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Prepared by: Sharon Brant – Director Media Contact : [email protected] (303-967-6323) Investor and Analyst Relations Contact: [email protected] (303-967-8276)
© 2008 First Data Corporation. All rights reserved. Proprietary.
Retail Rewards Programs – Consumer Insights
Key Insights 1. Grocery Stores and Specialty Retail Highest in Retail Program Membership 62% of consumers belong to a grocery store rewards program and 51% belong to a specialty retail
program.
2. Discounts at Point-of-Sale Most Preferred Reward Consumers identified receiving a discount at the point-of-sale as their most preferred retail reward,
however, less than half (46%) indicated they currently receive this reward from their retail rewards program.
3. Consumers Prefer to Shop Where They are Members, But Not Willing to Pay More While 71% of consumers agree that they prefer to buy from places where they are a member, only
23% are at least “somewhat” willing to pay more.
4. Selection of Gas Stations Greatly Influenced by Program Membership While Influence on Selection of Fast Food Retailer is Low
37% of consumers who are members of gas rewards programs indicated their choice of gas station is “very “influenced by their membership, compared to 4% of fast food members who select a fast food restaurant based on their membership.
5. “No Fee” Top Rewards Program Feature “No Fee to Join” was rated by 13% of consumers as the most important feature in a retail rewards
program.
About this study
First Data Competitive Intelligence conducted the Consumer Loyalty Study with over 1,000 U.S. consumers in July 2008. The study focuses on rewards programs with Financial Institutions (FIs), the travel sector and the retail sector. This CI Market Brief focuses on consumer insights regarding rewards for the Retail sector. Sample size completing the survey for the retail sector totaled 500.
© 2008 First Data Corporation. All rights reserved. Proprietary. Page | 2
Key Insight #1: Grocery Stores and Specialty Retail Highest in Retail Program Membership
62% of consumers belong to grocery store rewards programs with an average number of 2.2 memberships per participant. Grocery store members are very active with 91% of the memberships being used at least once since joining. 51% of consumers belong to specialty retail rewards programs with the largest specialty category membership being book stores. 62% of specialty retail members belong to book store rewards programs. While only 16% of consumers belong to a coffee shop rewards program, they are very loyal members making 84% of their purchases at stores they are members of.
Retail Rewards Program Membership
Industry Type
% of People Who Belong to Rewards Program
% “Active” Memberships* (Amount Total Memberships)
Average Number of Memberships (per Participant)
Percent Visits to Store Using
Rewards Memberships
Grocery 62% 91% 2 75%
Specialty Retail 51% 89% 2.1 75%
Pharmacy 36% 91% 1.2 88%
Department Store 21% 91% 1.6 83%
Gas/Fuel 18% 93% 1.3 75%
Fast Casual 18% 88% 1.6 48%
Coffee 16% 95% 1.3 84%
Discount Store 12% 93% 1.3 72%
Fast Food 6% 90% 1.4 48%
Date: July, 2008 N = 1,000
* For the purpose of this study, “active” is defined as follows: having used the rewards at least once since signing up for it.
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Key Insight #2: Discounts at Point-of-Sale Most Preferred Reward
In general, the retail rewards that members receive do not always match with their preferences. While “Discounts at the point-of-sale” is the most preferred rewards, less than half (46%) of members indicated that they receive that reward. The second most preferred, “Coupons for Discounts on Total Purchase”, however, is received by nearly two-thirds (63%) of members. While 62% of members indicated they received “Coupons for Discounts of Specific Items”, that reward is rated seventh in terms of preference.
Preferred Rewards (in Order from Most to Least Preferred)
Percent Receiving Rewards
1.) Discounts at the Point of Sale 46%
2.) Coupons for Discounts on Your Total Purchase 63%
3.) Free Merchandise or Upgrades 39%
4.) Discounted Prices 49%
5.) Cash Back 14%
6.) Discounts or Rebates on Gas 22%
7.) Coupons for Discounts on Specific Items 62%
8.) Points or Miles Redeemable for Merchandise or Upgrades 21%
9.) Money Added to a Prepaid / Gift Card 5%
10.) Special Members-Only Benefits 38%
11.) Prepaid / Gift Cards 9%
Date: July, 2008
N = 500
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Key Insight #3: Consumers Prefer to Shop Where They are Members, But Not Willing to Pay More
While 71% of retail rewards program members prefer to buy from places where they are a rewards member, only 23% indicated they are willing to pay more to shop there. More than half (56%) are willing to go out of their way to shop at a place where they belong to a rewards program.
Impact of Program on Purchasing Decisions
Date: July, 2008 N = 500
62%31%
50%
17%
14%
14%
14%
13%
18%
41%29%
41%
5% 15% 7%30%
0%
20%
40%
60%
80%
100%
I am willing to pay more to purchase items f rom a place
where I am a member of their
rewards program
I am willing to go out of my way to shop at
a place where I belong to a rewards
program.
I choose retailers, companies or brands
based on their rewards program
I prefer to buy f rom places where I am a
member of their rewards program
Disagree (0-4) Neutral (5) Somewhat Agree (6-8) Agree (9-10)
23%
71%
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Key Insight #4: Selection of Gas Stations Greatly Influenced by Program Membership While Influence on Selection of Fast Food Restaurant is Low
More than one-third (37%) of consumers who are members of gas station rewards program indicated that membership was “Very” influential in their choice of a gas station. That compares to only 4% of members of Fast Food rewards program who said that membership influenced their selection of a Fast Food restaurant. 41% of Fast Casual rewards members indicated that membership had “No Influence” on their selection of where to dine.
Influence of Loyalty Membership on Choice of Retailer
Date: July, 2008 N = See page 7
34%26%
9%
41%30% 27% 28% 31% 28%
12%9%
18%
16%22%
17% 12% 9% 14%
39%53%
36%
28% 44%
36% 37% 38% 34%
15% 12%
37%
15%4%
20% 23% 23% 24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No Influence Neutral Somewhat Influential Very Influential
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Key Insight #5: “No Fee” Top Rewards Program Features
Consumers don’t expect to pay a fee to join a retailer’s rewards program. Consumers are also interested in programs that offer “Ease of using Points/Rewards”; “Ability to Select Benefits of their Choosing”; and “Ease of Earning Points/Miles”.
Importance of Retail Rewards Program Features
Date: July, 2008 N = See page 7
No fee to join the program
13% Ease of using points/rewards
12%
Being able to select/redeem benefits of your own choosing
12%
Ease of earning points/miles
12%
Automatic redemption process
11%
Not receiving unwanted communication
9%
Being able to track the amount of points/
rewards9%
Ease of joining the program
8%
Receiving communication of special offers or
promotions6%
Having alternative methods for identifying
your membership6%
Having an appealing-loooking program card
1%None of these
1%
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Sample Size by Retail Program Type
All 500 respondents were asked core questions relating to their retail rewards program membership and needs. In addition, respondents were randomly divided into subgroups to answer questions related to specific retail program types. The following table summarizes the sample size by retail program type:
Sample Sizes by Program Type
Gro
cery
Spe
cial
ty
Ret
ail
Gas
/Fue
l
Fast
C
asua
l
Fast
Foo
d
Dis
coun
t S
tore
Pha
rmac
y
Dep
artm
ent
Sto
re
Cof
fee
N = 149 N = 146 N = 70 N = 105 N = 46 N = 70 N = 73 N = 71 N = 92
