Loyalty programs have been a cornerstone of retail marketing for decades, with millions of consumers enrolled in their favorite retailers’ clubs. The old “buy 10 get the next one free” punch-cards have evolved to more sophisticated programs that reward shoppers for frequenting their establishments in new and meaningful ways. From 20 percent off the whole store for an entire year with a Rite Aid wellness+ card to earning digital “stars” redeemable for free food and drinks with the My Starbucks Reward card, retailers understand that for loyalty programs to be effective, they need to truly stand out from others and offer real value for the shopper. Let’s face it, there’s no way I’m going to carry 20+ loyalty cards on my key chain or in my wallet. I’ll choose the few that deliver the most value to me – the individual shopper.
Loyalty in an Omnichannel World
While loyalty programs have come a long way since their inception, in today’s omnichannel world, they are simply not enough to rest your laurels on. In this new retail environment, creating loyal customers will come down to being relevant to each shopper – whenever and however they choose to interact with you. Loyalty programs can play a critical role in this approach because of the vast amount of data they unlock regarding each customer’s shopping behavior. Unfortunately, too often their focus is on transaction data only, as opposed to also including other interaction data like email behavior, Web browsing, call center activity, social, etc. As consumers adopt new technologies and shop through more channels, painting an accurate picture of them to meet their individual needs is like putting together a complex puzzle. Loyalty programs need to evolve to see the full puzzle, not just pieces.
Personalization = Customer Loyalty
Consumers understand that by joining a loyalty program, they are letting the retailer track them, but will expect something of value in return. The easy thing to do is offer a discount, but this can quickly turn a loyalty program into a discount program that builds price sensitivity, not loyalty. What a loyalty program should do is to make the consumer feel like the retailer knows them and, therefore, can offer relevant services to them. Relevant messages build trust with the customer and keep that retailer top of mind for when the customer is ready to shop again. Retailers understand the importance of these personalized experiences and know that customers have come to expect them, but aren’t delivering on the promise because of challenges such as internal silos, legacy technology and the paralyzing amount of data at their fingertips. This has to change!
That being said, we’re seeing a new awareness amongst retailers looking for ways to meet consumers’ omnichannel expectations that makes us hopeful for the future. Our clients, for instance, are successfully using data from every single customer touchpoint – from Web, email and mobile to direct mail, in-store and loyalty data – to paint a complete picture of their individual shoppers. With this picture, they are able to tailor content that is relevant to each consumer at the right moment on the right touchpoint. These personalized communications have proven to increase engagement and sales in the short term, and customer loyalty in the long term.
I don’t believe you can have customer loyalty without personalization, and I expect this will become even more evident as retailers continue to expand into the omnichannel retailing environment.