GET WITH THE PROGRAM - Worldwide | Nielsen

1 GET with THE PROGRAMCARD-CARRYING consumer PERSPECTIVES ON RETAIL LOYALTY- PROGRAM PARTICIPATION AND PERKSNOVEMBER 20162 GLOBAL RETAIL LOYALTY SENTIMENT REPORTFAITHFUL FOLLOWERS OR FAIR-WEATHER FANS?AROUND THE WORLD Done well, loyalty programs can help drive more frequent visits and heavier purchasing. More than seven in 10 global respondents (72%) agree that, all other factors equal, they ll buy from a retailer with a loyalty PROGRAM over one without. More than half of global loyalty- PROGRAM participants (51%) say product discounts are among their three most-valued loyalty- PROGRAM benefits, followed by monetary rewards in the form of rebates or cash back (45%). Generic deals, however, create little differentiation; retailers must focus on connecting with consumer needs and delivering greater value. Monetary rewards are important everywhere, but non-monetary rewards resonate more strongly in some African/Middle Eastern countries than globally.

2 Examples include recognition as a valued customer in Morocco, Egypt and Pakistan and charitable donations in Egypt and Morocco. Consumers crave flexible loyalty programs . Roughly eight in 10 global loyalty- PROGRAM participants say it is somewhat or very appealing to be able to earn rewards regardless of whether a purchase was made in store, on a website or on a mobile device (81%) and to choose among several types of rewards (79%). Digital tools and features are particularly appealing in Asia-Pacific, where the highest percentage of loyalty- PROGRAM participants in the Worldwide study rate as appealing store-specific loyalty mobile apps (69%), integration with digital payment systems (78%) and integration with third-party apps that consolidate loyalty- PROGRAM information (63%).3 Copyright 2016 The Nielsen CompanyWhen it comes to shopping, choice is the operative word.

3 Whether consumers shop at a specialty retailer or a mass merchandiser, on a computer or a mobile device, they have never had so many ways to please the palate, discover the deal or pay the piper. Differentiating your brand in such a crowded space is not only critical, but also more difficult than retail loyalty PROGRAM can be an effective way to create competitive advantage by reducing customers likelihood to switch stores. Indeed, more than seven in 10 loyalty- PROGRAM participants in Nielsen s Global Loyalty-Sentiment Survey (72%) somewhat or strongly agree that, all other factors equal, they will buy from a retailer with a loyalty PROGRAM over one without. Loyalty programs can also help drive more frequent visits and heavier purchasing. Nearly three-quarters of global loyalty- PROGRAM participants (74%) agree that loyalty programs make them more likely to continue doing business with a company, and two-thirds (67%) agree that they shop more frequently and spend more at retailers with loyalty retailers are not the only ones benefiting from loyalty- PROGRAM participation.

4 Two-thirds of global respondents (66%) agree they d shop more at online retailers if these sellers provided loyalty benefits similar to those of traditional in-store retailers. And increasingly, loyalty programs are at the leading edge of technology as retailers incorporate advanced analytics, mobile experiences and other digital solutions into their many shoppers appear to love loyalty programs . In fact, 66% of global respondents say they belong to one or more programs . But there is often a large gap between the number of programs in which shoppers are enrolled and the number in which they actively participate. So what distinguishes the winners from the rest of the pack? While many tried-and-true retail loyalty- PROGRAM fundamentals can be applied anywhere in the world, there also are unique differences by country. For example, mobile loyalty apps are particularly appealing in India and China, while non-monetary retail loyalty reward programs are important in Morocco.

5 Knowing what PROGRAM attributes resonate best with your customers will equip you to drive AGREE THAT THEY SHOP MORE FREQUENTLY AND SPEND MORE AT RETAILERS with LOYALTY RETAIL LOYALTY SENTIMENT REPORT Loyalty programs are intended to ultimately increase a retailer s share of the consumer s wallet, said Louise Keely, executive vice president, Nielsen Global Retail Practice. But loyalty programs cannot be designed in a one-size-fits-all manner. There are big differences in loyalty PROGRAM preferences and habits across countries, and across consumer groups within countries. These differences include how consumers want to use technology to engage with their loyalty PROGRAM , what tangible benefits they are seeking from loyalty programs , and even how much they care about loyalty programs . Retailers need to determine who they want to bring into the store or onto the website more, and design a loyalty PROGRAM for them.

6 The Nielsen Global Retail Loyalty-Sentiment Survey polled more than 30,000 online respondents in 63 countries to understand what drives consumers to participate in retail loyalty programs . We examined self-reported participation rates, the rewards or benefits valued most, and the features that are most appealing in the loyalty programs of the future. Finally, we provide insight into the ways to build and maintain a winning loyalty THE GLOBAL SURVEY METHODOLOGYThe findings in this survey are based on respondents with online access in 63 countries. While an online survey methodology allows for tremendous scale and global reach, it provides a perspective on the habits of only existing internet users, not total populations. In developing markets where online penetration is still growing, respondents may be younger and more affluent than the general population of that country.

7 In addition, survey responses are based on claimed behavior, rather than actual metered data. Cultural differences in reporting sentiment are likely factors in the outlook across countries. The reported results do not attempt to control or correct for these differences; therefore, caution should be exercised when comparing across countries and regions, particularly across regional 2016 The Nielsen CompanyMONEY MAKES THE LOYALTY PROGRAM GO ROUNDIt should come as no surprise that for the majority of respondents, financial incentives are the primary reason for participating in loyalty programs . Two-thirds of global respondents who participate in loyalty programs (67%) somewhat or strongly agree that they join these programs only to get free products or discounts. When it comes to the most-valued loyalty- PROGRAM benefits, monetary incentives top the list in every region, by a wide margin.

8 More than half of global loyalty- PROGRAM participants (51%) say product discounts are among the three most valued benefits, and discounts are particularly popular in Europe (62%). Fewer global PROGRAM participants (45%) say rebates or cash back are among the most-valued benefits, but cash back is slightly more popular than discounts in North America (49% versus 46%) and Latin America (48% versus 47%). However, creating meaningful differentiation requires offering more than generic deals. While tangible discounts are a usage driver for loyalty programs , share-driving programs go far beyond these benefits, said Keely. Tailoring loyalty benefits for specific consumers, and using the loyalty PROGRAM engagement vehicles be it via an app, email, or in-store interaction all allow retailers to personalize the loyalty PROGRAM so that it s not just a discount vehicle.

9 Providing advice, tailored offerings, and other services will delight the loyalty- PROGRAM member. In this way, there is no one loyalty PROGRAM each shopper will have his or her own version of the PROGRAM , tailored to his or specific needs. Financial rewards are the most highly-valued loyalty- PROGRAM benefits for members of all ages, but product discounts and cash back or rebates are rated higher by older respondents than by their younger counterparts. Younger loyalty- PROGRAM participants value a few non-monetary benefits more highly than their older counterparts, though the percentages who say these are among the top three benefits are rather low. Fifteen percent of Millennials say higher-priority service, such as first-class seating or VIP customer service is one of their top three loyalty- PROGRAM benefits, more than double the percentage of Baby Boomers and Silent Generation respondents (6% of each group) who say so.

10 In addition, 12% of Millennials say their most-valued benefits include personalized products or service experiences, and 10% say the same of charitable donations. These response rates are more than three times higher than for Baby Boomers (3% for each type of benefits) and Silent Generation respondents (4% and 3%, respectively).FINANCIAL INCENTIVES DRIVE LOYALTY PROGRAM PARTICIPATIONPERCENTAGE WHO SAY BENEFIT IS AMONG THEIR THREE MOST-VALUED REWARDSPRODUCT DISCOUNTS51%45%33%32%22%15%13%12%12%10%7 %REBATES OR CASH BACKFREE PRODUCTSFREE SHIPPINGFREQUENT FLYER POINTSEXCLUSIVE ACCESS TO SALES OR MERCHANDISEDISCOUNTED SHIPPINGHIGHER PRIORITY SERVICERECOGNITION AS A VALUED CUSTOMERPERSONALIZED PRODUCTS OR SERVICE EXPERIENCESCHARITABLE DONATION MONETARYNON-MONETARYBase: All respondents who are members of retail loyalty programs Note: Respondents could select top three benefits Source.