Does Implementing a Reward Program Increase Brand Loyalty

Last updated on July 3, 2023

Loyalty programs have been around for quite some time now. With many organizations adopting these programs to increase brand awareness the question remains, is it effective?

Loyalty programs are offered as a way to attract and retain customers. They may provide rewards, discounts, or other special incentives. Caddle surveyed 9,138 Canadians in August 2022 and has determined that practically all Canadian Shoppers have used at least one type of loyalty rewards program.

Did You Know?

91% of people use free retail loyalty rewards programs!

The Economic Factors

The current economic context has magnified the importance of reward programs. In an economy where inflation is at an all-time high, companies need repeat business since attracting new customers is challenging in the current economic landscape.

Decision-Making Factors for Canadians

Loyalty programs rank second behind price for most influential factor when determining where to shop.  Although price is the main factor, many shoppers tend to shop at a store where they collect points without giving it much thought. Gen Z and Millennials are the most likely to shop from a store where they collect points without much planning. 

In a hypothetical scenario in which some stores would stop offering rewards, three-quarter of shoppers would change their shopping habits. Half would continue to shop at the same store only less frequently, while 20% would shop there only when necessary.

Why Implement a Rewards Program?

Loyalty programs offer further information on the type of products that may be purchased and whether certain incentives are more effective than others. Acquiring new customers is more expensive than selling to an existing one, meaning that creating loyalty programs is a cost-effective way to retain customers.

51% of Canadian shoppers say loyalty programs influence their shop selection either a lot or completely.

Different generations have different top motivators that drive them to use loyalty rewards programs. Interestingly, for Gen Z, having the ability to use the points in more shops is their top priority, whereas millennials, Gen X, and baby boomers care most about having relevant offers. The influence of rewards programs, specifically on Gen Z shoppers in the past few years, has increased notably compared to other generations.

By seamlessly integrating these programs into their daily routines, customers can develop a deep sense of brand loyalty. Customers will become invested in the program and integrate shopping into their daily, weekly, or monthly routine.

Loyalty programs are a crucial factor to consider when making decisions about where to shop. Join us for a webinar on July 5th from 12-1 pm EST as we dive into the evolving dynamic of consumer loyalty. Learn about customer retention and how to reinforce desirable customer behaviour. Perhaps when you next walk into a store after the webinar, you’ll think about why because, who knows, it may be that their loyalty program entices you, whether consciously or subconsciously.

For more data about Loyalty Programs reach out to our team to become a client. You can also sign up for our free weekly newsletter to receive our daily survey data.

*Disclaimer: all data presented is owned by Caddle and has a Margin of Error of 1% or lower.

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