If you were to ask a retailer what the most important tool of their customer loyalty efforts was 5 years ago, I bet the majority of them would say traditional loyalty and rewards programs. You know, the old “buy 10 get one free”-esque programs that reward customers for repeat purchases while enabling retailers to track behavior and incent future purchases.
There are a lot of variations on this theme (points vs. coupons, gold/silver/bronze levels, etc.), but the essence is the same: buy from me, let me track you and I will make it cheaper for you to buy from me in the future.
But to survive in today’s increasingly competitive retail landscape, loyalty initiatives must extend beyond an economic value proposition. Rather, real loyalty has to be based on understanding the individual consumer and delivering personalized value that is more than just X percent off.
The Omnichannel Shopper
To turn one-time shoppers into life-long customers in today’s retail environment, you must first understand today’s shopper. Gone are the days when consumers completed all of their shopping in-store, at the same few retailers. Today, consumers have a plethora of options, from where and when to shop, to whom with and how often. As a retailer, it’s your job to deliver enough value to the consumer that they choose to continue to shop with you – not because they have to, but because they want to. While customers do want a good deal, frankly a better price is generally just a click away so price can’t be your only loyalty lever. If you aren’t able to standout – whether that’s through customer loyalty initiatives, relevant offers or seamless cross-channel experiences – expect consumers to go elsewhere.
Loyalty in an Omnichannel World
In our omnichannel world, creating loyal customers will come down to being relevant to each shopper – whenever and however they choose to interact with you, whether that’s in-store, online, via email or on a mobile device.
Josh Allen Dykstra wrote a great article for Fast Company where he investigates how Millennials think about shopping. One of his key points is that Millennials aren’t shopping to own things, but rather they shop for connections – to things they want to do, to ideas they admire, to other people like them.
On the one hand, it is tough for retailers to hear that the coming generations aren’t interested in owning things. But on the other hand this could be great news, because Dykstra is saying the purchased “thing” isn’t the important element.
Things are commodities and we know that ecommerce has created hyper-competition around “things.” But if you can tap into the connections consumers want, then they will shop with you and develop a deeper loyalty that is more enduring than just another purchase. Again, it is NOT about discounts and just a pure economic value proposition. It is about creating connections with the individual.
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. If done properly, these programs can aggregate a wide-range of interactions, such as email behavior, online browsing, social media interactions and call center activity.
As consumers adopt new technologies and shop across more channels, loyalty programs should be approached like a puzzle, with the end goal being to create an integrated picture, not a pile of separate data points.
Next-Generation Personalization and Customer Loyalty
Consumers understand that by joining a loyalty program, they are letting the retailer track them and expect to receive value in return. A recent survey found that upwards of 65 percent of shoppers were willing to share data if they received some benefit. That benefit should be the “connection” Dykstra discussed. Retailers should aim to develop loyalty programs that make consumers 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. This is more than the typical “products you may also like” suggestions on a website product page. Instead, retailers have to go much further to show that they understand a consumer and their needs.
For example, they could recognize that the consumer left an item in their web shopping cart and then send them a message as they enter a nearby mall that that item is now on hold for them in the retailer’s store location in that same mall. Or they could see that the customer returned something in the store without buying a replacement, and email an offer for free one day shipping via the website on any other size of that item, or an item from that same brand.
Whatever the merits of these particular examples, the idea is to use your knowledge of a customer to offer a service uniquely tailored to their needs, and one that reinforces the message that you understand them.
This is not a fanciful, futurist view. This is happening already. All the retailers I work with are successfully using data from every single customer touchpoint – from Web, email and mobile to direct mail, in-store and loyalty data – to gain a full view of their customers. With this view, they are able to personalize content so that each consumer receives the right message at the right moment at the right touchpoint.
These next-generation, personalized communications have proven to increase engagement and sales in the short term, and customer loyalty in the long term.
So bring your brand out of the punch card stone ages and implement customer loyalty programs that incent purchases past the “get one free” stage. By collecting and analyzing data across all customer touchpoints, and using that data to deliver valuable, meaningful messages and offers, you’ll engender more than just customer loyalty, you’ll create life-long brand fans.
Graeme Grant is president & COO of CQuotient.