Loyalty programs (LPs) can offer valuable savings to households facing rising cost-of-living pressures, but their benefits are not the same for every shopper. As more consumers seek discounts, coupons, gifts and vouchers to reduce everyday expenses, retailers are increasingly investing in these programs. Globally, the loyalty management market is projected to grow from US$17.38 billion in 2026 to US$51.65 billion by 2034.
New research led by Edith Cowan University (ECU) analysed survey data from more than 800 Australian supermarket customers to understand what drives engagement with loyalty programs and how effectively they encourage loyalty to retailers. The findings suggest that customers’ individual characteristics, circumstances and ability to take advantage of rewards all influence whether a program succeeds.
ECU Professor of Marketing and Service Science Sanjit Roy said retailers often reinforce loyalty program use by reminding customers to scan their rewards cards at checkouts. However, customers may question whether the rewards they receive justify sharing their personal data, particularly when discounts and promotions are not sufficiently personalised to their shopping habits.
Despite these concerns, the researchers found that engagement with loyalty programs can lead to stronger engagement with retailers and greater customer loyalty, both in shoppers’ attitudes and purchasing behaviour. However, customers’ ability to wait for discounts can significantly affect how much they benefit from a program.
Dr Saalem Sadeque, Course Coordinator and Lecturer in Marketing at ECU, said a shopper who expects a frequently purchased product to go on sale may be able to postpone buying it and purchase more when the discount arrives. By contrast, someone who urgently needs an essential product, or cannot afford to buy in bulk, may miss the savings despite being loyal to the retailer.
The research found that successful loyalty program engagement depends on a combination of factors, including trust in the retailer, commitment, perceived benefits, the ability to wait for discounts and the ability to search for better deals across different retailers. “Our findings demonstrate that no one factor leads to engagement but rather a combination of all these factors,” Professor Roy said. Poor engagement can also make it more difficult for retailers to predict customer spending and cash flow.
For retailers, transparency and personalisation may be particularly important. Professor Roy said supermarkets should be transparent about pricing and business practices, provide strong customer service and consistently deliver on their brand promises. Retailers could also make better use of customer data to provide benefits that are genuinely relevant to individual shoppers rather than treating customers simply as data points.
Ultimately, the researchers argue that loyalty programs should provide clear and consistent value while building stronger relationships with customers. “A tailored, integrated strategy that aligns a loyalty program’s value with trust and relationship building is essential for sustaining customer loyalty and long-term retailer relationships,” Dr Sadeque said. Personalised offers that reflect customers’ needs and values could increase perceived benefits and make shoppers more likely to engage with loyalty programs actively.
More information: Stephen Skinner et al, Customers’ disposition towards loyalty program engagement, European Journal of Marketing. DOI: 10.1108/EJM-08-2024-0633
Journal information: European Journal of Marketing Provided by Edith Cowan University