Rewards programs, including both retailers’ proprietary loyalty programs as well as multi-brand rewards programs such as cashback rewards for shopping, are an important driver of customer loyalty in a time of economic instability. When planning their loyalty or rewards programs, brands must also take into consideration factors that influence loyalty, including an exceptional, consistent experience across all of a brand’s channels, a positive emotional connection, and continued improvement in a brand’s products and services that drive better value for the consumer.

Customer experience is a critical component of any rewards program. However, a poor customer experience will result in a lack of participation in a program – ultimately eroding any chance of creating more customer loyalty.

Better Customer Experience = More Participation

The importance of the customer experience in rewards programs is clear from findings we published in a recent whitepaper based on the results of a summer 2022 survey we conducted, which assessed consumer sentiment towards shopping rewards programs. Among the implications for online retailers, we discovered that rewards and loyalty programs considerably influence shopping behavior at the top and the bottom of the purchase funnel: 81% of respondents choose online merchants based upon availability of rewards and 79% are more likely to complete purchases when coupons and cashback are available.

But beyond the impact on actual shopper behavior, the mechanics of a rewards program and the customer experience play an important role in customer satisfaction. Ultimately, these considerations could affect participation in a program.

Emarketer recently cited research which showed that 61% of worldwide consumers would use loyalty programs more if rewards were applied automatically. This is borne out by our survey findings too: the majority of consumers in our survey prefer convenient access to rewards, such as rewards being automatically applied at checkout (79%) or having the ability to activate them while shopping (60%). Designing loyalty programs with easy-to-access features results in a more frictionless shopping journey for consumers, which is a considerable element of the consumer experience.

Surprisingly, while our survey found that 79% of consumers indicated they most prefer rewards to be automatically applied at checkout, only 39% of consumers indicated they would want to receive an email with a special offer. This is one consideration for retailers who rely on email marketing to communicate with loyalty program members about rewards – perhaps retailers need to look at other ways to more conveniently deliver  messages/rewards/discounts to consumers during the natural flow of the shopping journey.

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Convenient currency

Convenience is clearly a critical factor for loyalty programs, and the element of convenience also extends to the actual currency of the rewards program itself. In other words, how do customers receive/redeem their loyalty rewards?

In addition to their preference for conveniently-accessible rewards offered within the natural flow of shopping, cashback is king for today’s consumers. When we asked about the ways they might receive rewards for shopping, 78% of consumers indicate they prefer cashback. When asked about other options, far fewer (64%) prefer points.

Earning cashback on credit card purchases is a well-known, well-loved tool among consumers. Today’s  cashback rewards for shopping have grown in popularity due to programs such as Honey, Rakuten Rewards, and Capital One Shopping. Consumers are becoming much more familiar with the ease of receiving cashback rewards for online purchases (in addition to credit card cashback.) The importance of providing easy-to-understand and simple-to-use rewards cannot be overstated. For one, cashback for shopping is easy to redeem, customers aren’t locked in to spending rewards at just one store, and typically there are lower “minimums” for redeeming rewards.

Given the state of our current economy, aside from the convenience and simplicity, cashback-on-shopping programs are proving to be a crucial help to customers who want to get as much value as they can out of every dollar spent. In fact, our survey showed that 90% of respondents say that rising prices have increased their interest in earning cashback rewards when they shop, as well as using coupons and receiving discounts. This monetary benefit fosters a positive connection for customers, fostering a better customer experience.

Discounts further enhance consumer experience

As it relates to the current economic climate – customers’ propensity to save money – brands can also enhance the customer experience by delivering easy-to-find, easily accessible discount offers to loyalty program members. Our survey revealed the majority of respondents (61%) state they “always” or “often” look for coupons/coupon codes, discounts, cashback rewards, or other ways to save on their purchase, while an additional 36% “sometimes/rarely” look for such rewards. Only 3% of respondents “never” look for coupons and rewards when shopping online.

Ensuring that a loyalty program can offer strategic and personalized offers to members is another way to deliver a better customer experience at a time when price is a key factor in consumer decision-making.

Customer experience cannot be counted out when considering launching or revamping a loyalty/rewards program. Today’s consumer has become accustomed to widespread availability of many other digital conveniences, so frictionless and value-adding considerations components of the overall customer experience are paramount. The easier and more convenient a loyalty program is for members to access and spend their rewards, the more participation a brand is likely to have, and the bigger impact on the intended effect – brand loyalty.

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