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Consumers — especially millennials — will pay for loyalty programs

6/29/2015

Cincinnati -- Consumers, especially millennials, are willing to ante up for fee-based loyalty programs.



In a survey by LoyaltyOne, 62% of respondents said they’d consider joining a fee-based rewards program if their favorite retailer offered one. The number was even higher among millennials with 75% of 18-24 year-olds and 77% of 25-34 year-olds saying they’d consider joining a fee-based rewards program.



Overall, millennials ages 18-35 scored significantly higher than any other population segment for being open-minded about investing in a loyalty program membership.



In other results:



• Nearly half (47%) said rewards in fee-based programs are better than rewards in free programs. A significantly larger number of millennials – 61% of 18-24 year-olds and 54% of 25-34 year-olds – said fee-based rewards are better.



• Of the respondents who already participate in fee-based loyalty programs, 69% said they were enticed by free shipping, followed closely by special discounts at 67%.



• Women (67%) are slightly stronger than men (64%) in their belief that rewards are worth paying for.



• When asked which category would be most appealing if compelling benefits were available through a fee-based program, respondents ranked Grocery and Mass merchandise highest (35%), followed by Credit Card rewards (26%), Specialty Retail (13%), Travel (18%) and Restaurants (9%).



• 32% of 18-24 year-olds and 34% of 25-34 year-olds said they have never been offered membership in a fee-based program, versus 25% of the general population.



“These results should attract the attention of brands considering a shift to fee-based loyalty programs as marketers look for ways to create competitive differences and lock in customer spend against a backdrop of waning program effectiveness and engagement challenges,” LoyaltyOne Consulting associate partner Lance Du Chateau said. “The traditional spend-earn-redeem reward program doesn’t make sense for all companies and customers, and fee-based value propositions increasingly are a topic of conversation. More marketers should explore this approach.”


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