Having to share personal data turns consumers away from loyalty programs, study says

Dive Brief:

According to a new Harris Poll survey, 71% of Americans would be less likely to join a rewards program that collects personal information, such as address, account information and more, with 27% saying they would be much less likely to join, according to a press release.
Additionally, 76% revealed they would be more likely to join a program that required just their name and phone number. The survey also found 58% of Americans are less likely to join a customer loyalty program that requires an app download to access benefits, with 26% saying they would be much less likely to join. Consumers also showed fatigue with carrying cards, with 79% responding they would be more likely to join a program that does not require one.
The online survey polled 2003 Americans age 18 and older, and was conducted on behalf of Wilbur, a loyalty program operator based in Boulder, Colorado.

Dive Insight:

The research suggests that, while loyalty programs are rampant, there is an undercurrent of resistance among consumers when it comes to sharing too much information with marketers. While consumers also crave personalized experiences — a feat that requires customer data — the Harris Poll survey raises the possibility that a preference for privacy could outweigh the desire for personalization following a number of data privacy scandals over the past year, including Facebook's Cambridge Analytica mishap. The latest research also reinforces other recent findings, including research from ExpressVPN, which uncovered that 71% of consumers worry about how brands handle their personal data, pointing to theft and credit card fraud as prevailing concerns.

Still, loyalty programs have continued to sprout, with program launches by 14.9% of department stores, 5.2% of specialty stores and 5.9% of activewear retailers in 2018, according to L2 Gartner. The loyalty landscape has been evolving beyond transactional rewards with the emergence of experiential offers including special event invitations, something evident in Marriott's new Bonvoy loyalty program. Beauty brands are among those setting new standards for personalization.

Retailers need to make sure if they are giving healthy benefits they are getting a high value customer in return. Multi-retailer program Plenti shuttered last year after key participants left and other retailers had to rethink their benefits because it was hurting their bottom line. Bed, Bath & Beyond’s discounts contributed to sliding financials and a downgrade by S&P in October, while L.L. Bean pulled back on its lifetime return policy because it was being abused.

The Harris Poll results serve as a strong reminder that the privacy issue for consumers has not gone away. For retailers, despite the high participation and apparent enthusiasm for loyalty programs, it is clear that they need to carefully weigh willingness to share data against the desire for personalized experiential rewards when crafting a loyalty program strategy.