Free shipping discounts push loyal customers to switch loyalty programs

A Facebook statistic posted on a board in India on Friday confirms what behavioral economics would tell you: When free shipping discounts are added to an “offer”, brand loyalty wears off. In India, loyalty…

A Facebook statistic posted on a board in India on Friday confirms what behavioral economics would tell you: When free shipping discounts are added to an “offer”, brand loyalty wears off.

In India, loyalty discounts are offered to customers who sign up for free newsletters and send back coupons. But the long-term savings aren’t worth it. A post in the “Free Shipping Tab” board says that 100 percent of customers are switching their loyalty cards to Amazon once discounts are added, which means they end up getting a lot of emails. The post cited Facebook data showing that over the past six months, only 2 percent of “loyal customers” replied to free shipping offers.

This conversion rate compares to 42 percent in the U.S. In two surveys of marketing to consumers in 2018, consulting firm Agenda found that customers in India were 3.6 times more likely to switch loyalty programs than in the U.S. The largest market for loyalty programs overall was China, with 26 percent of respondents revealing that they were switching programs. Meanwhile, 48 percent of those surveyed in the U.S. said they would not switch loyalty programs.

It’s not the first time people have changed loyalty schemes to protect themselves against free shipping discounts. Check out the video below for a lengthy thread from The New York Times on the subject:

First Posted on Friday, February 8, 2019

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