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5 Red Flags—Managing Loyalty in a Digital World

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Jun 29 2016, Posted by Lisa Cramer
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75% of loyalty programs fail in the first 2 years, according to a recent study by Capgemini Consulting.

Now explosive digital growth is widening this gap, despite increased spending on loyalty efforts year-over-year. So what can you do? Is loyalty just a lost cause? How can you gain some traction and optimize your loyalty efforts for success?

We’ve pulled together 5 red flags to watch for when managing loyalty in today’s digital world…

  1. Overlooking the in-store experience
  2. Key Stats:

    • Brick-and-mortar sales in the first quarter of 2016 accounted for over 92% percent of total U.S. sales (U.S. Census Bureau).
    • 88% of in-store displays go unnoticed by shoppers (POPAI).
    • Two in three shoppers who tried to find information within a store say they didn’t find what they needed, and 43% of them left frustrated (Google).
    • 46% of shoppers stated that they usually know more than the sales associate (InReality).

    We all know that huge retail brands are in trouble right now, filing bankruptcy or closing stores—Sports Authority, Walmart, American Eagle, Office Depot, to name a few. However, we also know that over 92% of all retail sales still happen in-store and more and more pure-play etailers, like Bonobos, Birchbox, and Warby Parker, are moving in-store and experiencing tremendous growth. Even, Amazon is moving into brick-and-mortar. So obviously, there’s a place and opportunity for physical retail, however, ignoring how much transformation is happening in retail and how the role of the store is changing is suicidal, 92% or not. Today’s shoppers just have too many options, and to sit back and keep delivering the same dated experience, expecting a different result is literally the definition of insanity.

    That said, it’s critical to understand that the pure-plays we mentioned earlier didn’t just open up stores. They reinvented what it means to be a brand in retail by focusing on the in-store experience as a marketing tool and an interface to bring the brand to life for shoppers through immersive experiences, instant gratification and sought-after value that couldn’t be replicated online. Moreover, these brands realized that shoppers weren’t just coming to their stores as blank slates, ready to be influenced. They understood that their stores were one part of a larger experience and that seasoned by online shopping and digital tech conveniences, shoppers were increasingly expecting an easy, seamless shopping experience. Consequently, as digital connects to fragment the traditional shopping journey, focusing on the in-store experience can be a key opportunity to help shoppers connect the dots, put a face and personality to your brand and develop a more substantial, loyal relationship.

  3. The one-size fits all program
  4. Key Stats:

    • Only 25% of loyalty programs reward customers for some form of engagement. For instance, 2% of loyalty programs reward shoppers for in-store check-ins (Capgemini Consulting).
    • 44% of the negative sentiment towards loyalty programs is due to lack of reward relevance, flexibility and value (Capgemini Consulting).

    Some shoppers buy from you every day. And, some shoppers are your biggest advocates—always leaving you reviews and sharing positive things on social. On the other hand, some shoppers check-in occasionally, rarely engage with your latest marketing campaigns or promotions or visit you once a month online or in-store. All are valuable. It’s important to stratify rewards and recognize loyalty in whatever form it exists. Your goal should be to align the right investment with the right shopper—whether it’s a freebie, an exclusive invite to try a new product, an in-store event to get free tips from an expert in-person, etc. This will allow you to deliver hyper-targeted experiences and messages and build relationships with shoppers rather than just create a coupon stop.

  5. Getting trapped by the “bright and shiny”
  6. Key Stats:

    • On average, U.S. households are enrolled in 29 loyalty programs, but remain active in only 12 (Colloquy).

    It’s natural to gravitate towards all the buzz, but “bright and shiny” can be a dangerous approach to winning loyalty. Flashy apps and new technologies can deliver a cool, but momentary, experience and lead you into a false sense of security. Quickly you’ll find your brand has amassed several different mobile apps that really do little to bring value to the consumer, improve their experience or offer any notable performance metrics. Instead, start by mapping out your customer journey and all your touchpoints, then identify the gaps in your customer experience and your competitors’ experiences to determine where you can be most helpful to shoppers and bring them the most value—outside of just more coupons. Aim to differentiate not just through your products but through your experience. As retail continues to evolve into an “always-on” shopping journey, your customer experience will become an increasing important loyalty and survival tool.

  7. Failing to deliver personalized value in the moment
  8. Key Stats:

    • 1 in 3 shoppers has purchased from a company or brand other than the one he or she intended to because of information received in the moment (Google).
    • 75% of shoppers said they would be more likely to buy in-store if given personalized offers/promotions delivered in the moment (InReality).
    • By 2020 a customer will manage 85% of the relationship with a company without interacting with a human (Gartner).

    Beacons paired with shoppers’ mobile devices can be used for a wide variety of retail purposes like rewards, sale notifications, reminders, product recommendations, product information, shopping lists and in-store pick-up aids. And, don’t just think about mobile here. Remotely managed digital screens in-store can be used to deliver many of these things as well, without requiring the shopper to opt-in or use their mobile device. Also, virtual 2D storefronts or kiosks for instant product purchasing 24/7 can be used to empower busy, on-the go, self-directed shoppers. A big part of loyalty is being available and accessible for shoppers, ready with needed information or relevant value before the competitive clutter.

  9. Recognize how loyalty plays in an omnichannel world
  10. Key Stats:

    • Only 9% of loyalty programs offer points redemption across channels (Capgemini Consulting).

    Right now. Can I earn and redeem points through your loyalty program as I move through my journey online and offline? Do I receive personalized offers and messages in these places as well? If not, you are missing out on critical opportunities to connect with your shoppers and collect important data points. If you’re going to have a loyalty program, it should be good everywhere.

U.S. shoppers are still signing up for loyalty programs in droves—memberships actually topped 3 billion in 2015. That’s a 26% increase since 2013 (Colloquy). So there’s definitely still a great opportunity here. However, most loyalty programs are missing the mark. Every time you throw something out there that doesn’t bring value to your shoppers, improve their shopping experience or reward them for their individual relationship with your brand/store, you’re setting yourself up to fail. It’s time to rethink loyalty efforts and build individual relationships rather than discount junkies available to a better deal at any moment.


Image Copyright: macniak / 123RF Stock Photo

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