How to motivate the not-so-loyal consumers in a multi-billion loyalty program market

Samantha Slinko

Samantha Slinko

Chief of Staff, Thoughtworks Canada

April 25, 2023

Pyramid in the middle, with coins, rewards, gifts, and trophies flowing in and out.

Those who know me well know I am a savvy shopper and I will only buy something if I think I am getting the best deal out there. The last article I wrote was about a Product I Love, Poshmark, a product that absolutely nails the second-hand shopping experience, allowing customers to get the lowest price on high quality items. When it comes to the things I can’t get second hand, I have the same buying philosophy: find quality items and experiences, at a deal.

You can’t get a deal everywhere, which is why it is so important for brands to use the value of loyalty programs to lure in customers, both new and existing. Loyalty programs give customers perks and benefits based on their purchases in hopes to retain their business and increase their customer lifetime value (CLV). These programs are essential to the brand’s support in an ever competitive marketplace, as they help differentiate from their competitors while ensuring they are building a base of healthy and loyal customers. 

In a market where options are abundant and economic conditions are tough, loyalty programs can be a brand’s holy grail if done right. Take notes from Aritzia, who surpassed $1B in sales during the turbulent times of the pandemic for retailers and credits much of it to strong brand loyalty. Customers make purchases based on their shopping goals, and they’ll be loyal to the brand that helps them achieve the goal in an easy manageable way. For some, that goal is to have a luxury shopping experience, for me and many others it’s where we can find high quality items and experiences at the best price.

There is a significant market segment of savvy shoppers driven by deals that businesses can win over and convert into repeat customers. Although some businesses tend to ignore their thrifty clientele in hopes of scoring those who spend a lot (their white whales), by focusing on this otherwise passed over market segment through loyalty programs that value low-tier members, businesses who shift their focus to the spend-and-save customer can actually convert them to a spend-to-spend customer. Businesses shouldn’t synonymize deal-savvy shoppers as non-spenders. Savvy shoppers are in fact likely to spend more per transaction, and transact more often if they are motivated by savings on a high quality experience.

Loyalty to a brand is earned over time – even if I have a positive history with a brand, a competitor with a better offer for the same item will win me over. Because of this, customer loyalty isn’t earned easily. Which is why it is essential that brands improve their user experience of their loyalty programs so that they can convert someone, like me, to become a repeat customer. I am not alone, 96% of consumers agree that loyalty programs can be improved. The good news it that 75% of consumers would switch brands for a better loyalty program. Customers would stay loyal to a brand, who in turn provides them unique offers on a consistent basis that they would not get with their competitors. 

It all sounds easy right? But not so fast – keep in mind that it is easy to keep top-tier customers happy and spending with your brand. These individuals are typically being offered luxury airport lounges, free trips, exclusive memberships, and gifts. It’s converting those who don’t value those perks that is hard. So, how can businesses motivate those who aren’t swooned by the perks and play purely on price? Read on. 

How do you motivate those who aren’t swooned by perks?

Before I jump into my favourite loyalty programs, I want to share what businesses need to do to make a loyalty program valuable for their low-tier members. 

  1. Have a deal-driven offering. In general customers who fall in the lowest tier are typically motivated by price. They are willing to shop elsewhere, forgoing brand loyalty, and focusing more attentively on the best deal. With this in mind, businesses should offer a unique loyalty program reward that makes the low-tier customer be able to achieve the best deal and so that the customer feels like they are winning on price. It’s enticing to find the highest-saving option for value (deal-driven) instead of the cheapest option (price-driven).
  2. Provide a seamless digital experience: This translates to a user-friendly interface, for managing and redeeming points and offers. This is table stakes for loyalty programs. If your competitor has features that make it easier to shop, redeem and view the points balance, you won’t win on price because it’s psychologically easier for your customers to shop elsewhere just through their user experience alone. 
  3. Allow customers to redeem their perks early and often: Everyone loves a quick win. This means building points quickly and having low thresholds to redeem for the low-tier customer, to offer opportunities to return to the loyalty experience often.

Businesses that are doing loyalty programs right Rewards

I travel only a few times a year. Hotel and airline programs don’t favour the infrequent traveler in most cases, but does. I love that the Rewards program isn’t point-based, instead it’s independently tangible. Customers get 1 night free for every 10 nights stay booked through The rewards program creates mutual benefits for both parties as in exchange for a free night, I am motivated to book more to redeem faster. This might mean I may book more than I had originally anticipated. I will spend to save, but the key thing here is that I will spend significantly more than what I will save. I also appreciate that I can search by the hotels that accept and don’t accept the rewards redemptions, making a super smooth digital experience. knocks it out of the park, with a user-friendly interface, a valuable offering that keeps me coming back, and an easy redemption process. By giving a free night (or even two!), I am actually able to save on my longer getaways I am taking, meaning the reward is provided almost instantaneously.

PC Optimum

PC Optimum points are cash back rewards on purchases from stores that fall under the Loblaw Company family umbrella. Being free to sign up makes it a low barrier method for earning cash back on purchases you were likely going to make anyway, while driving loyalty to the businesses. PC Optimum has a great low tier redemption value and it’s easy to collect points. Through offering an easy-to-use mobile app, I can scan my card in store, view my balance and see upcoming offers – all great features that allow me to be a lifetime customer, despite never reaching a higher tier. This is also despite not always purchasing the low-cost options for my everyday items, but knowing I can accumulate additional value (points) on my purchase.  

PC Optimum stands out by its offerings of “one weekend only” specials that allow customers to build up points very easily. For example, Shoppers Drug Mart holds a ‘20x the points’ event, where all eligible purchases allow you to earn 20x the points. Because the PC optimum redemption value is relatively low considering how easy it is to build points, when I do regular household item shopping during a 20x the points event, I know that the next time I spend money at any of their stores, I can immediately redeem at least $10 on my next purchase. Again, allowing me to win on price when I am not looking for the cheapest option. 

Sephora Beauty Insider

We all know Sephora’s Beauty insider stands out from the rest. The loyalty program is tiered based on annual spend – their VIB and Rouge tier members are rewarded with better perks, but their loyalty program also caters to the casual shopper. As a Beauty Insider I collect points quickly to be able to redeem just $10-$20 off my purchase very often. On top of that, when there are sales, even at the lowest tier, I am eligible for a discount. It’s not bank breaking savings, but it’s enough to keep me coming back and choosing to buy my makeup from Sephora rather than directly from the brand, a department store, or a drugstore. The exclusive nature of a slight discount during an annual sale on more premium products is just enough to make me feel that I am winning on price on name brand products that are sold at other retailers at the same price. 

And of course, I appreciate the free birthday gift even though I am not a top tier customer!

CIBC Aventura 

I use Aventura for all my flights. Aventura often has price drops for flights where I can get a round trip to NYC from Toronto for 13K points ($350 CAD value) – what a steal!  But Aventura has the opposite problem to their competitor Avion (read more on them below) – their digital experience is painful. Its dated appearance contrasts with what so many great digital products have –  a well-designed user interface for an intuitive and enjoyable experience. Features like; getting sent a PDF document after I make a purchase with my airline speak to its dated approach.

Although I am winning on price for their offering, the functionality is challenging when using their digital tools. 

Avion Rewards

RBC Avion has an outstanding digital experience and allows customers to redeem early and often by giving customers the option to apply only some of their points against their purchase. I use Avion for travel bookings and their digital user experience both on mobile and web is top notch. I particularly love how I can see the number of points I have at all times while searching the app and how I can apply a portion of my points to the purchase. 

However, the redemption values are very high, and they don’t have the flash deals the way Aventura does. I typically will put larger purchases on my Aventura credit card for this reason.

Build better loyalty program experiences

In a growing competitive market with the anticipation of economic turbulence, it’s more paramount than ever before to not only protect your most loyal customers but also find new ways to recruit them through a better program experience. And that starts with your largest market segment: the low-tier, savvy shopper that’s not typically loyal — yet.

Aligning on a value-driven offering that makes the customer feel like they are winning on price matched with a seamless digital experience will capture new members and make existing members move up the loyalty ladder, meaning they are spending more with your brand.

Samantha Slinko

Samantha Slinko

Chief of Staff, Thoughtworks Canada

As Chief of Staff, Samantha is responsible for managing the communications of the organization working and closely with top executives to ensure efficient decision making and helping to operationalize and implement strategic priorities.

Leveraging her background in technology consulting and expertise in communications, she is passionate about driving the employee experience. Samantha supports employees navigating through change by driving clear communications that foster trust and transparency for the organization.

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