Dive Brief:

• A majority of consumers — seven in 10 — say that loyalty programs are a key factor in deciding which businesses to frequent, according to a Snappy survey of 1,500 Americans released last week. 
• Customers’ main considerations for choosing a brand are product quality and price, Snappy found. But nearly half of customers say they choose the brands they do business with based on if the company has a loyalty program. 
• Loyalty programs also impact customer spending. Seven in 10 consumers say they will join a loyalty program before making their first purchase, and three-quarters say they will spend more money as a loyalty member.

Dive Insight:

A well-crafted loyalty program can be a differentiator for brands looking to acquire — and keep — new customers.

The study found that the top feature customers want from a program is the ability to earn rewards points toward discounts, bonuses or exclusive merchandise. Customers also want exclusive treatment, whether that’s by earning discounts only available to members or gaining access to exclusive perks, such as free shipping.

Customers appreciate loyalty program gift giving, too, with three-quarters of customers who receive a gift or exclusive merchandise reporting that they see a brand more favorably. Nine in 10 customers say they are interested in programs that allow them to choose the gift, and the same ratio would like to receive them on their birthdays.

Sephora, for example, regularly finds that its birthday gift is its loyalty program’s No. 1 benefit to consumers, Emeline Berlind, senior vice president and general manager of loyalty at Sephora, told Retail Dive last year. 

Sephora’s BeautyInsider program offers members the choice of gifts on their birthday, which currently ranges from Moroccanoil hair products to Kosas lip and brow products. Its loyalty program boasts 31 million members in the United States, and a majority of its sales come from members, Berlind said. 

There are traps with rewards. Snappy found that the most common rewards program pitfalls include complicated redemption processes, unattractive rewards and invaluable incentives. That’s in line with other research; more than 3 in 5 consumers seek simple cash-back loyalty programs, according to a Deloitte survey from January.

Such findings have driven brands to simplify their loyalty programs and offer straightforward financial rewards. Most recently, Foot Locker revamped its FLX loyalty program to include cash back rewards after careful listening to customer feedback, an executive told sister publication CX Dive.