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Loyalty trends and best practices

Keeping Up With Today's Loyalty Demands

by Julia Leyrer
March 05, 2015
Keeping Up With Today's Loyalty Demands

Originally posted on IBM's Smarter Commerce blog:

Loyalty marketing is more and more prominent in today’s retail landscape. It is becoming common knowledge that customer acquisition costs are increasingly rising, and data-driven customer retention is a key area filled with untapped growth potential. But loyalty marketing is evolving and is more intricate than just offering discounts to existing customers. As many marketers realize, there are three common problems that they run into when trying to implement an effective loyalty program:

  1. They often feel stuck offering dollars-off discounts and are losing their margins without sustainably changing their customer behavior.

  2. Personalization is not going further than using much more than a first and last name, and is not connecting to the customer and building customer relationships.

  3. Their loyalty members are not actively participating and being engaged, and consequently not influencing long term results.

Today, there is an average of 29 loyalty programs per U.S. household, but people are only active in about 12, or 41%, of them. Customers are selective about their loyalty programs, which underlines the need to make yours stand out and be as efficient as possible. This requires close attention to 1) increasing customer self-identification, 2) taking personalized communications, opportunities, and rewards to the next level, and 3) extending the program to be omni-channel and connect cohesively across all customer touch points. In executing on those requirements, the loyalty payoff can be huge. One major retailer’s loyalty program was successful in increasing average spend by 20% per member, program enrollment by 45%, and repurchase rate by 14%.


Increasing Self-Identification

Loyalty incentivizes customers to provide more information about themselves and engage across channels, which leads to a richer understanding of your customers and how they interact with your brand. You may be surprised how many of them are open to providing information about themselves in order to receive more relevant communications and offers. Collecting information that they provide through forms, surveys, and feedback can be very useful, as well as connecting customer social accounts. With social accounts, in addition to seeing basic information such as their age, gender, and location, you can also see their likes, actions, and which topics they are posting about. Expanding your repository of customer data is critical to developing a holistic customer view to ensure you are implementing the most effective strategies for your unique customer base.


Taking Personalization to the Next Level

In addition to increasing customer self-identification, you should track and analyze metrics such as order frequency, average order value, and from which channels customers are purchasing. Modern loyalty programs gather this customer data and provide a centralized hub which is used to personalize meaningful incentives and rewards for higher customer redemption and satisfaction, and also to send personalized messages. These messages can be targeted towards specific actions and customer segments, and are used to maintain relevance and build upon customer-brand relationships by making customers feel like you are paying attention to what they want. For example, using loyalty program information, instead of running a general email promotion to all existing customers, you can specifically run it to gold tier members that ordinarily make a purchase every two months, but are now coming close to not making a purchase in two months. By knowing the purchasing habits of this narrow segment, you are able to selectively and more effectively run this promotion. Using personalization, you also do not need to depend on blindly providing dollars-off to all customers without sustaining engagement in the long-term, when you have the insights to segment customers, deliver personalized experiences, and understand how to truly interest and engage your customers.

Keep track of what your customers like and dislike, inside and outside of your company. If it means being presented with relevant offers that match their interests, 64% of people would choose to have their individual activity tracked.


Cohesive Omni-Channel Capabilities

With today’s consumer having the ability to interact with your brand across all channels, it is essential to have cohesive communication, connectivity of data, and customer access to your program and rewards at all touch points. Different consumers like to interact with brands through different channels – whether in-store, social media, or email – and your program should be available in their preferred channel. It is also a quick way to lose an engaged customer from your program if they do not have the access they expect or if they are receiving different information in different channels. Having robust and consistent communication across all touch points is key to providing brand validity, trust, and ease for the customer to solidify their loyalty.

Today’s consumer is accustomed to numerous messages competing for their attention across different channels. It is imperative to stay on top of the evolving loyalty landscape and customers’ expectations and preferences to make the most of your loyalty program.500friends, A Merkle Company, helps retailers build more profitable customer relationships with omni-channel loyalty programs and strategies. We partnered with IBM WebSphere® Commerce for our software-as-a-service (SaaS) loyalty suite, LoyaltyPlus, to easily develop a richer hub of data for better customer understanding with faster time to value for our mutual clients. LoyaltyPlus connects customer data at all touch points, from in-store to mobile, and delivers a seamless, fully branded omni-channel experience.

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