Customer retention is one of the most valuable and important strategies for building a successful mid-size retail business. It places the focus on customer lifetime value (CLTV) – the total that a customer spends with the retailer over a relationship that usually spans years, and even generations. Customer retention for retailers drives maximum value from a customer by focusing on longevity and consistency, which in the long run are worth more than a short-term shopping spree from a consumer who then moves on. In fact, 80% of growth revenue comes from generating increased sales with existing customers, rather than from new ones. That’s why just a 5% increase in customer retention for retailers can lead to as much as a 95% increase in profits.

But how do mid-sized retail stores ensure retention? A surefire strategy is a customer-focused retail loyalty program, which will deliver

• Enhanced experience to increase customer engagement and return rate.
• Increased sales – 70% of consumers spend more and visit more frequently when they are part of a retail loyalty program.
• ‘Voice of the Customer’ (VoC) insights about behaviours and preferences, which enable personalized marketing. (VoC) information is invaluable – brands who use it have a 55% higher customer retention for retailers and an increase of 14.5% in customer satisfaction.

For a retail loyalty program to deliver on these benefits though, it is essential for mid-size retailers to pick the right platform, such as iVend retail POS. So what should a mid-size retail store planning to add or enhance a loyalty platform look for in a POS system?

1. A full range of loyalty program features – retailers need to have choices when it comes to how to reward and communicate with customers. Requirements change over time – as the business grows, customer demands shift and as you try new approaches. So it’s important to be able to implement your retail loyalty program in different ways – look, for example, for:
   • Customers can earn points or currency, with options for ratio of spend to reward
   • Points/currency accrued by purchase, by visit, by spend – and managed by physical card or app.
   • Tiered loyalty levels, with greater rewards for larger spend, longer membership.
   • Rewards are digital coupons, special pricing, gifts, discounts, money off next purchase, invitations to exclusive events, or an option to donate to charity.
   • Mobile notifications to customers.
   • Flexible rules for how points accrue and expire.
   • Bonus rewards, for example on a birthday or anniversary.
   • Group memberships – for a family, community organizations, or those wanting to donate to a charity.
2. Data insights – the ability to capture and analyze VoC information to understand behaviours and preferences. This enables retailers to build deeper relationships by showing that they understand their customers.
3. Omnichannel loyalty– customers want the same experience across online and in-store purchases, and in fact often make a purchase that spans the two channels, such as Buy Online Pickup in Store (BOPIS, or Click and Collect). This applies to loyalty as well – they must be able to earn, review and spend points online and in-store as part of the same omnichannel system.
4. Personalized marketing – consumers don’t want generalized promotions, they want offers that are based on what they buy, and what they aspire to buy.
5. POS integration – for loyalty to work seamlessly and enable a mid-sized retailer to manage the program effectively, it must be able to exchange data with other parts of the POS system, such as data analytics, sales and inventory.
6. Scalable loyalty program – as the business grows, the mid-size retail store operator doesn’t want to be held back by their loyalty system or outgrow it and have to replace it. It’s essential to choose a loyalty system that can scale with the business.

A well-executed loyalty program retains customers, which in turn drives sales, reduces marketing costs and therefore delivers higher profits. By selecting a state-of-the-art, modern and sophisticated POS and loyalty platform, mid-size retailers can delight their customers, and see their business thrive.

FAQs:

Do customers want to participate in loyalty programs?

For the majority, the answer is a clear ‘yes’. Globally, around 70% of consumers participate in one or more retail loyalty programs and for many shoppers, they have a wallet-full of cards (or more likely a smartphone full of apps). Additionally shippers like giving their opinion – with the caveat that they then want to see the retailer act on their feedback. But where this happens, 70% say their brand loyalty is stronger when they see their feedback being put into action.

Is it better to have a SaaS or on-premise loyalty platform?

In today’s IT world, especially for mid-sized retailers with limited IT resources, a cloud-based, Software-as-a-Service (SaaS) loyalty platform is a must. A SasS loyalty solution is managed remotely, requiring no in-store hardware or IT experts. Retailers can be sure that they always have the latest and most secure version. But because even the best connection to the internet falters occasionally, they must ensure that when they pick a SaaS loyalty platform, it is one that has the option for local processing and later synchronization.

Content Sources:

Mckinsey

Forbes

Deloitte