Customer Loyalty Programs: The Most Effective Tool in Your Marketing Arsenal
If your wallet has ever looked anything like mine, chances are that at one point in time it was loaded with stacks of customer loyalty cards. In those early days of customer loyalty programs, it was on the customer to pull out that card and present it at the point of purchase to get a special discount, or to make sure the customer loyalty program points were being gathered and tallied. Eventually, I forgot about all those cards stuffed in my wallet, and maybe that made me a disloyal customer—or at the very least, a negligent one.
New Customers vs. Returning Customers—A Difficult Balance
These days, customer loyalty programs are far more complex. And just as all things retail are being reshaped by current social and economic situations and pressures, customer loyalty programs are being thrust into a new position of importance. The Retail TouchPoints 2020 Customer Loyalty Benchmark Survey states that 68% of retailers gained new e-commerce customers due to Covid-19. Covid-19 drove a record number of shoppers to digital marketplaces as first-time users, especially within the grocery sector. This created a problem for retailers who will need to address how to retain such a large amount of newly acquired e-customers.
The continuing diminishment of annual marketing budgets dedicated to customer acquisition and retention also places even greater importance on customer loyalty programs as they become sole providers for maintaining the balance of a retailer or brand’s new and returning customers. And as more retailers establish partnerships with third-party services such as delivery app providers, the traditional customer/retailer or brand relationship is disrupted, leaving customer loyalty programs the last lifeline a brand or retailer may have with their customer.
Customer Loyalty Program Avoidance
There is such a thing as customer loyalty program avoidance. A customer may avoid entering into a deeper relationship with a retailer or brand because of a lack of trust. Some shoppers are of the opinion that the benefits of belonging to a customer loyalty program don’t outweigh the risks. Many shoppers are wary of the programs because they are of the perception that the retailer is utilizing their data to fuel the profitability of the business. Retailers and brands do gain a tremendous wealth of information from customer loyalty programs by using customer data platforms to harvest intel from within a retailer or brand’s ecosystem. Input from an individual’s different devices is compiled to form a 360-degree profile of that customer. This data can be used to craft a personalized customer loyalty program for that same customer while also being used to inform a retailer or brand’s decision-making on everything from product development to real estate and media purchases.
Customer Loyalty Programs and Customer Expectation
Customer loyalty programs are a proven method of linking customers to a retailer or brand for a period of time. The Retail Touchpoints Customer Loyalty Benchmark report reveals that 22% of retailers surveyed stated that 50% of their income is derived from customer loyalty program members—a startling testament to their importance.
The 2019 Loyalty Report from Bond states that 79% of customers surveyed are more likely to buy from businesses with loyalty programs and 73% are more likely to recommend businesses with loyalty programs. Shoppers now expect to be rewarded for their continued investment in a business, with purchase discounts still being the most popular and traditional form of reward. Loyalty perks are currently shifting into being service-related, such as the availability of expedited shipping and looser return policies in return for more customer dollars spent. Large, subscription-based retailers such as Amazon, who can approach loyalty rewards from a point of greater flexibility, are putting downward pressure and influence on all loyalty programs by creating increased customer expectations.
Embrace the Whole Customer
The very essence of a traditional customer loyalty program is the understanding that a retailer or brand is rewarding the customer in the brick-and-mortar or e-commerce spheres for their transactional interactions, or for dollars spent over a period of time. But in order to embrace the wider scope of who a loyal customer truly is—one who is enthusiastic, connected and who is an advocate for the retailer or brand—the non-transactional must be taken into account. A customer loyalty program must embrace the whole customer and must recognize non-transactional interactions on digital platforms and social networks.
Get More Customer Loyalty Program Participation
So how does the retailer or brand seeking a higher rate of customer participation in their customer loyalty program achieve that?
Many existing customers may not be fully aware of the customer loyalty programs offered by a retailer or brand. Your business may have gained customers in recent months—make sure to take the opportunity to introduce your loyalty programs to your new audience. It’s never been more important to make sure your program is well-publicized. Actively promote your loyalty program in store, online and in package. Consider out-of-home advertising and paid advertising on social media platforms. Reach out with personalized emails to remind customers of program benefits—this will be crucial for those grocery retailers that received record numbers of new online customers in the first half of 2020. Make sure to use your company’s or brand’s own social media and access any influencers you may have in your stable to help get the word out.
Get the Word Out—Consistently
- Make more strategic use of your in-store signage and print collateral programs to promote your loyalty programs. We’ve written recently about how signage acts as your silent salesperson, and here is the perfect reason to put that salesperson to frequent and good use.
- Spread your message and the value of joining your loyalty program throughout the store by tagging products and reminding customers how much money could be saved through program participation.
- Position stanchions strategically near the front of the store, at point-of-purchase areas, and even at exit points (reminding the shopper what they may save during their next visit if they participate in your program).
- Incentivize your cashiers and salespeople to boost awareness by asking customers if they are a loyalty program member and provide a means by which the shopper can easily sign up for benefits, like a QR code that connects to the store’s loyalty program sign-up right on their receipt.
- Use bag stuffers and in-package materials so that customers can review the information at their own pace and in their own homes. Offer incentives for the first purchase after enrollment. A scratch-off game card could offer a special discount to first-time sign-ups. Make it fun!
Make It Easy for Your Shopper to Enroll
- Give thought to a redesign or simplification of your program so it will be convenient and easy to use. Registration processes should be concise and efficient, and the structure and benefits of the program should be clear and easy to understand.
- Explore the use of QR codes on your signage, in-package and print materials, and advertising to help customers easily and seamlessly access your sign-up forms both in and out of store. Advertisements in a bus shelter or train station may be the unexpected but best-placed media to boost program participation. And yes, even your own parking lot might be another opportunity to do this.
Pump Up the Volume
Remember that engagement inspires loyalty and trust, so keep your message fresh and continue to offer new incentives. Ultimately, focus on exclusivity and personalization. Rewards in the forms of discounts are no longer attractive enough. The more intimately you know your customer, the better you will be positioned to understand their purchasing habits and influence their future purchasing habits.
- Offer members incentives or service perks through your loyalty program to make their lives easier or more enjoyable, which ultimately cements the customer/brand contract and leads to more purchasing.
Medallion Can Help
More than 55 years of retail experience have taught us that knowing and staying in communication with your customer is of the utmost importance, especially during times of change, like these. Vary and freshen your message, but be certain to continue to communicate your brand values and value proposition. These principles will help you build or ensure a new or existing bond with your customer and will ultimately deliver what you need to create lasting retail relationships.
Call Chris Gordon @ 646.677.5618 to discuss how in-store signage, display and print collateral can help build your customer loyalty program.