As Starbucks and J.Crew enhance their rewards programs, consumers crave simplicity

The trend: Retailers and brands are doubling down on rewards programs at a time when rising prices are causing customer loyalty to weaken.

• Starbucks interim CEO Howard Schultz teased an enhancement to the company’s rewards program that includes coffee-themed NFTs providing consumers with access to exclusive content and other perks. The coffee chain plans to roll out the initiative at its investor day in September.
• J.Crew overhauled its J.Crew Passport program by adding multiple tiers that lead to perks such as a birthday shopping credit and free monogramming. As members rack up points, they can move up tiers and receive access to more exclusive benefits.
• General Mills introduced an app-based rewards program that offers points redeemable for gift cards, merchandise, and other perks.

Why now? As prices rise, customer loyalty is weakening. Thirty-eight percent of the 39 consumer brand categories—including dining and retail—analyzed by Brand Keys are experiencing "declining” loyalty.

• Rewards programs can help counter the trend. For example, unlike many fast-food chains that have seen a downturn in the number of people buying combo meals, Restaurant Brands International’s eateries have seen an uptick in customers redeeming loyalty program rewards to cut the price of their meals. The company has encouraged that shift by pulling back on paper Burger King coupons to incentivize consumers to join its rewards program and access promotions and deals.
• By gathering data about consumers, retailers can create more personalized offers that are likely to resonate with audiences. This strategy also addresses customer needs, as 55% of consumers would use loyalty programs more often if they received personalized rewards, per a Salesforce survey.

KISS (Keep it simple, stupid): There’s no more important element to a rewards program than enabling a seamless user experience that incentivizes members to participate.

• Sixty-one percent of consumers would use loyalty programs more often if they automatically applied rewards and 44% would do so if they offered simpler terms and conditions, per Salesforce.
• “Reward and loyalty programs need to be easy for the customer to use,” said Patty Soltis, eMarketer principal analyst at Insider Intelligence. “The app is not the new punch card for loyalty. Customers in loyalty programs want personalization and easy-to- understand promotions. Keep it simple.”

The big takeaway: Rewards programs should be a straightforward trade in which members share firsthand data in exchange for a clear, desired benefit, such as a discount or free item. The more consumers need to invest time and/or energy to understand a program’s details and nuances (such as how to use a NFT), the fewer the people who are going to use the program.

This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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