On Valentine’s Day, our thoughts turn to love – and for retailers, love is everything. Their goal is to have customers who love them, and who show that love as loyalty, not just on Feb 14th, but all year round.
Why are love and loyalty so important to retailers ?
Firstly, customers who truly love a brand spend every time they shop. Research indicates that it is around 14% more – a very attractive prospect for a retailer.
Secondly, customers who love the brand become advocates – that is, they tell others about their great experience, and recommend the brand – to their friends, family and social media contacts. They do the retailers’ marketing for them – and do it more effectively, as we know that shoppers are more influenced by what other customers say than by the retailers’ own advertising.
Thirdly, once customers are part of a loyalty program, retailers have access to invaluable data about their preferences, their shopping behaviours and their demographics, which can be used to develop meaningful segmentation, to plan merchandising and build tailored offers.
What should retailers look for in a loyalty program ?
The three key goals of a loyalty program are:
Acquisition – attracting members
Engagement – encouraging spend
Retention – minimising ‘unsubscribes’ and maximising lifetime customer spend
If these are to be met efficiently and effectively, it’s crucial to select the right system – so what should retailers be looking for when they choose a loyalty application?
Acquire – the first step towards love and loyalty is to build the membership – encouraging shoppers to join the program. A referral reward encourages existing members to recommend the program to family and friends, harnessing their extended networks. Group memberships, where a family or a fundraising group can combine their points, will also encourage membership.
Finally, it’s got to be easy to join – and easy means different things to different customers, so a loyalty application with as wide a range of registration methods as possible is essential.
Engage – keeping members engaged is an important part of the success of a loyalty program, ensuring that they remain active participants, so the retailer can encourage them to increase their overall spend.
Members are more likely to stay engaged if they can easily manage their membership – if there is a simple way they can update their profile, see their balance and their transaction history and manage their communication preferences. Some of them will want to receive regular notifications about, for example, level achievements in the program, predefined events and special awards. The key is to give them choice about how they interact with the program, so that it is tailored to their specific needs.
Retention – the whole ‘raison d’etre’ of the loyalty program is to keep shoppers coming back, to make them fall in love with the brand and to build a relationship that will generate lifetime spend.
Multiple membership levels are a great way to give members an incentive to continue their engagement – they’ll want to move up from, say silver to gold to platinum. If a retailer has multiple brands, a cross-brand loyalty program, with rewards earned across the entire portfolio, can also help to increase engagement and spend levels.
Tailored promotions are an essential element of engagement with shoppers – harnessing the data collected via the loyalty scheme to send individualised offers based on their customers’ buying patterns. The more personalised the offer, the more likely the member is to act on it.
A choice of how to spend rewards will drive engagement – so retailers need a loyalty system that gives them flexibility to offer, for example, a rewards catalog and a points+pay option, with ‘sliders’ so that members can easily calculate the balance of cash and points that they want to pay.
With so much competition in retail, and savvy shoppers who are always on the lookout for the best deal, loyalty is more important than ever. So this Feb 14th, it’s worth taking the time to think about how you are going to get your customers to fall in love with you, and stay true.
iVend Loyalty can help you acquire, engage and retain customer advocates – for more information, download our Loyalty Fact Sheet
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