Customer Engagement

Consumers leverage loyalty in holiday shopping

Consumer participating in rewards programs.A new nationwide study commissioned by Citi Retail Services has discovered that more than two-thirds of Americans who participate in rewards programs expect to save money this holiday shopping season through their redemptions. While the average customer expects to save $149, one in three expect to save $200 or more. The survey also found that loyalty programs are very effective, with 86 percent of customers saying they are more loyal to the brands where they participate in rewards programs.

By Wise Marketer staff

Shoppers are treating their rewards like a separate currency, accruing and spending strategically to boost their holiday purchasing power and stay on budget. Citi Retail Services’ survey found that shoppers:

  • Use rewards to buy more gifts than they would otherwise (50%)
  • Use rewards to buy gifts for someone they wouldn’t otherwise (26%)

But some shoppers are saving those rewards for themselves: 41 percent of shoppers said they plan to use their rewards treat themselves to purchases they otherwise wouldn’t make. The average shopper participates in four rewards programs, and nearly 90 percent of shoppers plan to utilize those programs during the holidays to either accumulate points or redeem existing ones. Money quote from Terry O’Neill, Managing Director, Head of Product, Marketing and Analytics at Citi Retail Services:

“We are seeing a general trend, but especially during the holidays, of customers making concerted efforts to be strategic about how and when they use their rewards. It’s not just about leveraging rewards as a ‘bonus’, but rather seeing it as a new type of currency that has a genuine impact on purchasing decisions and extends their wallet. While loyalty programs continue to evolve to include experiences, many shoppers are still drawn to the hard dollar value and are tapping into their accumulated rewards during the holidays to extend their purchasing power.”

Citi Retail Services found that some savvy shoppers are taking steps to maximize their rewards programs. Survey findings indicated that some shoppers are consciously spending with the purpose of getting more in return – especially when bonus rewards or points promotions are underway. In order to accomplish this, shoppers buy more of something, like the common practice of buying in bulk (42%), or shop at odd times to take advantage of flash sales, such as very late at night (25%). And there is good reason to be serious about rewards – while there is no central repository of information on just how much of this “currency” exists nationally, estimates put the value of the total rewards market at more than $320 billion, projected to grow to $500 billion by 2019.

Shoppers across the country, in all regions, participate in rewards programs at high rates, with eight in ten consumers belonging to at least one rewards program. On top of that, each part of the country boasts a significant number of “very active rewards users,” with Northeasterners (36%), Southerners (24%), Midwesterners (27%) and Westerners (27%), participating in five or more rewards programs. Nationwide, shoppers are concentrating their spending on fewer brands, getting more bang for their buck.

Rewards programs are also popular among all age groups with Millennials as the most avid reward seekers (83%). Generation X closely follows (73%), with approximately one in two Boomers (54%) participating in rewards programs. Followers of the loyalty industry will note that the penetration of loyalty programs as reported in this Citi survey is considerably lower than that reported in other loyalty participation studies such as the venerable COLLOQUY study, which places consumer loyalty program participation in the double-digits.

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