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Millennials Most Open to Joining Fee-Based Loyalty Programs
Craig Levitt
January 1, 2018
3 Min Read
A LoyaltyOne nationwide survey of 1,005 consumers in May 2015 reveals that millennials ages 18-35 scored significantly higher than any other population segment for being open-minded about investing in a loyalty program membership. Here are key numbers from LoyaltyOne’s fee versus free loyalty program research:
62% of respondents said they’d consider joining a fee-based rewards program if their favorite retailer offered one.
This 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.
65% said customer rewards are worth paying for if relevant to their needs.
Millennials, again, rated this even higher with 79% of 18-24 year-olds and 76% of 25-34 year-olds saying relevant rewards are worth paying for.
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.
The survey results emerge against a backdrop of high-profile marketplace developments. Earlier this month Walmart disclosed details of its new $50 per year fee-based delivery program called ‘Shipping Pass,’ which is widely viewed as a challenge to Amazon Prime with its $99 per year fee. Jet.com is another emerging membership-based shopping club promising low prices at a $49.99 fee. “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. Reinforcing the point, Du Chateau noted the survey found that 49% of overall respondents said all rewards programs seem alike. The perception of program sameness was even stronger among millennials, where the scores were 57% for 18-24 year-olds and 52% for 25-34 year-olds. “Brands have historically hesitated to explore new loyalty strategies because traditional programs were still novel in most spaces. However this hasn’t been true for years. The perception that only a small minority shoppers will ‘pay to play’ is also a dated viewpoint,” Du Chateau said. “Forty-two percent of consumers surveyed have already paid to join a program and 62% of respondents said they’d consider joining a fee-based rewards program if their favorite retailer offered one.” Other key findings from LoyaltyOne’s research:
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.
“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,” Du Chateau said. “More marketers should explore this approach.”
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