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Lead Your Team Strategy

Do Customer Loyalty Programs Require Privacy Sacrifices?

shopping cart . / Credit: Shopping Image via Shutterstock

When it comes to loyalty programs, consumers value savings over just about everything … including their privacy.

Eighty percent of consumers say loyalty programs are worthwhile for the savings and rewards they offer, a new eMarketer report found. That comes even as nearly 30 percent of respondents say loyalty programs require too much personal information. Just 24 percent of consumers said they would not enroll in a loyalty program because it was a risk to their privacy.

Those concerns are not stopping consumers from signing up for those programs, though. Additional research by Maritz Loyalty Marketing found that Internet users were a part of seven loyalty programs last year, the most popular of which were for retail stores. Additionally, consumers participated in loyalty programs for bank credit cards, airlines and hotels last year.

"The findings suggest that participation in loyalty programs should not be mistaken for total trust in the brand," the eMarketer report said. "These are transactional relationships at the core, and brands must be sensitive to how they can provide mutually beneficial rewards that don’t tread too far on consumers’ private lives."

For companies that can keep the customer relationships, loyalty programs can provide a big boost to their bottom line, the research also found. Seventy percent of consumers say loyalty programs are an important influencing factor in the relationship they have with brands. Fifty-seven percent of consumers also say that loyalty programs influenced where they made purchases in an attempt to maximize reward points.

Companies looking to take advantage of those benefits should be sure to avoid some of the behaviors that consumers say will discourage them from signing up for loyalty programs. More than half of respondents say they have stopped participating in a loyalty program last year, but only 7 percent of people requested to leave the program officially.

Consumers say that certain actions by companies can push them to the breaking point when it comes to loyalty programs. Some of the weirdest requests that consumers say they have seen from companies include:

  • Using programs to access status updates or photos of friends.
  • Offering rewards to consumers who provide personal information.
  • Asking for credit card info from retailers in return for savings.
  • Allowing loyalty programs that consumers follow to offer rewards based on profile content.
  • Requesting personal information that can be used to target consumers based on demographics.