Today’s consumers have an often dizzying array of options for buying goods and services. Innovation in commerce for B2C and B2B is delivering a growing and diverse group of retailers that range from single-proprietor social sellers to giant marketplace operators. At the same time, it’s becoming super easy to comparison shop for just about anything.
That’s a lot of competition for an established retailer to deal with. So, what can you do to win over your audience and keep them coming back for more? The answer can be simple: offer a loyalty program.
Loyalty has been changing lately too, expanding beyond traditional spend-more-to-save-more models into full-service programs that bundle transactional offers with experiences geared to make customers feel special.
Starbucks, for example, uses its popular Starbucks Rewards program to let customers collect points for purchases that can be traded for free products. But for many members, the best element of the program is one that addresses a major pain point – app users can place their order via mobile and skip the line at the store.
The North Face, another notable player in loyalty, developed its XPLR pass to bring members merchandise discounts, access to limited-edition collections, and “field-testing” of products. The outdoor clothing retailer also uses loyalty to remind customers about its brand values - members get points for activities that include bringing a reusable bag to shop in the store or using their mobile app to check in at a national park.
Other merchants have even convinced customers to pay for loyalty memberships. The best example is Amazon Prime, which uses a host of discounts and free services to keep shoppers loyal and spending more.
For customers, a compelling loyalty program can be the reason they stick with a brand or retailer even when a lower price is available elsewhere. And for the company, the benefits of loyalty have a clear business case. Loyalty programs can:
- Drive revenue and lifetime value
- Help you build first-party data and customer segments
- Deliver actionable insights
Getting Started with Loyalty
Here are a few things to consider when you are scoping a loyalty program:
- Set clear goals for what you want your loyalty program to deliver to your customer and to your business
- Ensure that your rewards are compelling for your target audience
- Have a right-sized budget for running the loyalty program, including paid promotion
- Understand how you will collect and monitor loyalty data, and make sure you have a data governance plan
- You’ll need a set of processes for turning insights from your loyalty program into actions
- Make sure you are staffed appropriately to manage your loyalty program, which will require skills in strategy, operations, and technology
- Choose a technology vendor whose capabilities are the right size for you now, with room to grow
When scoped and operated according to business goals, loyalty programs can prove rewarding for customers and retailers alike.
Already familiar with loyalty? Check out part 2 of this blog to see if you’re making the most of your loyalty program.
Need help? Contact us.
