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Harnessing the Power of Loyalty Programs to Grow Your Business

Loyalty programs have always been an effective way to influence consumer behavior. Offer a relevant coupon here or a perk there, and customers are likel...

Frazer Jones
|Sep 6|magazine18 min read

Loyalty programs have always been an effective way to influence consumer behavior. Offer a relevant coupon here or a perk there, and customers are likely to buy just a little bit more – while in the meantime, your brand is able to analyze the data, learn about your best consumers’ shopping habits, and tailor your strategies to meet their needs.

As technology evolves and more data becomes readily available through loyalty cards and apps, the paths that retailers can take to market to their best consumers and mid-level consumers is changing rapidly. Time-tested strategies have to be revisited and updated for the next generation – and for marketing professionals, it’s an exciting movement to watch.

“As retailers get more and more engrossed in building unique loyalty strategies, it’s going to be a really interesting time,” says Nancy Berg, Vice President of Client Services at loyalty solutions agency Kobie Marketing. “The whole world is changing – it’s online retailers versus brick-and-mortar, and how we can integrate both of these experiences into an effective experience is really the game.”

So how can retailers learn from today’s consumers and tailor their own loyalty programs to fit that consumer’s needs?

1. Build In Unique Perks for Online Users

As the consumer world increasingly turns to online shopping, it makes perfect sense for retailers who are able to use online sales and distribution effectively to cut down costs to find ways to reward consumers for taking their business to the web. The simplest and most efficient way to do that is with a program that gives consumers incentives to order online.  

“Historically, so many retailers offer programs where you get a certain level of points for how much you spend, and then in turn you get a coupon every so often when you reach thresholds – but what I’m loving watching is how they’re expanding beyond that to offer unique pickup opportunities for best customers who order online as opposed to going into brick-and-mortar stores for shopping,” says Berg, citing Amazon Prime memberships as a key example of a loyalty program that rewards consumers with discounts and lightning-fast service.

The rise of the smartphone and the mobile experience has been a windfall for brand loyalty programs, helping retailers connect with consumers 24/7. “There’s more engagement in creating a full service online-offline experience, rather than necessarily a static web page or one that’s purely informational,” says Pamela Sullins, Senior Director of Client Services at Kobie Marketing. “More and more retailers have mobile apps, which make it easy to do the type of activities you’d do on the web from your iPhone.”

“The loyalty program is prominently represented in that experience,” notes Berg. “People expect more and more, that the points and rewards that they earn and the benefits that they get, are all right there. It’s with you all the time – if I’m running to the gym and I forget my wallet I don’t worry about it, but if I forget my phone I’ll go back and get it.”  

“It’s also moving forward fairly quickly – we’ve seen more push notifications and geotargeting, and again that’s being taken to a whole other level, even directing you to certain things in the store or particular areas within the store and providing special offers for certain loyalty members when they’re in store,” adds Sullins. “It really tightens that online-offline experience even more, and also gives us more data and insight into what’s effective and what type of impact is that having from a revenue and retention perspective.”

2. Make the Experience the Selling Point for Brick-and-Mortar Consumers

Brick-and-mortar retailers of all sectors are often at a disadvantage going up against online vendors, and the growth of programs like Amazon Fresh has extended this issue even to the once-untouchable realm of grocery shopping. When you can’t win through price, you have to build loyalty by turning the act of shopping into an experience worth coming back for.

“People who go to an in-store go there for a reason, because nowadays you can get practically anything you want online – so having an exceptional customer experience and really using the store employees as advocates for the brand is important,” explains Berg. “Integrating the associates into the overall loyalty experience is also extremely important. We’ve all walked into stores where you want to know [how to redeem your loyalty points], and the associate has very little understanding. The experience is so much different when it’s part of the fiber of who the store associates are, and it really makes those customers feel like they’re special because they’re part of the program, and that we know what it is that they want because they told us and we’re here to service and support that. That’s a real important key.”

As Sullins adds, in today’s market customer service is the one true mark that can make all the difference in creating a loyal customer, and consistent personalized value is what can keep a loyalty program from feeling like a run of the mill discount newsletter. “The Four P’s of typical marketing – product, place, price, promotion – have really become commoditized,” she says. “The customer experience is really the key differentiator, and the ability to leverage your loyalty program to maximize that customer experience is what you’re really going to need for your long term survival. When sales are down, many times you’ll look at strategically using or initiating traffic-driving tactics like coupons or other special offers to help boost sales, but it has to be done in a way that folds into a broader long-term strategy built around enhancing the customer experience.”

3. Listen to What Your Customers are Telling You

If there is only one point that you take away, it’s to make use of the data that your consumers give you every day. Whether it’s through an app or a card, signing up with a loyalty program means allowing your retailer of choice to compile data on shopping habits: what consumer are buying, and when they’re buying it, are an open book. That compilation of data is critical – according to Kobie Marketing, 96 percent of retailing executives consider big data important for staying competitive – but it all means nothing if the brand doesn’t use it to improve their service.

“I think what technology has done now, and I think we’re seeing it more and more particularly in the retail space and other markets where we can learn from them, is that technology gives us a basis to really begin to do what as marketers we’ve always said we want to do – and that’s to have a 360 degree view of the customer,” says Sullins. “Because we have so much more insight into that, because of the ways that we can communicate with and have communication from our loyalty members, that level of insight is really invaluable in driving not only more purchases but improving the overall shopping and customer experience.”  

That insight can be used to tailor and retool your loyalty program in your consumer’s image – though it’s important to remember that every consumer is different in terms of what they consider valuable, whether it’s coupons or early product access. “What’s important is to make sure that with the information we are getting – not only from the transactional behaviors, but also from asking them and surveying them and listening to them – that we really start to build benefits that will create true loyalty to your brand because your customers know you’re listening.”