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Why your loyalty program isn’t enough anymore

 

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According to research from Strategy Analytics, around the time we’re heralding the dawn of the ‘20s, we’ll be living among some 33 billion devices connected to the internet—that’s roughly 4.3 devices per human on the planet.

Even today this connected world is drastically shifting the way in which we interact with brands. Switching to a competitor is easier than ever before as we can search online and find the same product through a competitor at a better price or with a more favourable service offering. We’re taking our research, our advocacy and our loyalty to the streets, with a bigger audience and more dynamic knowledge base than at any time in history.

Having this type and volume of information available at our fingertips is fragmenting the path to purchase, giving more control to the consumer to choose how and when they want to interact. In turn, this forces brands to rethink the way they do business in order to retain customers and create long-term engagement.

Loyalty trends analysis from across the globe has highlighted similar findings, indicating consumers’ interest in loyalty programs is starting to dip as we move away from seeking rewards that are based on transacting with the brand to participate in a point-based system. The 2016 Bond loyalty report found that only 50 per cent of consumers actively use the loyalty programs they join and just 22 per cent felt programs were personalised to them.

Traditional loyalty programs not enough

In short, loyalty programs as we know them simply aren’t enough anymore. They’re built around an outdated approach that serves to benefit the brand by providing a quick and easy way of gathering consumer data to help build a picture of who their customers are and fertilise lower-cost-to-serve communication channels, rather than focusing on the needs of the consumer.

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Rewards are typically linked to transactions in single or limited channels rather than looking at how consumers are interacting across the full path to purchase and embracing behaviour within a multi-channel environment. Operationally, the data gathered is often siloed to one department rather than providing rich insight to the entire business to fuel the customer experience.

This approach fosters the appearance of loyalty—creating a relationship that goes through all the motions—without really generating any at all and only loosely even rewarding it. When you put it like that, it’s a hollow and superficial basis on which to build an enduring connection. It’s more of a fling than a marriage.

Personalisation paramount

Gartner’s Magic 8 Ball once said that by 2017 the vast majority (some 89 per cent) of businesses would compete mainly on customer experience. We’re now in 2017 and need to accept that we live in an age where consumers expect personalised service and experience. Compelling experiences are sticky, and delivering unique and nuanced experiences to the consumer is paramount to fostering long-term relationships.

Fundamentally though, you can’t just talk the talk. You need to mean it if you’re going to create authentic, engaging experiences and that starts back of house, facilitated and supported by fully integrated back-end systems. In practical terms, this means collecting data on your customer around how and when they interact with your brand across all channels and using this data to fuel the experience.

Today, there is no excuse. We have (or at the very least have the ability to acquire) all of the data required to provide hyper-personalised experiences at scale. Yet this approach is still a step away from the current single-channel approach that is too often adopted by most commerce brands due to a host of (increasingly invalid) reasons such as infrastructure limitations.

Some brands are tackling previously insurmountable challenges by applying a deep knowledge of customers to bring to life compelling experiences and offerings. Case in point: UK-founded startup Deliveroo, which has managed to smash its way into new, highly competitive markets like Hong Kong.

Since launching there in 2015 it has grown its revenue base by 35 per cent month-on-month and created stickiness amongst this new audience by putting customers to good use, driving loyalty through hyper-targeted segmentation and personalisation. But using data is hardly new, right? Except that Deliveroo understands that this alone won’t create a loyal following; it’s the totality of this data being employed to create the kind of customer experience that would have been previously unachievable at scale.

The Amazon threat

 If the carrot of diehard (paying) fans wasn’t enough, the threat of new market entrants both from established international players and star-ups alike means that retailers must look to review and overhaul their systems and procedures in order to remain competitive and avoid participating in the inevitable commoditisation and race to the bottom on price.

In Australia, retailers will soon be faced with sharing customers’ hearts and minds with Amazon as it takes a more active role in the market. Amazon is known for being an innovative retailer and is constantly investing in new technologies to limit disruption to the consumer journey. Examples of this strategy at play include products such as Amazon Dash, the one click ordering process for household items, and the recently launched check-out free Amazon supermarket; all geared towards providing a seamless experience to the consumer. It’s this sort of approach that keeps consumers shopping at Amazon and contributed to a 15.8 per cent rise in revenue earlier this year, amidst a decaying traditional retail landscape. And the retailer achieved all of this without a traditional rewards program—in fact membership in their ‘club’ (Amazon Prime) isn’t even free.

So if the future of loyalty is here, why are so many retailers getting it so wrong? Legacy infrastructure and the perceived size and complexity of the task ahead alongside a lack of skill is often a roadblock to changing how things are done within an organisation. But it doesn’t need to be. A clear data strategy, together with a gated implementation plan clears the way for change that makes a modern—no, futuristic—loyalty program, attainable.

It’s clear that as consumers we’re more connected and in control than ever before, and  now is the time for retailers to step up and provide the experiences their customers are demanding. Understanding your brand’s experience value proposition and delivering on that promise is what will drive loyal customers back. By integrating technology into this experience the data exchange becomes second nature.

loyalty programsAbby Goode is a senior strategist at Isobar specialising in CRM and data. She’s gained extensive experience delivering data-driven customer experience lifecycle strategies within the UK and Australia both client side with the likes of Officeworks, Matalan and Kmart and agency-side.

 

 

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