Last updated on June 28, 2023

Mary Pilecki
VP and Principal Analyst @ Forrester
October 13th, 2021 | 5 minutes read
Table Of Contents

Mary Pilecki is Forrester’s vice president and principal analyst for all things customer loyalty, her research spanning from loyalty strategy, programs, and consumer trends to the tools, skills, and processes B2C marketers need to manage and measure loyal customer relationships.

Yotpo recently hosted a webinar in which Mary Pilecki was a guest speaker. In our following Q&A, she answers some of the biggest questions about enterprise loyalty that brands are asking as we enter the age of the connected consumer — growing expectations from shoppers for omnichannel loyalty experiences, how quickly a program can generate ROI, and more.

As a C-Level executive, what do I need to know about Loyalty programs?

Loyalty strategies are essential for B2C businesses today to keep customers engaged.  And while every loyalty strategy doesn’t require a supporting loyalty program, we know that loyalty programs are very popular: According to Forrester Analytics Consumer Technographics Benchmark Survey, 2021:

  • 86% of U.S. online adults belong to at least one loyalty program
  • 73% do so because they believe loyalty programs save them money
  • 55% like getting messages, offers, or promotions that are more relevant to them

And most loyalty programs are profitable — 63% of U.S. online adults say they spend more money with companies with which they participate in a loyalty program. Further, loyalty programs are an effective antidote to data deprecation — brands are actively using them to collect personal data from customers who share it in exchange for some sort of value (like loyalty points, free samples, or personalized offers).

What role does introducing a loyalty program have in the digital transformation of organizations as more retailers requiring a more seamless omnichannel experience?

The Covid-19 pandemic forced many businesses to start or accelerate their digital transformation efforts, and loyalty programs must be part of that transformation. In 2020 we saw many “punch card” programs converted to digital programs that are now accessible and usable across both digital and in-person channels. This is great for both consumers and brands because the loyalty programs can now be enhanced with gamification, personalized offers, and real-time, contextual information.

Consumers expect their interactions with brands will persist across channels and devices and are disappointed when they don’t. So, retailers need to ensure that their loyalty programs are not only accessible across touchpoints but go the next step and extend the interaction as well by enabling customers to use their rewards at the point of sale.

How can brands leverage the zero-party data they collect from their loyalty program?

Consumers who share their personal data with brands expect some value in that transaction, and brands can deliver by using that data appropriately to deliver personalized experiences based on the information collected. For example, a U.S. fashion retailer uses the information customers share in style quizzes and challenges to better understand their preferences, and then the brand sends them curated product offers based on their answers.

And personalization is successful — rewards members at a major pharmacy retailer converted 30% more than average with personalized offers. Smart brands use the zero-party data they collect to improve customer journeys and experiences, which generate positive customer emotions that ultimately drive purchase behavior.

Loyalty is a long-term investment, which might take too long to see value from. With my organization’s limited bandwidth, why is it still worth investing, and how fast can we expect ROI?

The return on investment for a new loyalty program will vary based on how quickly the brand adopts any new technology and how well it executes its loyalty strategy. But, companies that embrace loyalty across the organization often accelerate the ROI because all the functional groups are working towards the same goal.

The ROI for loyalty programs should be calculated by adding incremental revenue from the program to the savings derived through marketing efficiencies and driving desired member behaviors. Then the brand must subtract the costs for technology adoption, testing, implementation, and ongoing operations and maintenance.

Forrester has built an ROI model for loyalty based on its Total Economic Impact™(TEI) framework and interviewed dozens of customers about their experiences. We see an average ROI for loyalty programs of between one and two years when the brand has implemented new technology.

I have a Customer Data Platform (CDP). Why do I need a Loyalty Program?

CDPs centralize customer data from multiple sources and make it available to systems of insight and engagement — such as loyalty technology. But CDPs don’t generate interactions with customers as loyalty programs do — CDPs support loyalty strategies and programs by supplying unified data to feed loyalty activities. Use your CDP to power your loyalty program with relevant customer data.

Next steps for your brand’s loyalty strategy

As consumers continue to expect more from brands they love, businesses must meet and exceed these expectations with their approach to loyalty. If you’re interested in learning more about how to accomplish this for your business, watch guest speaker Forrester’s Mary Pilecki discuss how emotional loyalty and strategic loyalty programs future-proof brands and drive top-line growth below. And, schedule a call with Yotpo’s enterprise team to talk through the specifics of building a loyalty program for your business today.