The Loyalty 2020 USA Report.

The LoyaltyReport.2020USAEXECUTIVESUMMARYState of Loyalty.LAUNCH EDITION

A Decadeof Loyalty.In its 10th year of publication, The Loyalty Report is proudly known as the leadingsource of insights and guidance into an ever-evolving world of customer engagementand loyalty—and the launch of this year’s report couldn’t be more timely. In the midstof a global pandemic and economic slowdown, the challenges facing Brands in 2020have never been more complex. The urgencies for digital transformation, complete withempathy and focus on human needs and experiences, are heightened. The opportunitiesfor Loyalty Programs to help Brands accelerate recovery are very real and present.While savings have grown more important in light of recent events, so has the valueof great service, time, and added convenience, along with the feelings of security thatstrong Brands engender. New customer expectations, preferences, and behaviors arenormalizing. Traditional loyalty mechanics like points, discounts, and rewards are tablestakes. To stand out and earn loyalty that sticks, Brands now must focus on true driversof Member Engagement—and that starts with a foundation of Personal Relevance to theMember, extended through the interconnectivity and influence of digital and humanexperiences within your program.In partnership with Visa, Bond surveyed almost 70,000 consumers on more than 100attributes that examine over 1,000 Loyalty and Credit Card Programs across 34 globalmarkets. This decennial edition of The Loyalty Report shares several of the mostimportant lessons learned for Brands charting their path towards the “new normal.”How will your program stay relevant with the changing State of Loyalty?How do I access the complete report?Contact us to learn more about how you can subscribe tothe most in-depth research study on consumer Loyaltyand rewards Programs, and gain access to insights intosome of the 1,000 Loyalty and Credit Card Programsoperated globally.#loyaltyreport 2

The World’s Largest Studyof Loyalty, Engagement, andKnown-Customer Experience.Sample of more thanIn68K34MarketsAMERICASEUROPEASIA PACIFICMIDDLE EASTExamining more thanInAcrossConsumersAcross1000 15 Programs17K Americans providedfeedback on 300 Loyalty Programs betweenDecember 3, 2019 andMarch 17, 2020.Industry Sectors AirlineApparel RetailAutomotiveBig Box RetailCar RentalCPGEntertainmentQuick Serve Restaurant & DiningGas & ConvenienceGroceryHealth & BeautyHotelInformalOnline RetailPaymentsPharmacy and more.100 Attributes Loyalty MechanicsProgram InfluenceBehavioral LoyaltyEmotional LoyaltyEarn MechanicsRewards & RedemptionBrand AlignmentHuman ExperiencesDigital Experiences. and more.#loyaltyreport 3

FastFacts.Sector EngagementMember Engagement scorecomprises satisfaction, advocacy,emotional connections, and spend.Member EngagementRanked by SectorThe Influence of LoyaltyLoyalty continues to bring positive outcomes for Brands, andthe impact on advocacy, retention, and spend (or “say, stay,spend”) remains strong.SayStaySpendI am more likely torecommend Brandswith good LoyaltyPrograms.Programs makeme more likely tocontinue doingbusiness with Brands.I modify amountspent to gNew MembershipsRemain Steady butnot all are ActiveActiveMemberships714GrocerySpecialty RetailCruise LineAnatomy of the “Active 7”Auto RentalAverage number of active memberships in wallet, by sector:Apparel Retail2020AirlineDrug StoreTop Credit Card Performers Bank BrandedCashback CreditBank Branded Points CreditCo-branded Credit% Changevs. 2019Payment1.918%Specialty Dining0.86%Private Label Credit#loyaltyreport 4

FastFacts.Digital ExperiencesMade PersonalLoyalty Programs achieving highlevels of personalization alongthe Member Lifecycle experienceconsiderable lifts in key outcomes.The ExperienceAccounts for 3/4of What 8%8%Earn Burn10%24%10%12% Recognition Support10%Data Usage Trust12%8%Communications12% Ease Enjoyment8%Digital10% Brand Alignment4% Meets NeedsPersonal RelevanceDrivers of increased importance in 202025%StronglyAgree47%HIGHERProgram EngagementHuman ExperiencesMade PersonalOnly one in four Membersstrongly agrees that programrepresentatives make themfeel special and recognized,but programs getting thisright experience 47% higherengagement.7.5 LiftStay5.4 LiftSpend6.4 LiftCredit Card Programs achievinghigh levels of personalization alongthe Member Lifecycle experiencea 196 lift in spend on card, perMember, per month. 196 LiftTailored OffersMembers who receive relevant offersthat become more relevant over timeare 8 more likely to go out of their wayto use them.8 #loyaltyreport 5

Providing Relevant, Timely Insights.2020 Chapter Highlights01. Key Program Performance Measures and Drivers of EngagementBy examining key attitudinal and behavioral performance measures, for both Loyalty and Credit Card Programs,our study showcases the importance of Loyalty in strengthening relationships between Brands and theircustomers. We outline why marketers, in addition to building balanced programs that are competitive on valueproposition, must differentiate on Member experience—a crucial factor in driving Member Engagement, beingone of the “active” programs in a Member’s loyalty wallet, and avoiding disruption from competitive programs.A barometer for marketersMember satisfaction echoes their outlook on life.Follow the Member sentiment in your region toevaluate performance on expectations.#loyaltyreport 6

COVID-19—Loyalty in a Time of CrisisIn 2020, the COVID-19 pandemic has changed the way we live on a global scale. Our recent series of researchstudies have been integrated to provide-driven insights. Bond is able to point out the impact of this global healthcrisis when it comes to consumer behaviors overall and within customer Loyalty Programs—and we reveal howBrands should continue to operate these programs.02. Path to EngagementBond has leveraged a neural network analytical method to create a Loyalty Path Analysis. New to this study,this research approach proves that Personal Relevance is a foundational element to establishing successfulLoyalty Programs. We lay out a recommended roadmap for Program operators by showing both the strengthand direction of interconnectivity across a set of Member Engagement drivers.The path to MemberEngagementActionable Program LeversKey Business OutcomesBond’s neural network assessment identifies the strength and direction ofinterconnectivity among the fundamental aspects of each driverof Member Engagement. The Path Analysis prioritizes the most actionableprogram levers right through to key business outcomes—revealing that successstarts with Personal Relevance carried through the entire loyalty strategy.#loyaltyreport 7

03. Digital InteractionsBond shares insights and examples to specify how clients/partners can more effectively utilize digitalcommunications and interactions to deliver Personal Relevance to Members. This includes isolating the touchpoints, sector by sector, that hold high importance and value in improving personalization within the MemberLifecycle—which ranges from onboarding and activation all the way through to attrition. Analysis includesa deep dive into the role of “offers,” with insights into the areas of improvement that will drive strengthenedefficacy of promotional spend, in order to drive engagement with the program and the Brand.Simplified knowledgmentSpecial Offers04. Role of the RepLooking ahead to a post-COVID-19 world, one thatis sure to remain increasingly digital, this chaptershares insights into the importance of the role thatrepresentatives play in Member Engagement. Tofulfill their role in delivering the Loyalty Programpromise: now, more than ever, insights convey thatrepresentatives need to excel on key competenciesthat strengthen (make) the Member relationship,while correcting for those that can destruct (break) it.Programs achieve a3.7 lift in satisfaction and47% higher engagementamong Members who stronglyagree its representatives helpthem get the most out of it.#loyaltyreport 8

05. Co-brand CongruenceBrand-aligned payment extensions of non-tenderLoyalty Programs drive multiplicative value forMembers and the Brand. Bond’s insights validatethe purposefulness of aligning credit card andprogram loyalty mechanics. Members participatingin both programs need to derive benefit and valuethat solidifies and strengthens the relationship—andthat expands beyond what would be achieved if theMember was only participating in one or the other.Only 2/5 of Membersstrongly agree that Loyalty Programs and theirassociated co-branded credit cards are workingtogether seamlessly.3/4 of Membersin a co-branded Credit Card or Loyalty Programfeel strongly that these programs are a key partof their relationships with Brands.#loyaltyreport 9

06. Live ExperiencesIn this chapter, we dissect the cornerstone elements that drive successful Member-exclusive live Brandexperiences so that Program operators can find a path to an attributable return on investment. While thecurrent climate may have put a pause on these interactions, they will shift and adjust in the “new normal” tobecome an integral point of engagement. Bond’s research highlights experiences that drive the most value fromengaging participants before, during, and after the event—all within the context of current market dynamicsand future dynamics of what may be the “new normal.”The Experience RibbonTMImpact on Event Satisfaction#loyaltyreport 10

Top Loyalty Programs.Airlines1. JetBlue TrueBlue2. S outhwest AirlinesRapid Rewards3. A laska AirlinesMileage Plan2. M GM M Life Rewards3. Marriott Bonvoy Rewards2. H-E-B Points Club Rewards3. Smith’s Fuel Program2. CVS ExtraCare3. W algreens BalanceRewards2. Sephora Beauty Insider3. Sally Beauty RewardsHotel1. Hilton HonorsRetail: Grocery1. Food Lion MVP ProgramRetail: Drug Store1. Rite Aid Wellness Retail: Health & Beauty1. M y Bath & Body WorksRewards#loyaltyreport 11

Top Loyalty Programs.Retail: Department1. JCPenney Rewards2. Kohl’s Yes2You Rewards3. The Nordy Club2. myAbercrombie3. T he Children’s PlaceMy Place Rewards2. Bed, Bath & Beyond Beyond 3. Harry’s Shave PlanRetail: Apparel1. Nike Retail: Specialty1. Amazon PrimeDining & Quick Service Restaurant1. Chick-Fil-A One2. D omino’s Piece of thePie Rewards3. Dunkin’ Donuts DD Perks2. Wawa Rewards3. MAPCO MY Reward Gas & Convenience1. C umberland Farms SmartPay Mobile App#loyaltyreport 12

Introducing.The State of LoyaltyData LakeDip into loyalty highlights that span 10 years, 100,000s of consumers,34 countries, representing 100s of Marketers, and covering 1000s ofprograms and apps; history’s longest-standing, deepest, most robust dataon consumer loyalty around the world. Wade even further into programand sector-level perspectives. Plus, examine behavioral and attitudinalbenchmarks—all featuring operational and operator data and findings.We’ve filtered the past to predict the future.stateofloyalty.comhttps:// stateofloyalty.comDive In HereGet more fromThe Loyalty Report.Contact us for more detailed report findings, to learn about purchasingthe complete report, or to schedule an engagement workshop.Phone: 1.844.277.2663Email: info@bondbl.com