shopper

How to Turn Customer Loyalty Programs into Love

Mirror user behavior to make things more personal

It’s no secret that loyalty is the sweet spot. For Wakefern Foods, 97% of sales are powered by customers enrolled in their loyalty programs. But while rewards and incentives have long been a direct path to purchase, a loyalty program is far more than the sum of its discounts. It’s one of the best opportunities to deepen a customer’s relationship with the brand.  

When a retailer breaks free from the punch card, they can evolve their loyalty program to be much more pertinent and valuable for the customer:

“Loyalty programs increasingly need to have flexibility. In other words, it can't just be 'Buy ten get one free,' at a coffee shop anymore. Stores themselves are starting to have to get creative with what loyalty means to them and giving the customers choice in what those rewards are.” — Nicole Leinbach Reyhle, Founder, @RetailMinded      

How can loyalty programs feel smarter?

Each customer’s experience of their favorite brand is unique, and loyalty programs should reflect that by personalizing the interaction. They can’t just be transaction-based. They should appeal to consumers with information and rewards that cater to their lives as individuals, helping them connect with the brand on an emotional level. With the Nordstrom app, loyalty customers add items to a wish list for later fulfillment. When they’re in close proximity to a store, they receive an alert encouraging them to drop by and (ideally) purchase these wish list items—a simple exchange, but one without the feel of a blind promotion.   

With rapid advances in artificial intelligence, retailers are well equipped to personalize each engagement within a loyalty program. This data gives sales associates an intimate picture of their customers, so they can approach them more as friends and less as a mere transaction. Here are just a handful of the telling data points:  

  • Which items and which styles has a customer repeatedly gravitated to?
  • Is there a certain type of product they frequently explore but never quite commit to buying?
  • If they’re in the midst of travel, which items might be suited to the location or the nature of the trip?   
  • What interests do they have that might enrich how a brand talks to them?  

A loyalty app can seize on chances to interact with the customer as they walk through the store, giving them the ability to scan items for real-time rewards, checkout in-aisle, or even track a product’s origin and sustainability.  

How do loyalty ecosystems provide value beyond the product?

Loyalty programs help retailers show they’re committed to improving a customer’s overall quality of life. Domino’s, among others, has seen positive results from gamifying the rewards experience for customers. “Piece of the Pie Pursuit” is a mobile game in which their loyalty customers take on different challenges and earn their way to a free pizza. It’s an engagement strategy that makes perfect sense because it mimics what users are already doing on mobile every day.    

Cash rewards, freebies and discounts will always be well received. But with the help of data-driven insights around customers and their preferences, retailers stand to benefit from exploring other measurable actions to reward loyalty as well. Here are some places rewards could go:   

  • Philanthropic contributions that are in tune with a customer’s values—something both L’Oreal and DSW have explored
  • Support for personal goals or projects, such as new skill acquisition or health and exercise regimens
  • Time “given back” to a customer’s day, whether through a wellness app, a service like Audible, or even in-store yoga classes with Lululemon      
  • Entertainment in the form of free concert tickets (specifically to users’ favorite music acts)          

Partnering with businesses in other industries is proving to be a sharp way to redefine loyalty. Members of the Target Red loyalty program in Dallas enjoy 50% off their first year of a Shipt membership, complete with same-day delivery. The Uber Visa card gives members a subscription credit for streaming services and access to exclusive events around the country.

Loyalty programs allow retailers to  show their chops.

As the backbone of the customer relationship, loyalty programs can evolve in lockstep with every point of the omnichannel experience. But as retailers expand loyalty to connect with other focuses in a consumer’s life—media consumption, philanthropic efforts, travel, wellness and self-improvement, sports and entertainment—loyalty grows into one of the most powerful tools a brand has to show what they’re about.

If brands can tap into the bigger passions that consumers hold dear and the data sets tied to these passions, they can give them meaningful opportunities for self-expression. In effect, loyalty to the brand becomes loyalty to who you are.

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Updated Jan 10, 2019 | Originally published April 2018

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