The phrase ‘customer loyalty’ is indeed a buzzword these days, as retailers scramble to figure out how best to earn and retain shopper loyalty. But the concept is age-old and is contained in the word ‘customer’ itself, which was originally defined as “one who purchases goods or supplies, one who customarily buys from the same tradesman or guild.” Sellers of yore endeavoured to provide friendly, personalized service to create trusting relationships with their customers in the hopes of securing repeat business.
Today, customer loyalty programs are a core part of a store’s retail strategy. Until recently, they had a relatively simple definition: they were marketing programs that rewarded members with purchase incentives. And the premise was simple: The more you shop and spend, the more you receive in return.
Nowadays, customers want more. The younger demographic especially knows companies collect and use lots of data on their purchasing behaviour. They’re cool with that – as long as they get something of value in return, and this needs to move beyond merely offering redeemable points which has typically been the norm.
So, what are retailers to do to seal the deal? In a word: Personalization.
While straight discounts on goods and services routinely purchased will continue to hold some value, loyalty programs of the future need to push beyond to give customers greater flexibility. Flexibility will need to be multi-faceted in order to provide choice. How? Among others, features retailers will want to consider include: customization; influencer marketing programs; and pooling programs.
Thanks to both offline and in-store mobile technologies, retailers are able to track what individual customers buy, when they shop, and how much they spend when they collect loyalty points at the point of sale. These customer insights can be leveraged to offer customers rewards towards products or services that are relevant to them. For instance, after a customer purchases a shirt, a retailer can send suggestions for skirts to match. On the service end, a customer who shops frequently for high-end beauty products – and who doesn’t appear too interested in discounts – might be offered a free makeup session.
Or, the program can be further customized by giving customers the option to ‘personalize’ how they redeem their points – the discount or the makeup session.
For example, Sephora’s Beauty Insider allows customers to earn rewards based on a traditional point system. Loyalty members can choose how to use their reward points. Those concerned about price can redeem points for things like gift cards and discounts, while those more interested in experiential rewards can redeem theirs for exclusive things like limited edition products or in-store beauty tutorials.
Personalization allows Sephora to target different markets – those seeking discounts, those seeking experiences, and those seeking both.
Influencer Marketing Programs
The rise of mobile and social media has provided retailers with an opportunity to invite customers to promote a company’s offering to their social media followers in return for points, rewards, or some other perk. These influencer marketing programs tie in with loyalty programs becoming increasingly experiential. Brand-sponsored activities and the act of influencing peers are experiences in themselves – experiences that empower the influencer, and make them feel like an authority or a trend-setter, which reinforces their relationship with the brand.
Tarte Cosmetics does influencer marketing really well. Customers are invited to be brand advocates by posting a selfie with Tarte products or writing online reviews. The company organizes large-scale events – including all-expenses paid holidays – and asks attendees to generate and post content throughout. These happy ‘influencers’ appreciate the brand offering and in turn develop a long-term relationship with the brand.
Customization and flexibility come together when different retailers team up to offer customers the opportunity to pool and redeem points at the different retailers.
A great example is Canadian Tire’s Triangle Rewards Program. Using the Triangle Mobile App or Triangle Rewards Cards, customers can collect and redeem Canadian Tire Money® at Canadian Tire itself or any of their partners – SportChek, Gas+, participating Mark’s and Atmosphere stores, and Husky stations across Canada. Customers receive, via their online account or Triangle™ Mobile App, customized offers based on items they’ve purchased, departments they regularly shop in, and categories they’ve shown an active interest in.
The Real Win
To boost engagement, companies have to push personalization beyond offering only functional rewards (points for discounts) and supplement the offering with experiential rewards (points towards experiences). That is, providing customers with access to experiences in sync with their personal interests (trips to educational or discovery destinations, cooking classes, makeup sessions, one-day workshops, etc.) This enriches the journey to redemption as there is now emotional gratification driving their behaviours towards something that is seen as more worthwhile than merely the functional convenience of a nominal discount.
The More Things Change…
When it comes down to it, personalization in today’s high-tech world isn’t much different from what it was back in the day of medieval trade fairs.
If, as a customer, I tell you who I am, I will expect you to address me by my name and show me that you care about what I like in order for us to have a reciprocal relationship based on trust and loyalty. As retailers, you don’t need to go far from that statement to understand what your customers really want. Listen to your customers and give them the options to get involved with your brand on their terms. Be flexible, be fair, and give your audience a voice. It is a two-way relationship that fosters growth, trust and loyalty!