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The SoLoyal Team

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Is Your Loyalty Program Future-Proof?

The loyalty program industry is a $300 Billion machine that is growing at a rate of 10%-15% per year, proving definitively that both brands and consumers are attracted to the prospects of membership. But how effective is your loyalty program and how can you make sure it's being properly leveraged in this rapidly-changing environment? In this post we'll take a closer look…

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Is Your Loyalty Program Future-Proof? - What's in this guide?

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15 Billion Memberships Globally

There are 15 Billion Loyalty Program Memberships Globally. That means there are twice as many memberships as humans on the planet and it demonstrates the sprawling reach and massive popularity of brand loyalty programs. However, it also creates a major problem for consumers who are forced to manage multiple loyalty accounts. In the United States alone, there are 5 Billion memberships (⅓ of the global total) and each household is a member of about 35-40 loyalty programs.

Retail Beats Travel

About 40% of all loyalty program memberships come from Retail Brands, while just 28% come from Hotels and Airlines. Travel loyalty programs are great, but retailers still strongly outnumber the travel industry when it comes to high volumes of enrolled members. As retail loyalty programs continue to proliferate, this gap will continue to widen. As a result there will be a greater impetus for brands in every industry to shore up their loyalty program's marketing strategy in order to stay competitive.

60% of Loyalty Memberships are Inactive

Due to the difficulty in managing so many loyalty accounts, 60% of all loyalty program memberships are totally inactive. That's about 9 Billion inactive loyalty accounts if you're keeping track. Above and beyond that, Mastercard Estimates that 30% of consumers haven't redeemed rewards over the last year or so, including those with active accounts. This points to a larger problem with a lack of engagement among loyalty members, even when they are considered technically active.

'This is one of the core problems that brands are grappling with,' says Lia Grimberg, Principal and Consultant at Radicle Loyalty. 'At the end of the day, it comes down to understanding what members want in a loyalty program. They are looking to be recognized and rewarded on an individualized level and they want to participate in a mutually beneficial relationship where loyalty cuts both ways.'

$250 Billion is “Sleeping” on Accounts

Shh! You might wake up all that money. That's right, there are literally billions of dollars just sitting on membership accounts at any given moment in time. And the worst part is that 40% of all this money will be totally wasted due to the unexpected expiration of points and rewards. This is not surprising considering that loyalty programs use extremely complex expiration mechanisms, rendering it virtually impossible to stay on top of everything.

Points Sometimes Miss the Point

Typical Earn and Burn mechanisms that rely on earning and redeeming points are only part of the story. Consumers are increasingly gravitating toward experiential rewards, which are far more engaging. Says Grimberg, 'loyalty managers need to evolve with consumer behavior. Things like entertainment or events, special access to new products and experiences, and ESG initiatives are top of mind for loyal consumers, and brands need to be there.'

America is Half the Market

Brands spend more than $300 Billion per year on loyalty awards and marketing for loyalty programs. Not only does this figure grow by about 10%-15% per year, but half of the money (more than $150B) is spent and allocated in the United States. Loyalty program marketing should be a huge focus area for brands who want to grow with this trend.

Australians Love Loyalty

With all the commercial consumption that goes on in the United States, it's worth noting that Australians are the world's most frequent rewards-earners with 61% of the population making a rewards-earning purchase more than 3 times per week. Canadians and Italians are tied for 2nd place with 56% of consumers doing this, while 53% of Japanese consumers do the same. This demonstrates that other markets are outpacing the U.S. in terms of purchase frequency and may be catching up to America in the overall popularity of loyalty programs.

Consumers Aren't Happy

Although loyalty programs offer consumers a lot of benefits, members are generally very critical of the overall loyalty experience. 61% of consumers say that they don't sign up for new programs because the enrollment takes too long or they don't want to fight through the program's confusing rules and mechanisms. In addition, 49% of consumers lose track of their points, are unaware that they even have rewards, or forgot they enrolled in the first place. For those who did realize they earned a reward, 35% said that it's too confusing or difficult to redeem it.

How SoLoyal Can Help

There is so much opportunity in developing a successful loyalty program, especially since loyalty members spend about 5x more than nonmembers. But as much as there is to gain from maintaining relationships with loyal customers, there is much more to lose if that relationship sours. SoLoyal seamlessly integrates with your existing loyalty program in order to boost your loyalty member acquisition. From there, we do the heavy lifting behind ensuring your members stay engaged with your brand. Instead of falling into the abyss of inactive memberships, we'll keep your loyalty program front and center in the consumer's mind, leading to an increase in Lifetime Value and long-term retention. If you're interested in seeing how we can work together, talk to us.

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