May 2017

IMA Europe Milan – 18th May 2017

Consumer’s perception of digital rewards in loyalty

programs: insights from a multi-country research

2nd Edition

Daniele Tonini – Target Research Partner & Bocconi University Contract Professor

May 2017

SECTION 1 Research framework and goals

and sample overview

SECTION 2 Main insights

SECTION 3 Conclusions

May 2017

SECTION 1 Research framework and goals

and sample overview

SECTION 2 Main insights

SECTION 3 Conclusions

May 2017 4

RESEARCH FRAMEWORK

AND GOALS

WHAT Multi-country primary market research

WHYResearch questions:

► Which are the differences among key European

Countries with respect to Loyalty Programs perception

& experience? And compared to the previous wave?

► At which point is the digitalization process of rewards in

loyalty programs?

► Which is the level of acceptance related to the

different types of reward?

► Which is the perception of loyalty programs sponsored

by e-commerce stores?

HOW CAWI (Computer Aided Web Interviewing)

using Certified Panel

Structured traditional questionnaire

WAVE 1

2016

WAVE 2

2017

May 2017 5

SAMPLE OVERVIEW

TARGET POPULATION

Consumers, members of Loyalty Programs(LPs) sponsored by:

5 EUROPEAN COUNTRIES

Online panel

1.620 Complete

interviews4.025 Contacted

people

Supermarkets

Petrol companies

Credit card/

Banking institutions

Italy

Switzerland

Germany

France

UK

Data collection time frame4th March – 16th March 2017

Germanyn=320

Francen=346

19%

20%

20%

21%

20%

Italyn=304

Switzerlandn=325

United Kingdomn=325

May 2017 6

SAMPLE OVERVIEW

Employee / worker

Pensioner

Manager / entrepreneur/ self employed

Student

Homemaker

Unemployed

Retailer /artisan

Others

49%

51%

38%

40%

22%

22%

31%

18%

10%

6%4%

5%4%

Young Adults (18-35)

Middle-aged Adults (36-65)

Older Adults (>65)

Male

Female

May 2017

SECTION 1 Research framework and goals

and sample overview

SECTION 2 Main insights

SECTION 3 Conclusions

May 2017 8

Main insights

LPs PARTICIPATION

86%

39%

18%

89%

25% 32%

73%

34%

15%

87%

8%16%

87%

30% 26%

Supermarkets Petrol companies Credit card/Banking institutions

IT CH DE FR UK IT CH DE FR UK IT CH DE FR UK

+4%Compared to 2016 +0% +0%

“Do you participate in a points collection program sponsored by one of the following businesses/institutions? ”

Supermarkets count the highest number of participants in a LP (80%), showing a growth over the

last year

The LPs of Petrol Companies have about 30% of penetration, except for France; whereas the LPs

of Credit Cards are mostly popular in Switzerland and in the UK (about 30%)

(TOT sample)

May 2017 9

Main insights

LPs PARTICIPATION

50% 53%

15%23%

36%26%

55%

29% 27%35%

21%15%

50%

31% 31%23%

13% 10%

65%

27% 23% 23% 22% 26%32%

8% 9%17% 13%

25%

Clothing shops Electronics shops Furniture shops Airline companies Bookshops E-commerce

IT CH DE FR UK IT CH DE FR UK IT CH DE FR UK IT CH DE FR UK IT CH DE FR UK IT CH DE FR UK

“Do you participate in a points collection program sponsored by one of the following businesses/institutions? ”

On average, the loyalty programs sponsored by clothing shops are the most popular

In Italy, Electronic Shop LPs have the highest participation, followed by clothing shop LPs

and Bookshop LPs

Germany and Switzerland show lower penetration of E-commerce LPs

+3%Compared

to 2016 +2% +1% +2% -1%(TOT sample)

May 2017 10

Main insights

E-COMMERCE

LPs

“What is your perception of the spread of the LP sponsored by

e-commerce stores compared with the traditional loyalty programs?”

Germanyn=320

Francen=346

Italyn=304

Switzerlandn=325

United

Kingdomn=325

Don’t exist - I’ve never heard about them / They are LESS prevalent

They are MORE prevalent

3%

3%

8%

6%

11%

E-commerce loyalty programs are still not deeply present in consumers’ mind and considered less widespread than the traditional ones

In Germany there is the highest perception of the spread of this type of LPs, contrasting with their low participation (previous slide): this could mean a weak interest in them (at least for now)

Year: 2017

May 2017 11

Main insights

E-COMMERCE

LPs

“In your opinion, how much effective are the LP

sponsored by e-commerce stores compared with the

traditional loyalty programs?”

18% 71% 11%

CH

23%

LESS EFFECTIVE

EQUALLY EFFECTIVE

MORE EFFECTIVE

Highest percentage in:

UK

76%IT

18%

MOTIVATIONS:

Only the 11% of the respondents considers e-commerce LPs more effective than those of the traditional stores. The strong majority doesn’t find differences between the two types of LP

It appears that the perceived effectiveness is strongly correlated to how much an individual is used to shop online

May 2017 12

Main insights

SOUGHT BENEFITS

1 Usefulness of the reward

2 Perceived value of the reward

3 Ease/convenience of receiving the reward

4 Ease/convenience of requesting the reward

5 Immediate availability of the reward

Type of benefits

REWARDITSELF

Type of benefits

CORRELATEDSERVICES

“Which aspects are most influential in your selection of a reward from

a points collection program, regardless of the reward type?”

FIRST 5 MOST IMPORTANT BENEFITS

The most important sought benefits are the same of the previous year

At the top the usefulness and the perceived value of the reward, immediately followed by more service-related features linked to a need for efficiency

Year: 2017

May 2017 13

Main insights

SOUGHT BENEFITS

Decreasing importance

REWARDITSELF

Increasing importance

CORRELATEDSERVICES

Possibility of transferring

the reward to a third party

COMPARING WITH THE PREVIOUS WAVE: 2017 vs. 2016

Reward in digital format (e.g. via email)

Ease/convenience of requesting the reward

Speed of delivery once the reward is available in the shop

+4.5%

+3.3%

+0.6%

+0.5%

The reward is current/modern

Possibility of combining reward from the same series/brand

Originality of the reward

Perceived value of the reward

Usefulness of the reward

-1.7%

-1.7 %

-1.1 %

-1.1 %

-1.0%

UK+8%

FR+7%

CH+8%

CH+3%

FR+2%

UK-4%

FR+7%

DE-4 %

FR-5%

CH-5%

IT-3%

CH-3 %

FR-3%

The importance of all the benefits related to the reward itself has showed a slight decreasecompared with the first wave, whereas benefits derived from added services have increased noticeably their relevance, particularly those which mean a loss of materiality of the reward

IT+4%

Year: 2017

May 2017 14

Main insights

TYPE OF REWARD

DEFINITION

GIFT CARDPlastic card/digital coupon or voucher with a value to be used for purchases in a specific chain of shops or website

CASHBACKA partial refund in cash following a purchase

DISCOUNTPercent discount on subsequent purchases

PHYSICAL REWARDObjects or tangible assets of various types/values

EXPERIENTIAL REWARDEvents, travel, dinners, spa treatments, gift packages, etc.

May 2017 15

Main insights

TYPE OF REWARD

33%

19%

19%

21%

17%

67%

81%

81%

79%

83%

Germanyn=320

Francen=346

Italyn=304

Switzerlandn=325

United

Kingdomn=325

PHYSICAL WORLDPhysic reward + Experience

INTANGIBLE WORLD Gift card + Discount + Cashback

+4.3%

+8.5%

+8.2%

+3.8%

+10.6%

“Which is the most preferred type of reward?” INTANGIBLE WORLDCompared with 2016

Year: 2017

Consistently with the previous analysis, intangibility is becoming more and more imperative over time, and rewards such as gift card, discount and cashback are preferred to physical ones and experience cross countries

May 2017 16

Main insights

TYPE OF REWARD

18%

24%

4%

16%

38%

17%

24%

4%

13%

42%

13%

22%

4%

17%

44%

“Which is the most preferred type of reward?”

BY LOYALTY PROGRAM

Physical reward

16%

Discount

23%

Experience

4%

Giftcard

15%

Cashback

42%

Year: 2017

Cashback is the most favourite reward particularly if linked to a credit card/banking LPs

Discount, physical rewards and gift cards follow

Discounts and physical rewardsare considered more suitable for both supermarket and petrolcompany LPs

May 2017 17

Main insights

TYPE OF REWARD

28%

13%

17%

16%

14%

30%

31%

22%

27%

12%

5%

5%

2%

5%

3%

14%

15%

6%

21%

21%

22%

35%

53%

31%

50%

Cashback

Discount

Physical

reward

Giftcard

Experience

“Which is the most preferred type of reward?”

BY COUNTRY

Germanyn=320

Francen=346

Italyn=304

Switzerlandn=325

United

Kingdomn=325

Year: 2017

If customers had to choose only one reward, cashback would be the first choice in all the countries, except for Italy, where the discount and physical rewardsare still preferred

In UK, as in the previous wave, gift card performs better than in the other countries, ranking second this year

May 2017 18

Main insights

TYPE OF REWARD“In a head-to-head comparison between two

different types of rewards, which do you prefer?”

Gift Card

Gift Card

Gift Card

Physical

reward

Physical

reward

Experience

Gift Card

Experience

Physical

reward

Discount

Physical

reward

Discount

Experience

Experience

Discount

Discount

Cashback

Cashback

Cashback

Cashback

Indifference

Highest increase in left reward compared to 2016

CH

UK

CH

IT

Compared to 2016

Gift

CardPhys.

Disc.

Exp.

Exp. Disc.

Gift card, compared to 2016, has gained ground in every one-to-one comparisons, especially versus Physical reward and Discount

In terms of overall preference, the Cashback is the clear winner also in this analysis

TotalSample

(2016 vs. 2017)

Gift

Card

Gift

Card

Slight preference

Moderate preference

Strong preference

Legend:

May 2017 19

Main insights

GIFT CARD“Which form of gift card

would you rather receive?”

Physical or Digital

BY COUNTRY

Germanyn=320

Francen=346

Italyn=304

Switzerlandn=325

United

Kingdomn=325

TOTAL SAMPLEn=1620

Compared

with 2016

DIGITAL Voucher sent by

email in real time

+20%

+14%

-10%

+21%

-23%

+4%

Year: 2017

Customers would like to receive more and more vouchers via email instead of the plastic gift card, especially in Italy and in France where the digital type has even overtaken the physical one

Germany and, strongly, the UK are buking the trend

May 2017 20

Main insights

GIFT CARD“Which is the most

preferred type of giftcard?”

Year: 2017

Gift cards are preferred for general online shopping and supermarkets

Generally customers would like to receive gift card to do the day to day shopping, rather than for less frequent purchases (electronics, travels, furnishings)

Supermarkets/food

General online shopping

Petrol Clothing Electronics TravelFurnishings/

design

CH

66%UK

60%IT

53%CH

44%IT

35%CH

32%DE

8%

TOTA

L SA

MP

LEH

igh

est

p

erc

en

tag

e

May 2017

SECTION 1 Research framework and goals

and sample overview

SECTION 2 Main insights

SECTION 3 Conclusions

May 2017 22

Conclusion

MAIN FIGURES

+5%ONAVERAGE

INTEREST IN INTANGIBLE REWARDS

+3%ONAVERAGE

IMPORTANCE OF REWARD IN

DIGITAL FORMAT

42%ONAVERAGE

OF RESPONDENTS WOULD LIKE CASHBACKAS REWARD

58%ONAVERAGE

OF RESPONDENTS PREFER

SUPERMARKETS GIFT CARD

+4%ONAVERAGE

INTEREST IN DIGITAL

GIFT CARD(compared to

plastic)

May 2017 23

LOSS OF MATERIALITY

MONEY INSTEAD OF

GOODS

CONSUMERS’

DEMAND

Conclusion

ACTUAL TRENDS

DAY TO DAY SHOPPING INSTEAD OF

OCCASIONAL ONE

Accessibility Flexibility Efficiency My own need

satisfaction /

personalization

Management of

expenses

GAINED

BENEFITS

Effect on consumers’ final choices