Loyalty Program Statistics - 2024 Data and Reports

Customer loyalty programs not only offer benefits to loyal customers who regularly shop with a particular brand, but they also help companies hold onto all-important repeat business.

Typically, customer loyalty programs offer incentives to customers who make repeat purchases with a particular business. These incentives often include discounts, free gifts, and exclusive access to sales and new products.

We've put together some of the latest loyalty program statistics, alongside insights from our own research to find out how people use loyalty programs and how effective they are for companies.

Key Statistics

• Nine in ten people (94.3%) are members of at least one customer loyalty program that offers rewards, discounts, or other incentives.

• 90% of companies have a loyalty program of some kind including McDonald's, Sephora, Walmart, and Starbucks.

• The average person is a member of 7.5 different customer loyalty programs.

• 95.3% of loyalty program users say that being part of a company's loyalty program makes them more likely to shop with that company over others.

• The top reason (37.1%) people use loyalty programs is to get discounts on products.

• One-third (33.3%) of people who don't use loyalty programs say they don't spend enough to get the rewards and they don't want to share their personal information.

• Just over half (53%) of consumers paid for a customer loyalty program in 2023.

• Points-based programs are the most popular with 37.1% of loyalty program users saying they like this format the most.

• Globally, the Loyalty Management market size was valued at $10.86 billion in 2023 and is predicted to reach $23.69 billion by 2028.

How loyalty programs work

Typically, signing up for a company's loyalty program will give the consumer benefits for purchasing from or engaging with the company. The process can go something like this:

• You buy something or engage with a company

• They give you the option to sign up to their loyalty program

• You sign up either by providing your information or through your existing account

• You receive rewards, points, or discounts by making more purchases

Loyalty programs benefit the consumer by giving them free items or discounts on purchases, and they benefit the company by encouraging consumers to make more purchases with them.

Loyalty program market size

The global Loyalty Management market size was valued at $10.86 billion in 2023 and is expected to reach $23.69 billion by 2028, with a Compound Annual Growth Rate (CAGR) of 16.88%. [1]

One study found that 90% of companies have a loyalty program of some kind, including McDonald's, Walmart, Starbucks, and Sephora. [2]

Each person uses an average of 7.5 loyalty programs

Our research found that 94.3% of Americans are members of at least one loyalty program.

The average person is signed up to 7.5 loyalty programs, with over half (57.8%) saying they are a member of between 4 and 9 of these programs.

Types of loyalty programs

Not all customer loyalty programs are the same and there are a few different formats that these programs can take, each offering a different kind of benefit or way of delivering benefits.

Let's take a look at some of the most common types of loyalty programs:

• Points-based - These involve customers earning points with every purchase they make, often 1 point per specific amount spent. These points can then be converted into vouchers or discounts on future purchases.

• Tier-based - These involve tiers like Bronze, Silver, and Gold, each with a different level of benefits. Usually, you'll move up the tiers as you spend more, allowing you to earn more benefits.

• Subscription-based - Typically involves paying a monthly or annual subscription fee which gives access to special benefits like discounts or other incentives.

• Mission-based - Involves customers having to complete certain tasks like commenting on a social media post to receive a reward in exchange.

• Value-based - Companies will donate to a particular cause for every purchase made, for example planting a tree or donating clothing to a local shelter.

• Community-based - Gives members access to exclusive community forums where they can engage with other members.

Points-based programs are the most popular among consumers

Of the main types of customer loyalty programs, points-based programs are the most popular with 37.1% of people saying they like this kind the most. This is followed by mission-based programs (34.2%), and subscription-based programs (33.5%). Tier-based programs are the least popular among consumers, but 29.5% still said these are their most preferred platforms.

Most popular industries for loyalty programs

The use of loyalty programs varies by industry, and customers are more likely to join one of the programs with certain types of business, and less so with others.

Health and beauty is the most popular loyalty program industry

The health and beauty industry is the most popular for loyalty programs with over one-third (37.4%) of people signing up to one with a brand in this industry. This aligns with other research as one brand in this space, Ulta Beauty, generates 95% of its sales from members of their loyalty program. [3]

Other industries in which people most commonly use loyalty programs include grocery shopping and supermarkets (34.6%), hotels and hospitality (34.2%), and clothing and apparel (32%).

Why do people use loyalty programs?

Companies offer many benefits and incentives to loyal customers by way of loyalty programs that allow members to access exclusive rewards, but which of these rewards are most important to consumers?

37.1% of people use loyalty programs for discounts

Discounts on products are the most common reason that people use loyalty programs with 37.1% of users saying this was one of the main reasons they use them. This is followed by free rewards (36.8%), and early access to new products (30.8%).

Delivery options like unlimited free shipping came lower on the list at 28.3%, however, three-quarters (75.3%) of shoppers say that free shipping impacts their decision to make a purchase.

Do loyalty programs impact people's buying decisions?

Being part of a loyalty program can make people feel closer to brands, and encourage them to make purchases with these brands rather than competitors.

Loyalty programs influence purchases for 95.3% of people

We found that being part of a brand's loyalty program made 95.3% of people more likely to purchase from that brand over others. 91.2% of people also say they are more likely to buy from brands that offer a loyalty program, compared to brands that don't.

The majority of loyalty program users (84.5%) also say that they would keep using a brand because they are part of the loyalty program, even if the quality of their products or services declines.

Marketing emails also impact buying habits

Alongside loyalty programs, many companies use marketing emails to send special offers or product recommendations to customers who have bought from them before.

28.6% of consumers say they are encouraged to make another purchase every time they receive one of these emails, while half (50.1%) say they'll make another purchase most of the time.

What makes people loyal to a brand?

Good customer service is the biggest driver of brand loyalty with 62.9% of consumers saying this makes them loyal to a brand. This aligns with findings from a study by Adobe in which 74% of consumers said they would be more likely to engage with brands that offer a higher level of customer service. [4]

Just under half of consumers (49.7%) say that benefits from a loyalty program influence how loyal they are to companies.

Only 11.5% of people said a personalized customer experience makes them loyal to a brand. However, 77% say they're more likely to purchase from brands that understand their buying habits and preferences.

Why is customer loyalty important?

Loyal customers bring measurable value to businesses as studies show that repeat customers account for 40% of revenue in some businesses, and returning customers spend an average of 33% more than new customers. [5]

The likelihood of repeat business more than doubles after three purchases

Repeat customers are more likely to shop with you again and again. In fact, studies show that the chances of another purchase increase with each purchase made. A customer has a 27% chance of buying something else after one purchase, but this rises to 62% after three purchases. [6]

Loyal customers are less put off by negative reviews

In our study of online review statistics, we found that 84.5% of people would be less likely to be put off by negative reviews if they were already familiar with the brand. This suggests that customers who develop loyalty to a brand are happy to continue shopping with them, despite other customers reporting bad experiences.

Why do some people not use loyalty programs?

Although most of the people we surveyed said that they do use loyalty programs, some respondents said that they don't use them.

Limited purchases and sharing personal data are the top concerns

The most common reasons for people not using loyalty programs are that they don't buy enough to get any benefits and they don't want to share their personal information, with one-third (33.3%) citing these reasons.

When asked what would encourage these people to join a loyalty program, the most common response was if companies required a lower spend to get the rewards (58%).

Personal data and loyalty programs

Many companies use loyalty programs to collect user data that monitors buying habits and preferences. This allows the company to give the user targeted recommendations for products they might be interested in.

The more data a company collects from you, the more it can open you up to issues like identity theft if the data was ever stolen or exposed due to a data breach.

Of those who use loyalty programs, 91.5% say they have concerns over how their personal data is used when they sign up. As we mentioned, 33.3% of people who don't use loyalty programs say it's because they don't want to share their personal information.

Paid loyalty programs

While many loyalty programs only require customers to sign up with details like their name and email address, some require payment to receive the benefits. This might be in the form of a monthly or annual subscription, or a one-time joining fee.

Some companies might have a tiered system with a free option and a paid option that offers more benefits. One example is bookseller Barnes and Noble which has a free B&N Rewards program where customers can collect stamps for every purchase to be redeemed for a discount later.

They also offer Premium Membership which costs $39.99 per year and offers additional benefits including discounts on almost all purchases, birthday offers, and drink upgrades at B&N cafes.

More than half (53%) of consumers pay for a loyalty program

Participation in paid loyalty programs has been steadily rising over recent years. One study found that 53% of consumers pay for a loyalty program, an increase from 32% in 2022 and 17% in 2021.

The same study also found that paid loyalty programs do not elicit an increased level of spending or engagement. The data shows that this behavior did not vary by more than 4% between paid and free loyalty programs. [7]

Paid Amazon subscribers offer double the value of non-subscribers

Customers who pay for benefits through a subscription are often more inclined to make purchases with that company because they want to feel as though they're making the most of the benefits.

One study of Amazon customers found that those who pay for a Prime subscription have a lifetime value of $2,283, more than double the estimated lifetime value of non-subscribers ($916). [8]

Examples of successful loyalty programs

Let's take a look at a few examples of some of the most successful loyalty programs in the U.S.

Starbucks Rewards

The Starbucks Rewards program is a points-based program where customers earn 'Star Points' with each purchase which can be redeemed later for rewards. Users earn 1 star for every $1 spent at Starbucks, and rewards range from 25 Stars getting you a free drink up to 400 Stars getting you select Starbucks merchandise.

Starbucks Rewards has 31 million active users in the U.S. as of 2023, a 15% increase compared to the previous year. Rewards members accounted for 57% of Starbucks' U.S. operating revenue in the second quarter of 2023. [9]

Sephora Beauty Insider

Sephora's Beauty Insider program is a tier-based loyalty program with White, Black, and Gold membership options. Benefits include offers on your favorite products, exclusive events, and a gift for every 200 points you earn.

As of 2023, the Beauty Insider program has 34 million users and has increased 30% since 2020. [10]

Lego Insiders

The Lego Insiders loyalty program is a value and points-based system where members can earn points through more than just making purchases. Members gain points by registering their Lego sets, taking part in surveys, visiting Lego's social media pages, as well as making purchases at the Lego store. The points can then be converted into discount codes for future purchases.

Lego also offers initiatives like Lego Ideas where customers' original designs can be voted on and made into official Lego products.

Sources

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