Privacy Concerns Can Hamper Loyalty Programs

Many Americans are thinking twice about signing up for loyalty programs because they want to be sure their personal information is safe, a new study from research firm Mintel, of Chicago, reveals.

About a third (32%) of consumers said the protection of personal information is an important feature of a loyalty program. More than one in 10 loyalty club members (13%) were uncomfortable with the amount of personal information requested when they enrolled in a program, and 10% were concerned about letting go of that information.

Yet merchants need the information to customize their offers to frequent customers. And 16% of participants in retail loyalty programs lack personalization. Young adults, or Millennials, especially prefer programs that are tailored to their shopping habits.

“Reassurance of privacy is undoubtedly a key strategic tool in loyalty program engagement, but there is a paradox at play here between personalization and privacy,” said Ika Erwina, retail and technology analyst at Mintel. “Ironically, even though loyalty program members crave a more personalized, relevant experience, they also show concern about sharing the information required to enable the retailer to deliver on this desire.”

The Mintel study shows age influences membership. Supermarket loyalty programs are more popular among people age 35 and up, while the age 18 to 34-year-olds tend to enroll in food service, mass merchandiser, online retailer, convenience stores or fuel, or dollar discount store programs. Club store memberships also are popular among younger consumers.

The Millennials also favor environmental and social responsibility, so retailers can use social issues to boost program awareness and participation among young adults.

Overall, what do consumers want in a loyalty program? Ease of redeeming rewards (55%), ease of earning points (51%), and monetary rewards (51%) ranked highest.
And, 36% are lured by exclusive deals and coupons; 22% want easy enrollment options.

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