Price is out, value’s in: the new rules of retail loyalty

What makes a customer stay loyal to a retailer? It’s the million dollar question that most organizations spend their lifetime (and considerable resources) trying to answer – and just as they edge closer, shopper priorities inevitably change.

Looking at the European loyalty landscape at present, one thing is for certain: it’s no longer just about being the cheapest. The rise of discounters and fast fashion retailers across the region has created an environment in which shoppers expect competitive pricing as standard.

That’s not necessarily saying they only seek bargains – plenty will shop with more expensive retailers – but at all price points, they want to feel that they’re getting a good deal.

This idea of ‘a good deal’ moves the topic of loyalty from cost to value. Adding value is a matter of honest, transparent pricing. It’s the quality of the products on offer. It’s the service retailers provide. And it’s the positive impact those services have on shoppers’ busy lifestyles.

European consumers now place a premium on their time, and this feeds directly into loyalty strategies. Convenience is king, and that means retailers must offer a quick and seamless experience both in-store and through their ecommerce platforms.

Moreover, if retailers can take steps to enhance this convenience, they’re onto a winning formula. In the store environment, mobile Point of Sale (mPOS) is an incredibly versatile piece of technology. At a basic level, it can be used as a queue buster, in order to reduce checkout waiting lines. However, it also has the capability to ‘curate’ shopper experiences – for instance, making complementary product recommendations or ordering items currently out of stock – that can save research time and future store visits.

Another key value factor in retail loyalty is personalization. Shoppers are no longer happy to accept a ‘one size fits all’ approach to incentive schemes, in which they are given the same, standardized offers as everyone else. They want retailers to go above and beyond the call of duty, to create promotions that are unique to them, in order to demonstrate their importance to their favorite brands.

Many retail organizations are gaining traction in this area by ‘tiering’ their promotional schemes, so that greater spending unlocks new rewards. These rewards aren’t just discounts, either; increasingly, the sector is moving towards a concierge model, where loyal shoppers are offered lifestyle benefits such as free express delivery, exclusive collection previews, even personal shopper services, rather than discount prices.

One major factor in the success of loyalty personalization is the ability to recognize and incentivize shoppers based on their total lifetime value. Too many retailers still have disconnected online and offline schemes, which can lead to a high frequency, high spend online customer feeling underwhelmed by their treatment in-store, and vice versa.

Mobile is absolutely crucial to bring loyalty programs together in all channels. The growth of digital passbooks has given retailers the opportunity to bring digital and physical rewards together in a single device. This way, no matter where the customer is shopping, they can accrue points collectively, and spend them wherever they choose.

Additionally, bringing mobile to the heart of customer loyalty presents retailers with more compelling promotional opportunities. Push notifications to the customer’s phone can increase average order values, especially if their previous purchasing data can be used to tailor those offers to something relevant. Equally, special offers are more likely to be redeemed if the voucher or code is kept on the device consumers carry everywhere they go, rather than printed on a piece of paper, destined to be forgotten in the folds of a wallet.

Whichever of these strategies retailers choose to focus on, one thing is clear: shoppers want their favorite brands to go the extra mile in order to prove their appreciation. The industry needs to think about how we can enrich their lives in other ways than just competitive prices.