Unlocking Profit Potential: Statistics That Prove Loyalty Programs Work

Want to grow (or start!) a customer loyalty or rewards program? If your colleagues keep demanding you show them the numbers before they sign on, this article’s for you! We’ll cover key statistics that prove the success of customer loyalty and rewards programs. Learn how these strategies drive retention, sales, and business growth.

Introduction

Customer loyalty is crucial to growing operations and revenue in an intensely competitive marketplace. Many marketers underestimate how critical loyalty dynamics impact their financial statements’ top and bottom lines, but verified statistics seldom lie. They offer invaluable insights into what consumers value in their brand connections, helping you install touchpoint components to retain customers, deliver excellent customer experiences (CXs), and convert those on the fence into brand ambassadors

Customer loyalty transcends the physical benefits of owning a product or subscribing to a service, merging with customers’ emotions, trust in the brand, and cognitive satisfaction. As a result, innovative loyalty programs represent an opportunity to show how much you value and recognize long-lasting relationships with customers and their ongoing engagement with your brand.

The statistics below reveal that rewards go beyond gifts, discounts, exclusive first dibs, and other perks earned from accumulating points or through another rating system. Indeed, they provide a comprehensive overview of how loyalty programs lie at the core of guiding customer behavior, driving sales to new heights, and escalating ROI.

A deep understanding of these insights can help your business by delivering a 360-degree view of the trends driving loyalty programs for all businesses, from start-ups to SMBs and established enterprises. How? This statistical presentation creates the ideal oversight for you to:

• Develop strategies that resonate with your target audience.
• Establish your brand as the go-to preferred choice.
• Leverage loyalty to create a competitive edge.

Statistics that open insights into loyalty program success

The crucial data and metric insights fall under the following five questions:

1. Size: How big is the brand loyalty arena?
2. Keeping it up: Is the ongoing persistence with brand loyalty overdone?
3. Engagement: How easy is it to emotionally engage customers with a brand loyalty program?
4. Retention: Do brand loyalty programs significantly impact customer retention?
5. Brand advocacy: Does it start with loyalty programs?

(1) Size: How big is the brand loyalty arena?

Fortune Business Insights recently estimated and projected a single US industry’s brand loyalty program investment – “Flavors and Fragrances” – at $6.47 billion in 2023, compounding by over 23% to reach $28 billion by 2030. Another investment example is the $75 billion (plus) that US brands commit to loyalty management annually – only one aspect of program structuring. So, what do these narrow views demonstrate?

• They’re only two among hundreds of broad industry participation in brand loyalty action.
• In other words, they’re a drop in the ocean!

Loyalty programs cumulatively and consistently deliver deep discounts and expensive freebies as rewards across thousands of products, concierge-exclusive services (for reduced or zero fees), birthday gifts, and other tiered perks to millions of customers annually. And that’s aside from the substantial recruitment, promotional, and operational dollars that go into uplifting the programs as brand differentiators. Put it all together with the escalating loyalty-generated revenues flowing in, and we have a sub-economy so massive that attaching an exact number is impossible.

(2) Keeping it up: Is the ongoing persistence with brand loyalty overdone?

To answer this question, let’s begin with KPMG – a universally recognized corporate advisor and consultant. It issued a report that underlines loyalty program inclusion and tiered membership in one’s strategy is vital to 75% of consumers. Conversely, ignoring loyalty initiatives amounts to a severe marketing omission.

A Fundera marketplace review supports the KPMG review, emphasizing that a sizable chunk of brand loyalists (43%) are happy paying higher prices to signal their preferences. According to Zinrelo (quoting from a non-specified Accenture survey), the percentage is closer to 57%. Finally, 50% of marketers prioritize brand loyalty and initiatives when developing content marketing strategies.

From another angle, a 2019 Motista report highlights that emotional brand connections are the ultimate deciders between brand success or failure, creating a 306% higher lifetime value. In addition:

• A Bain & Company report shows improving customer retention by 5% generates at least a 25% increase in net revenues.
• For e-commerce entities springboarding off integrated loyalty programs, the average order quantity increases by 319%.
• According to Harvard Business Review, companies with loyalty programs (versus competitors without them) enjoy revenues accelerating 2.5 times faster with 100-400% higher ROIs
• Businesses that personalize their marketing messages with customized content reap impressive results, such as 47% and 36% jumps in customer loyalty and satisfaction. In this regard, surveys confirmed:
  • Customers will be 8x more likely to love a personalized loyalty program (according to Zinrelo, citing an unspecified Forbes report)
  • After engaging with personalized content, 82% of customers said they leaned toward brand loyalty.

• According to IBM, 44% of consumers in 2024 think deeply about their choices, selecting brands that align closely with their lifestyle values. For example, sustainability in loyalty programs has significant market traction, especially with Millennials and Gen Zers. Indeed, 74% of Gen Z shoppers say they happily pay more for environmentally or socially-minded apparel products. (Statista)

Are there advantages of membership initiatives? The statistics say so.

• Members of loyalty programs generate 12-18% more incremental revenue growth per year than non-members. (Accenture)
• Member revenue emerging from the best-performing loyalty programs grows between 15 and 25% annually. (McKinsey)
• The odds of convincing a loyal customer to repeat-purchase is 60-70%, compared to a 5-20% success rate of selling for the first time to a prospect. (Marketing Metrics, in Forbes)
• 77% of consumers have stood loyally by their preferred companies for ten years or longer. (InMoment)

(3) Engagement: How easy is it to emotionally engage customers with a brand loyalty program?

In short, emotional engagement is not a seamless 1-2-3 transition. It requires significant investment, as indicated by Zinrelo extracts from a Paddle/ProfitWell report (only available upon paying a subscription fee). These show that CAC (customer acquisition cost) for B2B and B2C companies has spiked by 50% in the last five years.

Complicating the picture even more, while 72% of global customers express loyalty to at least one brand, 88% of them say getting to that commitment level took significant repeat buying (i.e., at least three times). Other obstructions include the following:

• According to Bond Brand Loyalty, the average American consumer belongs to 16.7 customer loyalty programs. What does this mean? Competition between programs is a significant dynamic many entrants in the arena don’t appreciate. If your program is one of them, members consistently compare it to other loyalty member experiences (even in different industries), resulting in confusion and clashes with diverse lifestyle/cultural messages. This may weaken brand loyalty of some brands while strengthening others
• According to McKinsey, Gen Zers (57%) have been less brand loyal since the COVID-19 pandemic, mainly at the expense of popular program memberships before the pandemic. Different generations’ preferences and behavior patterns vary significantly, but they seem to agree on one thing – poor service is a gamebreaker. For example, Business Wire highlights:
  • 74% of millennials are likely to react to frustrating service touchpoints by switching brands.
  • 86% of Gen Xers and 85% of Baby Boomers would do the same.

If your business is not paying enough attention to program CX features that engage members, then:

• 54% are likely to try another brand (Fundera).
• It weakens your connection to long-standing members, 82% of whom respond to a personalized program experience.

Winning back lost loyal customers is a challenge.

• According to McKinsey, 73% of US consumers who jumped ship will stay faithful to their new brand.
• All it takes to lose a loyal customer is severely exaggerating brand features and benefits (i.e., 31% showing zero tolerance). According to a Hiver Research Report; it’s worse than that:
  • 72% of loyal customers will switch to a brand’s competitor after interacting with a single severely corrupted touchpoint, resulting in a negative CX.
  • A “Loyalty Magazine” article supports Hiver, underlining that one of the most frustrating loyalty program touchpoints is the unreasonable time lapse in receiving rewards.

Moreover, giving your loyalty program a fighting chance of success won’t happen without stepping up capital commitment. For example, 50% of marketing executives say brand loyalty is one of their top objectives, and 69% of brand directors say they’ve invested more in loyalty programs since 2022.

(4) Retention: Do brand loyalty programs significantly impact customer retention?

A series of loyalty program stats connects brand loyalty to customer retention. The data delivers incredible insights, demonstrating the inextricable link between brand loyalty strategies and extending customer lifecycles. It underscores that businesses must invest in CRM (customer relationship management) and loyalty programs, develop sustainably meaningful touchpoints in customer journeys, and foster repeat business. The other side of the same coin represents reduced churn rates and CSAT scores that go beyond stakeholders’ expectations. Consider the following:

• According to eConsultancy, 82% of business leaders know that customer retention significantly outweighs customer acquisition from a cost-benefit viewpoint.
• They also acknowledge that loyalty programs are the spearhead combating churn losses of $136.8 billion annually.
• According to Zinrelo (quoting Think Impact in an unspecified report), 75% of customers are highly resistant to switching brands once enlisting as brand loyalty program members, resulting in:
  • Significantly higher profit and lower maintenance metrics.
  • C-suite and company boards approving investments in loyalty management, touching “23% of global brands’ customer ecosystem spending“.

Multiple Harvard Business Review references (including a guide to valuing a company by analyzing its customers and an interview with the CEO of Vanguard) support the view that brand loyalty programs and customer retention are joined at the hip. They propose loyalty programs as the most potent initiative for attracting new customers, with organizations investing billions in loyalty tech advancements and mobile solutions. Still, studies point out there’s a long way to go, with many citing low levels of satisfaction among internal stakeholders.

(5) Brand advocacy: Does it start with loyalty programs?

Harnessing customer advocacy as a strategic asset can create significant customer acquisition and retention. Statistics show how loyal customers, nurtured by compelling membership programs, can become vocal brand ambassadors. Moreover, the data shows how emotional engagement – a core brand loyalty ingredient – transforms customers into influencers. The net result of robust customer advocacy is enhanced brand visibility, trust, and a resilient customer base. Consider the following:

• Over 70% of consumers are more likely to recommend brands aligned with inviting loyalty programs.
• 71% of “positive word of mouth” recommendations to family and friends emerge from emotionally engaged customers – generally members of switched-on brand loyalty programs. It’s a robust market energizer when you consider that:
  • 81% of customers trust close-relationship recommendations versus company promotions (Hubspot research)
  • Every satisfied American customer sharing their CXs reaches eleven people on average (American Express)
  • 71% of millennials are arguably the most brand-engaged group, purposefully and routinely leaving good reviews for their favorites (according to Zinrelo quoting KPMG in an unspecified report).

Conclusion

This article presents curated data and metrics that focus on pivotal customer loyalty drivers. It connects to the current landscape, striking an optimal balance between the costs of running a brand loyalty program and the ROI upliftment of retaining customers (plus the benefits of acquiring new ones). Several items above cover customer loyalty’s impact on competitiveness, customer behavior trends (looking at generational differences), spending patterns, and strategic thinking.

Sogolytics is at the cutting edge of brand loyalty programs, surveys, and research to align with the latest marketplace changes that lead to significant churn reductions, better customer experiences, and less disruptive touchpoints in customer lifecycles. Contact us today for a direct conversation on how we can help your brand loyalty program grow from strength to strength.