Why You Should Leverage Loyalty Partners to Retain Customers
New customer acquisition is critical to scale a program and is often a key performance indicator for success. With 59% of U.S. consumers buying from less expensive brands to cut costs with inflation, brand loyalty is at risk as consumers prioritize affordability. In fact, consumers’ willingness to switch to a new brand to save money has increased 12% quarter-over-quarter. How can brands retain existing customers if they do not always have the best price? The answer is simple: by leveraging loyalty affiliate partners.
Loyalty Partners Drive Impressive Outomes
Consumers globally want loyalty programs. In the U.S. alone, 80% of consumers are affiliated with at least one loyalty program and 60% are more likely to spend money on a brand after subscribing. Consumers want to be rewarded for their loyalty and their purchases. This is more evident than before as a new study from Wells Fargo found that U.S. consumers are using their credit card rewards to help offset inflation – nearly half of rewards cardholders said they are using their rewards to help pay for groceries and gas. With the consumer price index rising 8.5% in July from last year, we expect consumers to continue to use rewards to offset some of the increases on both essential and nonessential goods.
While brand loyalty programs will continue to be a focus for consumers, with 84% of consumers choosing a retailer that runs a loyalty program over a competitor, multi-brand loyalty programs will soon be the most popular approach to engage customers according to a recent Forrester Study.
Multi-brand loyalty programs are not new, however. In fact, loyalty partners have been around for over 20 years and the new PMA 2022 Performance Marketing Industry Study confirms that cashback, loyalty and rewards websites make up 35% of ad spend by affiliate type with total industry spending on programs reaching $9.1 billion, an increase of 47% over the 2018 estimate of $6.2 billion.
AP Clients See Performance Growth Via Loyalty Partners
At Acceleration Partners, we are continuing to see loyalty partners grow every month. In July alone, loyalty partners were up 107% in clicks, 85% in actions and 36% in revenue YoY. Year to date (January 1 – July 31, 2022), loyalty partners are also up 38% in revenue compared to last year. Loyalty has historically been one of the top performing partner groups, but other affiliates showed performance increases in July as well, with coupon and content partners are both up 20% YoY in revenue.
The Amazon Prime Day event July 12-13, 2022, drove significant increases for Acceleration Partners’ clients with a 11% increase in revenue and 172% increase in clicks compared to the Amazon Prime Day event in June 21-22, 2021. Overall, our clients saw a 48% increase in revenue for the month of July YoY with an 85% increase in actions/orders YoY. Consumers are continuing to engage with all affiliate types and are choosing to buy when the time is right, especially when an incentive is in place to help offset price increases.
Reach New Customers and Retain Buyer Loyalty
With loyalty partners growing at a rapid rate, it’s important to understand not only how to reach a new customer, but how retain an existing one—as it is much more expensive to acquire a new customer.
Consumers are prioritizing promotions using supermarket vouchers/coupons by 86% more than they did last year in the UK alone, and 57% of consumers expect to receive prizes or free products. This behavior is expected to continue through the upcoming holiday season.
Check out the top 3 reasons to optimize or onboard loyalty partners before the holiday season:
- Consumers want multi-brand loyalty programs. Even if you currently have your own loyalty program, it is important to reach a new audience that prefers to leverage multi-brand loyalty programs. If your competitors are working with loyalty partners, it is critical you are matching or increasing the reward to the consumer. That 1% difference may be the reason you win or lose a big sale. To expand your reach, working with loyalty partners is a great way to start.
- Ensure every dollar you give away is acquiring or retaining a customer. Brand loyalty is weakening, with 38% of consumer brands from a Brand Keys survey reporting declining consumer loyalty. This means brands have to find ways to simplify the experience. According to eMarketer, 55% of consumers have said they would use loyalty programs more often if they received personalized rewards. The loyalty partners in the affiliate space can offer both tailored incentives and simplicity by allowing consumers to reward themselves with cash back or points. If you need an easy yet effective, personalized way to reward your consumers, a pay-per-performance loyalty program is a perfect match.
- Incrementality for loyalty partners can be a roadblock for brands. Based on multiple sources cited above, it is clear the consumer has shifted their purchasing behavior to ensure they are receiving an incentive or reward. If your brand doesn’t have their own loyalty program, you are missing out on a very savvy but profitable customer. In fact, many of the loyalty partners that work with Acceleration Partners’ clients see some of their best customers shopping through those partnerships. They will likely spend more (higher AOV) and repeat purchases more often. With the partnership on a pay-per-performance model (such as a cost per action model), it’s a very limited risk to ensure your best customer is incentivized to buy from your brand again and again.