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The Best Examples of Retailers Reinventing Their Loyalty Programs

In the age of the customer, retailers are reinventing their loyalty programs to remain relevant

Adebisi Adewusi
June 01 2019

With new players disrupting the retail space and escalating customer expectations, standard loyalty programs now fall short for consumers. of loyalty program members are satisfied with their programs and 77% of consumers admit they now retract loyalty faster than they did three years ago.

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In this article, we’ll show you how smart retailers are evolving their loyalty programs to keep their place in consumers’ hearts and wallets.

 Emotional Connections

As 82% of consumers buy from brands where they’ve experienced high emotional engagement, smart brands are making emotional connections the focus of their new loyalty programs. Initiatives that establish positive emotional connections with members earn 27% more revenue. Check out a few strategies you can use to build strong bonds with your customers.

Make life easy:  Make customers’ lives easier by building in benefits or features that soothe their pain points. Amazon Prime caters to urban consumers’ need for convenience by offering free and flexible delivery options.

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Develop a 360° view of your customers and revamp your loyalty program to meet their preferences, circumstances, and pain points.

Promote Shared Values: Build emotional ties by enabling loyalty program members to earn non-monetary incentives through donations to a nonprofit or by rewarding charitable behavior. DSW’s innovative loyalty program offers points to VIP members in exchange for shoe donations to Nashville-based nonprofit Soles4Souls, which collects new and used shoes for those in need.

When using this strategy, support a social cause that relates to your brand and aligns with your customer’s values, emphasizing what their money is going towards.

Drop surprises: 80% of loyalty program customers prefer surprise deals to traditional benefits. Use this to your advantage by presenting customers with unanticipated perks to make them feel appreciated. Caribou Coffee rewards those who join Caribou Perks’s loyalty program with random gifts. Do your research and understand what kind of offers your customers want, as well as the optimal times to dangle them.

The key to building an emotional connection through loyalty programs is to understand the emotional motivators driving your customers’ behavior. Measurement frameworks (such as empathy mapping) will illuminate why your customers behave a certain way and which offers will be most effective.

New Loyalty Currencies

Consumers fed up with points programs that add little or no value to their lives are shifting to ones that offer “alternative” currencies, i.e., rewards that meet their needs. 85% of consumers said they find alternative currencies including Wi-Fi access and quicker check-out lines highly valuable.  Nike uses the currency of convenience to reward NikePlus members, so that when using the app in-store, they can pay for products without waiting in line.

If you’re looking to introduce alternative currencies into your loyalty program, keep the following in mind:

Identify the right customer: Dig into your customer base and identify those who prioritize time, convenience, and other benefits over monetary rewards. Use quantitative and qualitative methods to find out which non-monetary rewards bring the most value, but build a prototype to gauge customer interest before making it a permanent aspect of your program.

Use your current assets: Reduce the cost of rewards by repurposing your existing assets. Bond Loyalty Report suggests carrying out an audit of your assets and using points as your anchor currency – while using alternative currencies to surprise and delight high-value customers.

Technology: Look for a flexible loyalty management system that can adjust who gets what as their relationship with your brand evolves, along with an analytical system that can be integrated with your CRM system to track customer behavior.

Premium Loyalty Programs

37% of customers are willing to pay a fee for an enhanced membership tier. are launching paid premium loyalty programs to increase revenue and combat high latent membership rates. For 888 yuan (129 USD), Alibaba’s “88 VIP” loyalty program gives members exclusive perks such as discounts on Tmall and Taobao, as well as access to various Alibaba businesses like Youku and Ele.me.

Premium loyalty programs come with great responsibility, however. Make sure your program is worth the money:

Give Valuable Rewards: Ensure the rewards are personalized, exclusive, and outweigh the costs of your premium loyalty program. To deliver relevant rewards, collect and analyze data on your customers’ shopping habits and personal interests, using the insights gleaned to offer a range of compelling benefits and experiences. Consider allowing customers to choose their own rewards, and listen to customer feedback for ideas on how to improve your premium loyalty program.

Give Immediate Benefit: Give your customers instant gratification by offering perks or points as soon as they sign up for your loyalty program. Reward actions such as social media interactions and make points instantly redeemable. Also, allow participants to easily monitor, manage, and interact with your loyalty programs via mobile app, SMS, and email.

Before using this strategy, evaluate your product or service to determine that it makes sense for your business and customers. Consider offering both a free and paid program to appeal to your customer base, and use testing to determine if you’re better off with an annual or quarterly payment structure.

Loyalty Across All Enterprises

Though single loyalty programs are great, consumers don’t mind being acknowledged for a wider set of actions across a broader set of retailers or brand partners. 21% of consumers belong to a coalition or multi-merchant loyalty program and are actively engaged with multiple retail partners. If you want to add more value to your loyalty program, here are a few enterprise loyalty programs to consider.

Cross-brand: If you offer a wide range of products, align your company’s diverse offerings under a cross-brand loyalty program for an easier and more complete customer experience. Williams-Sonoma’s Key Rewards Program allows members to enjoy benefits from shopping in all seven of its retail brands. To nail this type of loyalty program, create a reward structure that works across all brands, and reward transaction volume and customer engagement.

Join a coalition: Join a coalition loyalty program to offer customers more choices and capture their data. Choose one that offers experiential, aspirational, attainable, and accessible rewards to consumers, uses simplified communication to highlight its benefits, and educates consumers on how to earn rewards.

Partner with other brands: If you don’t offer a variety of products and services, partner with like-minded brands to curate a loyalty ecosystem that will keep your customers engaged. Limit participation to brands with which your customers engage, identify strategic partners that align with your values, and leverage your resources to develop a unique value proposition.

Evolve Or Die

While loyalty programs still have a place in retail, the old transactional points-based schemes no longer work. To keep up with today’s consumer, make sure your loyalty program is flexible, lower the bar for entry, and keep things fresh by adding new perks and more rewardable activities.

Use data for a deep understanding of loyalty members and learn which content will best engage members. When collecting data, collect only what you need from customers and let them know how the data will be used.

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