Merchants PYMNTS Pollinate Study: ‘Local Loyalty’ A Huge Worldwide Opportunity For Shoppers

PYMNTS Pollinate Study: ‘Local Loyalty’ A Huge Worldwide Opportunity For Shoppers, Merchants

June 02, 2021 at 02:30PM

Reconnoitering the levers and dials of experience as it relates to loyalty, PYMNTS researchers recently uncovered four distinct personas emerging post-pandemic. “Local shoppers” prefer intimate Main Street boutiques, “online shoppers” are devoted to digital, “national shoppers” like name-brand chains, while “mass merchant shoppers” go for deep discounting.

What do the shopper types have in common? Love of loyalty, rewards — and community.

The PYMNTS May 2021 report Making Loyalty Work For Small Businesses, a Pollinate collaboration, looks at these shopper preferences by the numbers and through a decidedly local lens.

Drawing on more than 4,500 survey responses from the U.S., the U.K., Australia and Brazil, the new report notes, “A key finding centers on the importance of having a digital channel for communicating and connecting with local shoppers and how local businesses can reimagine their loyalty programs to meet their customers’ needs and expectations.”

How small and medium-sized businesses (SMBs) do this — and how quickly — matters right now, as loyalty decisions made now will play a huge role in who’s still around a year from now once the pandemic haze finally lifts.

Figure 1

Making Local Loyalty Worth It For Consumers

Several things leap out of the findings, few more so than the fact that 57 percent of surveyed consumers (that’s 277 million shoppers in the U.S., the U.K., Australia and Brazil) — want local loyalty programs. And “local loyalty” has a few definitions, depending on where one is.

Per the new Report, about 50 percent of local shoppers currently use loyalty programs, “below the survey average of 64 percent. This means that roughly 45 million shoppers are not currently using loyalty programs but could be attracted by small-town retailers that provide them.”

Making Loyalty Work For Small Businesses notes that “interest is highest in Brazil, where loyalty enrollment is at its lowest.” Meanwhile, 76 percent of U.K. consumers “are already enrolled in at least one loyalty program, and only 46 percent would be ‘very’ or ‘extremely’ interested in using such programs if they were offered by their local businesses.”

It’s a potentially mammoth prospect, and merchants who get the model right will themselves be rewarded with affinity translating into bankable repeat business and continuous cashflow.

There is a caveat. Per the report, “… many view the prospect of using different loyalty programs for each individual business as an inconvenience,” noting that 25 percent of consumers not interested in local loyalty programs say the top reason is fear of insufficient value, with another 13 percent saying they don’t “want to carry loyalty cards or coupons in their wallets” and 7 percent saying they local loyalty is too limited in its uses. It suggests that programs from local merchant wouldn’t “be able to deliver the types of loyalty experiences consumers want.”

Table 1

Hometown Pride Powering Local Loyalty

The May Making Loyalty Work For Small Businesses report provides a behind-the-numbers breakdown of regional preferences in loyalty, and how SMBs must solve for those first.

For example, the report notes that 56 percent of Brazilian consumers are not using loyalty but would with the right offer. “This would mean that retailers with locations in towns across Brazil could win over 45 million or 51 million local customers with loyalty programs or special offers, respectively,” per the report. It gives some idea of the loyalty potential extant in key regions.

Similarly, 55 percent of U.S. consumers (nearly 140 million people) say they’re “very” or “extremely” interested in loyalty offerings from local merchants, and it clicks up to 56 percent expressing interest in special offers from local stores. That’s 143 million potential members.

Stating that “Discounts, cash back and free products are the most common reasons that surveyed consumers say they want to use loyalty programs,” Making Loyalty Work For Small Businesses notes “factors that consumers say might dissuade them from using local retailers’ loyalty programs and special offers can arise from using multiple programs offered by many retailers at once. Consumers’ concerns about carrying around too much in their wallets can result from using loyalty programs of merchants that issue cards, coupons and other paper-based reward offerings.” In other words, merchants, take the hint: digital loyalty is in.

Moreover, tapping into hometown pride can help fuel local loyalty. “Our research shows that 45 percent of consumers believe it is critical to shop locally in order to reinvest in their local economies, for example, while 44 percent say it is important because doing so can help keep money in their local communities. Forty-three percent say that purchasing from local retailers is important because it can help expand local job opportunities,” per the report.

Figure 8