the brand sense.

Most only feed consumers’ desire to save money, and we all know consumers that demonstrate loyal behaviors (I love Nike, or I love Apple, or I love Amazon) have a limited consideration set across categories and price is not usually the switching trigger.

What this all points to is that if retailers really want a “loyalty program,” it needs to be something that encompasses more than emails, apps and offers. It should be a living example of the retailer’s compelling brand identity. When you don’t have that identity in your pocket, what are you left with? Today’s loyalty struggles, in my opinion.

Phil Rubin
Member
4 years ago

Loyalty programs, led by loyalty marketers and CMOs, have failed to innovate after nearly four decades. There has long been a “sea of sameness” that retailers continue to exacerbate, reinforcing at least one definition of insanity: doing the same thing over and over and expecting a different outcome.

Loyalty programs are not the same as customer loyalty or customer marketing, As presented by most retailers, these programs are nothing more than expensive platforms for promotion. Even worse, marketers fail to use the data to drive more relevance for their brand beyond promotion. It’s a recipe for failure and it’s not surprising (the data has been showing this for years now) that consumers increasingly realize that their expectations will be unmet.

There are exceptions of course but it takes customer focus, a risk tolerance that accompanies innovation, a trusted brand and leadership. That leadership usually starts at the C-level and without that, retailers will continue to largely fail at loyalty marketing in general, even more so at loyalty programs.

Ken Morris
Trusted Member
4 years ago

The customer doesn’t see the value and that needs to change before we see a “yes.” Making participation frictionless is one step, like Amazon does with Whole Foods. Another would be a twist on the CVS model of CVS bucks, but before checkout as opposed to after checkout with a receipt that is longer than your height.

There needs to be perceived value and clearly we have failed to alter the perception.

Sterling Hawkins
Member
4 years ago

A lack of perceived value — you nailed it in the second sentence. Loyalty programs are a value exchange: I give you some of my personal information, you give me offers, personalization, content, etc. that’s valuable to me. If it seems like retailers are asking for more than they’re giving, it’s bound to be a low performing program. The best way to handle skeptics? Show them real value delivered to other customers and their communities. Word spreads, especially these days.

Bob Andersen
Bob Andersen
4 years ago

Most loyalty programs are created to reward the 20% of customers that buy 80%. The other 80% aren’t interested because the value of the rewards at their purchase levels are not worth the bother.

Brandon Rael
Active Member
4 years ago

The modern-day customer is much more aware of retailers’ data collection practices necessary to drive an increased level of personalization. Unless the brand or retailer provides a value-added experience, in the form of exclusive member only offers and other advantages that aren’t available to the more conventional customers, then there is no point to join yet another loyalty program.

There are also instances where loyalty programs are disguised as discount programs or lower cost of fulfillment strategies, and customers already have more than enough of that type of program. Customers should feel as though the retailer “gets them” and proactively anticipates their needs based on their prior shopping experiences.

Customers do enjoy a sense of belonging, and being part of a community of shoppers. It’s a delicate balance to get right, however, it could yield significant benefits for both customers and brands.

Kenneth Leung
Active Member
4 years ago

If the shopper doesn’t think of repeat purchases, a loyalty program doesn’t make sense for them to go through signing up knowing they will never accumulate enough for a reward and just get spammed with discount offers. Retailers need to think through what drives repeated purchases in terms of communications and behavior then build a program around to reinforce the behavior. Building a loyalty program should not be used to drive repeat behavior with discounts.

Brian Ross
4 years ago

These numbers are not surprising and are consistent with retail loyalty trends that we have seen over the past 20+ years. Typically, as a general rule, use the “third/third/third” model:

  • One-third of customers are highly engaged and actively participate in programs (“avids
    “ or “superFans”);
  • One-third of customers are selectively engaged – they participate and their engagement ebbs and flows based on value delivered over time;
  • One-third of customers are “unengaged” – and either don’t participate or participate very passively.
Trinity Wiles
4 years ago

These are some reasons why customers don’t join loyalty programs…

1. They aren’t deep & habit-forming
2. They aren’t being purposeful
3. They aren’t increasing customer expectations

Let me elaborate. Customers want instant gratification. Most loyalty programs don’t do it for them. Loyalty programs aren’t being purposeful enough. There needs to be a purpose behind every feature or it’s useless. Retailers need to use loyalty programs to drive in-store traffic. Customers are 7X more likely to purchase if they visit in stores vs. online. Creating a feature that would drive them in stores is purposeful and effective. Lastly, loyalty programs must shift to adapt to users buying patterns. For example instead of giving larger rewards, giving smaller rewards more often may adapt to the consumers’ buying pattern and reinforce that instant gratification.

David Slavick
Member
4 years ago

The question shouldn’t be why do so many people do not join. It should be why so many join and then stop participating. I do agree that personalized service, recognition and unique compelling rewards is essential for those brands that can support this type of mix. Unfortunately, too many brands put out a program and their business dynamics do not support what today’s shopper demands. This gap is ever widening as expectations grow. I suggest for those brands that have failing programs: re-evaluate your business case and operating model. Look inward first and overcome your constraints. Then listen and learn from your customers who are inactive, or simply saying thanks, but no thanks.

Raj Sangha
Raj Sangha
4 years ago

One of the main misconceptions retailers have with their loyalty programmes is that they’re offering their customers something in exchange for nothing. But personal data like email addresses, phone numbers and physical addresses are NOT free — and consumers know that.

More often than not, consumers are bombarded with sales emails and calls, often for very little value on their end.

Retailers need to earn back consumers’ trust with complete transparency and with engaging rewards that people actually care about.