Across the globe and over the past two decades, retailers have attempted to build customer loyalty through rewards programs.
Over time, the proliferation of these programs grew to become a marketing staple customers became accustomed to — so much so that it was questionable whether these programs were effective in building any real loyalty at all.
Analytics firm eMarketer found that membership in U.S. retail-loyalty programs alone had grown to more than 1 billion by June of 2014, while a report by Bond Brand Loyalty at that time found that monetary rewards were the most important benefits for program members.
But how did it evolve exactly? And how can companies reshape programs to make them more impactful?
Initially, traditional retailers were among the early adopters of these programs. Customers were rewarded after reaching a certain spending threshold, or they received points that were redeemed in the form of gift certificates or gift cards.
These programs then evolved to not only reward spending but also recognized customers for buying certain products. In some cases, customers were rewarded for buying products they were already using. In other instances, customers earned points for purchasing new items that they had not previously bought.
Faced with the continued onslaught of rewards programs, some unlikely partnerships took shape. Retailers and companies from outside of retail, such as airlines, utility companies and insurance providers, among others, partnered to provide customers with rewards for their day-to-day expenses, all under one program.
The challenge for retailers and other businesses continues to be in offering a rewards program that stands apart from the rest and truly provides customers with real benefits other than discounts.
This trend began with health companies providing discounts on insurance premiums by encouraging employees to take a flu shot during the flu season, having an annual physical and taking health assessments.
Pharmacies have embraced this approach and now reward customers for following and exhibiting healthy habits. Walgreens’ Balance Rewards program is a good example: Walgreens customers earn Balance Rewards points for setting and achieving goals tracked daily. Individuals can earn points for tracking physical activity such as walking, running or cycling. They can also earn points for making healthy decisions such as monitoring their blood and glucose levels and quitting tobacco. They can track their points by linking to an app or device.
A reason why this program is gaining momentum with customers is because it actually rewards people for doing things that are good for them.
Retailers may find opportunities to evolve their existing programs with the likes of these new wellness programs, which focus on promoting a healthy lifestyle. With fresh-food departments growing and access to pharmacies inside the store, grocery retailers can develop programs that make them the perfect destination for health and wellness. For non-food retailers, health-and-wellness programs can be connected to purchases of athletic apparel and fitness equipment, as well as award points for using that equipment via data tracking native apps.
They may reward customers who buy healthy items or encourage customers to earn points by logging into and accessing the health notes that are provided at the retailers’ kiosks or tablets near the health-and-wellness section of the store. They could even give customers points by having them consult a nutritionist in store who helps them pick out the right types of food to purchase in the aisles.
The key to developing health-and-wellness programs that resonate with today’s shopper is to make the engagement and reward meaningful, particularly with Millennials, who have an estimated combined global spending power of more than $2.5 trillion, according to industry estimates.
Millennials prefer personalized products and service experiences, and they want to feel recognized for their achievements and beliefs. This is important for retailers to know because Millennials are more likely than any other group to respond to loyalty programs, Aimia, a global leader in loyalty management, found in a recent survey.
Their research indicates that 80 percent of Millennials participate in some form of a loyalty program. And, according to a consumer-insights analysis by Canadean, today’s Millennials in 2025 will be faced with key health issues, including combating the negative effects associated with the overconsumption of protein, high stress and diabetes. Health-and-wellness programs today can help speak to this core group for years to come.
Kristen Baird is the senior director of insights and analytics at Interactions Marketing, a global retail solutions and experiential marketing firm for grocery retailers and brands. She has 20 years of retail experience, creating marketing and merchandising strategies to connect customers with brands.