As consumer expectations continue to rise, loyalty programs must work to stay relevant; embracing omnichannel, personalization and customer-edge technology.
The future of loyalty is personalization, and relevance is the currency that will win. Advances in technology and analytics enable never-before realized possibilities that will reward early adopters who focus on meeting the ever-changing needs of the customer.
That said, the moment is fleeting. Today’s competitive advantage quickly becomes tomorrow’s table stakes. Consumer expectations rise as they embrace new technologies and as leading firms raise the bar.
Companies that best understand customers and meet their needs will win. Thriving in this new environment requires investments in technology, new analytical capabilities, and both organizational alignment and change. But success starts with a basic understanding of the intrinsic value of loyalty programs.
Loyalty programs have always been a way to thank/reward and grow/retain a customer base by offering something more — a differentiated value proposition that reinforces a retailer’s brand image.
Loyalty programs generate value in many ways, including:
- Creating a two-way relationship with customers built on the premise, “You give me information about yourself and allow me to track your behavior, and I will deliver a better shopping experience.” It moves the relationship away from being strictly transactional.
- Generating consumer data can and should deliver value first and foremost by better matching the retailer’s value proposition with what shoppers are saying through the data. This can result in changes to brand positioning and voice as well as improvements to overall marketing decisions.
- Powering targeted marketing, which would not be possible without the contact information, permissions and behavior, is enabled by a loyalty program.
- Monetizing both the data (to suppliers) and customer access (via media). This must be managed carefully and openly so privacy is not an issue, true value is provided to suppliers and customers get something valuable as well.
Now that your loyalty program has established that customer relationship and obtained the data, how should you use it in a rapidly changing marketplace?
Shifting to omnichannel
The key to winning in omnichannel lies in personalization powered by relevance. Omnichannel represents the opportunity to optimize value by providing the customer with a seamless experience, whether they are shopping online from a desktop or mobile device, via phone order or at a physical brick-and-mortar location.
True omnichannel retailing starts with recognizing that customers increasingly interact with brands differently based on the channel. While today we may have the “store shopper” and the “online shopper,” the future is increasingly dominated by one shopper who engages with brands via different channels — and even that engagement differs by channel.
The key is to understand the role of each channel and craft an experience to meet customer expectations. For example, while a store must carry 65,000 items to offer depth/breadth, have one price on shelf and mass promotions for all, online doesn’t. But among those 65,000 items, only about 100 to 200 items are ever on the average customer’s shopping list; the online experience should be targeted to what matters to them, and it should personalize items and promotions.
Omnichannel means fully leveraging the resources at your disposal — and rapidly developing technology is creating opportunities constantly. Consumers are more empowered, connected and informed than ever. Omnichannel represents the best way to engage with them. It’s not a consideration anymore; you have to do it.
Technology is key What has truly changed because of technology (mobile/digital customer engagement) and analytics (customer insight) is that we can provide personalized programs right from the beginning. The days of launching a card and offering 10 points per $100 spent for all customers with a 1% value proposition are over. Technology plays the leading role with customers based on relevance and value.
A recent report from Oracle demonstrated the importance of technology to consumers. More than 90% of business travelers and 80% of leisure travelers value the ability to use their smartphones to request service and message hotel staff; 71% in that report said they would share information about food preferences or allergies and 64% would share their entertainment preferences. The willingness — and preference — of customers to engage on digital platforms represents a great opportunity.
Another developing technology allows in-store instant messages: beacons. In addition to promotions, beacons drive greater insight into how customers shop and how to align to their needs and wants — and identify experiential pain points.
While beacons enable real-time, in-the-aisle communication, this capability must be carefully managed. For example, some view grocery shopping as a chore — so the focus is on speed and ease of shopping. Most consumers don’t want their phone to light up uncontrollably while checking their grocery list with two kids in tow. Customers can get information overload. Push channels can be incredibly powerful, but if not used properly, they can have an opposite effect on customers than the one intended.
Another example of rapidly developing consumer technology is wearables. From eyeglasses to watches to smart shoes, consumers can literally be covered from head to toe. As new products are developed and introduced, consumer awareness, confidence — and usage — increase.
In terms of acceptance, a 2016 COLLOQUY study indicated that 50% of millennials would be strongly motivated to don a wearable if it had apps and features that reward those who frequently use it. Nearly 35% of respondents said people who use wearables are nerdy … but “cool nerdy.”
Wearables represent a remarkable opportunity to get close to consumers — literally. Loyalty programs should tap into the capabilities of wearables to provide useful insights about consumers to improve engagement.
In the end, personalization is somewhat about making the store/offering smaller — making it more intimate and tailored to each customer.
Customer-centricity and personalization are the modern-day methods to bring back the corner store where everybody knows your name.
Understanding the core values of loyalty programs, committing to the omnichannel approach and investing in technology: These capabilities will become the core competencies of the future, and they take time to build. The time to invest is today, and the time to act is now.
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