What makes up the DNA of a good retail loyalty program? Lisa Powell of Amblique sheds some light on loyalty best practice in the omni-channel age.
It seems these days that every retailer has a loyalty program – a card, a database, a barely-personalised email blast. This era of poorly conceived loyalty schemes has only served to make consumers increasingly cynical, with an overwhelming feeling that they’re being taken advantage of rather than rewarded. More often than not, loyalty programmes are put in place as a way to build up an email database rather than to reward genuinely loyal customers.
The majority of loyalty programs do little for the consumer or the retailer. They don’t deliver on what the customer wants, they don’t reward or encourage true loyalty and they don’t build brand advocacy or even brand consideration. Most of today’s loyalty programs feed the cynicism of the consumer, and many actually work to reinforce the feeling that they are being ripped off. Retailers who come up with meaningful, simple, transparent, omni-channel programs that actually reward loyalty and deliver on the brand’s promise will be ahead of the game.
These programs don’t need to be complex or complicated; in fact, the opposite is true – they just need to work to create experiences that are meaningful, memorable and consistent, that give customers a reason to come back or even recommend the store or brand to others. Loyalty benefits such as discounts or special offers should be a reward for repeat purchasing behaviour, not the primary reason to shop there.
Key to a successful loyalty program is the brand, in conjunction with rewarding loyalty, delivering on the experience. For these programs to work the entire omni-channel network needs to be engaged. Staff need to be able to recognise and understand their customers, just as the website, mobile site and other channels do. People and materials at all levels should be involved in influencing long-term behaviour – firstly attracting, then retaining, and ultimately creating long-term brand advocates who enter into an ongoing relationship with the brand.
Smart retailers are moving to loyalty programs based on an omni-channel communication model that offers the customer more ways to enjoy and reciprocate loyalty. Relevant and personalised communication via email or the call centre; a tailored, timely conversation via Facebook or Twitter; retail staff knowing your name and greeting you in the store; these are far more meaningful, not only increasing engagement but implementing service right down to the personal level, making the customer feel valued. Even smarter retailers are looking at their business as a whole, incentivising staff for attracting new members and rewarding them for member sales no matter where their customer shops.
Many organisations have realised that if they are going to harness this new consumer-centric era, their retail operations have to move beyond the single channel physical store, providing engaging ways in which to offer the customer an opportunity to buy their products wherever and whenever they want. A growing number of successful retailers are allowing their customers to shop via multiple channels, offering traditional stores, catalogue/call centres and e/mCommerce sites. However, due to the disparate infrastructures that typically underlie these channels, consumers who “channel hop” as part of their shopping behaviour can experience a process which is fragmented, inconsistent and inflexible with little or no regard for them or their experience.
Companies that can make the transition from traditional store or store and website to a fully integrated omni-channel retail environment stand to gain the rewards. These include greater visibility of their customers and operations, enhanced revenue and customer loyalty, all of which comes from providing a convenient, consistent and flexible shopping experience.
Retailers who fully understand and embrace this new multi-faceted environment, who take the time to understand the challenges faced by consumers, who provide services and programmes which adapt and seamlessly integrate with their target audience will reap the benefits. After all, it is the consumer who will shape retail in the future, not the retailer.
So, who is doing it well?
It’s simple; the brands doing it well are those that the consumer considers first when they want to buy. Brands like Qantas who focus on frequent flyers and build tiers of privileges and experiences keep members coming back. Who hasn’t heard a business colleague say, “It was $50 more but I went with Qantas as I am almost at gold/platinum”? Coupling this with a superior experience (which Qantas sometimes fails to deliver on) is the penultimate – customers feel that not only will they be rewarded, but that the experience itself is better, thus justifying paying more to get the points. They’re given a meal, a drink and great service, and feel that their decision to pay more was right.
Priceline is another of these types of programmes, a brand that seems to deliver the whole deal; it rewards customers for being loyal while also delivering great value for money, so the customer feels they are benefiting both ways. Priceline also works hard to make the experience personal by doing things like offering a choice of loyalty cards, fitting a customer’s personality and communicating around members’ preferences – they do send the occasional email blast around sale time but, given the customer demographic, members probably don’t mind this.
Customers are willing to attest their loyalty to Priceline. “I love the Priceline loyalty card,” says Lauren on the Westfield blog. “I often find things are cheaper then(sic) Coles or Woolies, so I’m saving money and then getting money back for the points I’ve accumulated…gotta love that!”
Brands need to be careful that their program doesn’t undervalue their offer. Sportscraft offer their VIPs ten percent off all full price product, as well as birthday surprises and exclusive offers. Once the VIPs login, the price of all full price products automatically changes, showing them their VIP only price. The differential is small but the member sees the benefit in a powerful, visual way, and this benefit works in whatever channel they choose to shop in. On the other hand, programs where the price changes by upward of 20 percent can make the consumer feel like they are being duped and that the RRP is an arbitrary number that the company can discount from which in no way reflects the value of the item. This, coupled with constant sales and discount messages, tends to erode the brand’s worth. This is also true for programs that offer benefits but then have reams of Terms and Conditions which make the offer almost impossible to take up. There is nothing worse for a customer, or brand for that matter, than trying to redeem something like a birthday voucher only to be told at point of sale that they can’t use their voucher for sale products or during promotions, especially in this time of frequent 20% off days – the customer can be left with no way to use their so-called reward.
Brands that attempt to create a community like Ikea Family are interesting – they want you to shop, eat, research and keep interacting with them. They offer free insurance, extended returns, exclusive offers and expert advice. If and when Ikea couple this with multichannel sales, which include backorders and deliveries to all of Australia, it will be unstoppable. Currently IKEA misses out on the whole experience by allowing you to browse and create wishlists online which are often out of stock or not available when you make the trek to the store.
Ikea is also affiliated with a charity, which has been the trend of recent years. While it does give a positive sentiment to the brand, it has not been shown to increase in loyalty or sales. Brands like Country Road and Witchery dabbled in aligning with charities like Red Kite and White Ribbon but this has dropped off in recent months.
To create an engaging experience, brands need to think omni-channel and communicate through multiple and fully integrated channels – web, social media, mobile, email, in-store, via customer service and after-sales follow up. They need to create a programme that works to reward and encourage loyalty, where the customer feels known and valued, and where any interaction with the brand is seen as positive. Brands now need to see loyalty programs not from the “What’s in it for me?” point of view, but rather “How do I get my customers to think of me first, talk positively about me to others and most importantly, keep coming back?”