The hurdle isn’t in persuading consumers to sign up for rewards programs, especially those offered at no cost, however. According to recent research from RIS News, of the retailers surveyed that offer a loyalty program, a third (33%) report that more than 50% of shoppers are members of the program.
The challenge is in offering a system that not only recognizes consumers’ brand loyalty, but also incentivizes them to continue shopping, refer their friends and family, and maintain a direct and continuous line of valuable zero- and first-party data that retailers can then use to retarget, personalize offerings, boost sales, and form valuable partnerships.
We’ve analyzed the retail industry's hottest retail loyalty plans for 2022, highlighting companies that continuously see growth across their loyalty membership count, are innovating new ways to create brand evangelists, and are streamlining rewards to provide a consolidated experience that creates a win-win scenario for multiple businesses and their shared consumers.
5. Tractor Supply Neighbor’s Club
Number of people in the program: 23.6 million, per the company’s Q4 2021 financial results
Type of program: Tiered, points accrue based on dollars spent
Cost to join: Free for base level, option to sign up for credit card
Tractor Supply’s loyalty program was updated last yearand now features three tiers: Neighbor, Preferred Neighbor, and Preferred Plus Neighbor.
At a minimum, rewards members receive a birthday gift, exclusive offers, and receipt-free returns. On the third tier, members become TSC personal credit cardholders and are eligible for additional rewards, including free, same-day delivery (two per quarter), full-day trailer rentals (two per quarter), and everyday standard shipping on $29 minimum order spends.
TSC personal credit cardholders also receive 5% on purchase (five points per dollar spent) and a $20 bonus reward upon sign-up.
Members redeem points in the company’s rewards hub, called The Market, where they can obtain services and more in exchange for rewards points.
According to an October 2021 earnings call, the company reports that its members account for nearly 70% of Tractor Supply Company’s sales, and year-of-year sales from members increased more than 20%.
Additionally, Neighbor’s Club members spend more than about three times the rate of non-members, and retention rates have exceeded 95% for high-value customers.
The new program showcases a continued shift toward personalized services for its professional consumers, a growing segment that overtakes its DIY consumer base in sheer volume of spend, according to the company.
Rewards members earn e-gift cards when they spend in-store and online on eligible purchases. Additionally, they can access business resources to tackle back-of-house-operations, and receive exclusive offers for rewards on eligible paint purchases, such as free select snacks and drinks.
Members can navigate their earned points on a mobile and online user experience that allows them to track and claim rewards.
The company also announced it would soon be offering MVPs Bonus Points that can be exchanged for additional rewards.
Amazon Prime’s cost is climbing $20 to $139 for an annual membership, or nearly $180 per year if consumers choose the new monthly $14.99 fee.
According to data from Chicago research firm Consumer Intelligence Research Partners, although Amazon Prime members who subscribe monthly vs. annually pay more, they are almost as loyal as annual members, with nearly 97% likely to renew compared with 99% for their counterparts.
A note regarding the subscription number reported above: One Prime subscription can have multiple members as many households share a single account.
Today’s hottest loyalty offerings signal that companies continue to invest in loyalty tracking (26%) and personalized offers (23%), according to an RIS study that looked at how retailers are considering upgrading their services.
And according to The Forrester Wave: Loyalty Service Providers report, 83% of the companies surveyed plan to increase their spending on loyalty by 5% or more in the next 12 months.
While paid subscriptions services reside in their own category, McKinsey data shows that demand for these types of offerings continues to grow.
In 2019, consumers spent an estimated $25 billion to $30 billion on paid loyalty programs, about a 25% to 50% growth rate from the previous year. Additionally, 63% of consumers are already members of at least one paid loyalty program.
- Consumers are willing to share data if they are being incentivized by rewards and feel appreciated.
- Retailers can leverage zero- and first-party data to provide additional personalized messaging and offers that will continue to incentivize consumers but can also be valuable in retail partnerships.
- Loyal consumers will pay for subscription services if the amenities provided in return are substantial, and continued promotion of exclusive discount events are key to incentivizing continued purchasing.
- Retailers can get the most out of their loyalty offerings with AI-enabled capabilities that include benchmarking, customer segmentation, behavioral analytics, churn/retention models, predictive models, look-alike modeling, and dashboards to visualize the data easily, according to Forrester.