eMarketer Interview: Building Loyalty Programs That Keep Customers Connected Post-Purchase
Originally posted on eMarketer.
Today’s savvy shoppers are members of several loyalty programs, but there is little engagement with these programs beyond the point of purchase. eMarketer’s Tricia Carr spoke with Zach Woith, vice president of loyalty strategy at service provider 500friends, about the reasons why customers stop using loyalty programs and what marketers can do to keep them engaged post-purchase.
eMarketer: Consumers are members of more loyalty programs than ever before, but they’re not participating in them. What can marketers do to engage members?
Zach Woith: We’re seeing programs put more emphasis than they have historically on understanding what value is derived and expected by members and making sure that [expectation] is met. Sometimes programs deliver highly aspirational rewards that are not attainable by the majority of members, or provide nominal dollars-off discounts that aren’t redeemed by members. Both of these examples are an extreme where the value exchange is not in balance. These are reasons why people might sign up for a program but not stay active or engaged over time.
eMarketer: Is thinking beyond the transaction an issue for marketers?
Woith: Loyalty programs continue to include new forms of engagement. While that transactional opportunity undeniably remains the foundation which all financially viable programs are built around, there is also a recognition, particularly among retailers that are motivated to retain and engage customers on an ongoing basis, that they need to think beyond the transaction.
“What defines a loyalty customer isn’t just the behavior around the transaction. It’s ... how they interact with your brand, how they discover new products or categories and how they use the product.”
If the majority of your active customers, which for most retailers are the people who purchase one, two or three times a year, how do you engage them between those purchase cycles? What defines a loyalty customer isn’t just the behavior around the transaction. It’s what they do in between those periods—how they interact with your brand, how they discover new products or categories and how they use the product.
eMarketer: What trends in customer loyalty help marketers engage with their customers?
Woith: One trend is the utilization of partnerships to strengthen the value proposition in the program, reinforce participation opportunities and reinforce brand positioning. There are a couple of ways we’ve seen partnerships evolve in the marketplace. Coalition programs like Plenti leverage partnerships in a broad way. They create the convenience of a one-stop shop to earn and redeem points across multiple retailers.
Retailers can also look to the travel space for a great model for partnerships. Broad partnerships linking, for example, airlines and hotels have a natural synergy in the experience of these two categories. Travel partnerships are an interesting approach to strengthen the value prop of not only the individual programs, but to create a meaningful experience that goes beyond being recognized as a top member.
eMarketer: What’s an example of a partnership?
Woith: The partnership between United Airlines’ MileagePlus and Uber is an example of taking this to the next level. When you use Uber when you travel, there’s an opportunity to earn points. It’s not only a much stronger value prop, but it’s also a recognition of what’s meaningful to customers and their experience with the brand.
“The partnership between United Airlines’ MileagePlus and Uber is an example of taking this to the next level. When you use Uber when you travel, there’s an opportunity to earn points.”
eMarketer: What’s an example of a successful partnership tied to a retailer’s loyalty program?
Woith: Our client [athletic products company] New Balance’s loyalty program is structured to drive engagement opportunities with that target customer who has an active, healthy lifestyle. A lot of retailers think about how they can look beyond the transaction and engage customers beyond just buying products. New Balance did this with a partnership with Runkeeper [a fitness tracker app].
Even a top New Balance customer buys shoes maybe three to four times a year—but they use the fitness tracker app on a weekly or even daily basis. Through an integration of the New Balance loyalty program with the Runkeeper app, loyalty program members can connect their accounts and receive loyalty points as they record fitness activity in Runkeeper. This reinforces the lifestyle connected to the product and allows the loyalty program to stay top of mind and relevant to members beyond the transaction.
eMarketer: What will be the big breakthroughs in loyalty this year?
Woith: It’s less about breakthroughs in technology or strategy. Retailers are looking beyond the cycle of acquisition and focusing on retention and lifetime value opportunities.
We hear a lot about loyalty and retention initiatives being the top priorities. Marketers should not just think from an acquisition perspective, but also look at the synergies that exist between how they acquire and engage customers and how that’s aligned with their broader strategies for loyalty and retention. Don’t think of them as two distinct considerations, but think about how they can coexist synergistically.
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