By Michael Zea, president and CEO, U.S., Aimia
Amid weaker-than-expected August retail sales, leading retailers are kick-starting their holiday shopping season by wooing existing shoppers through their customer loyalty programs. Retailers are increasing their investment in the traditional transaction-based loyalty efforts because of the proven success of rewarding customers for their purchases.
For instance, Toys “R” Us has invited its 35 million Rewards “R” Us members to earn 10% back on qualifying toy purchases through Halloween. They’ll get their earnings, up to $100, via an e-gift card in November, as shopping season gets into full swing.
Most brands, though, are missing the great opportunity to use insights gleaned from key customer experiences. They aren’t using pre- and post-purchase interactions at key moments to best understand how people move from curious consumer to retail loyalist.
The most successful loyalty efforts engage and capture people’s preferences before, during, and after the transaction. The opportunity for retailers is to build loyalty when consumers check in at your store, search online, share the purchase on social media, or even when they upload post-purchase usage data via an interactive app.
Understanding this, Best Buy, for one, has “reinvented” its Reward Zone program (now called My Best Buy). Its enhanced benefits include providing free shipping for online orders of at least $25, bonus points for “checking in” at the stores, an improved mobile experience and the traditional members-only benefits such as giving members advance notice of special sales.
Then there’s Apple’s Passbook, which has taken off as the digital repository of loyalty and gift cards – from clothing retailers and movie and entertainment venues to airlines and Major League Baseball. Passbook hardly made a blip last holiday season but its muscling into retailers’ space and now ranks as the fourth-most popular mobile commerce app among U.S. consumers.
Today, to truly succeed in building a holistic approach to loyalty with often-changing customers, retailers need to do three things:
1. Link customer data to search to be able to predict and provide customers and potential customers with relevant, timely and personalized offers.
2. Capture customer data and information throughout the entire purchase process – from the initial browsing to purchase and post-transaction.
3. Encourage and reward customers willing to provide their data and preferences throughout their interactions with your brand.
Consider what Guess is doing. The company is encouraging shoppers to download a mobile app, which incorporates a loyalty measurement. It tracks points from previous purchases and now includes a gift-giving guide for the holidays. As a result, Guess gathers more information about its customers’ personal preferences.
Once retailers go beyond transaction-based, cash-back programs, they then can begin to identify and engage people at the important moments in their purchase journey to deliver a superior experience across every brand touch point, online and off.
There are 10 key moments – inflection points – that provide retailers with an opportunity to identify, engage and build greater loyalty with their customers, namely:
1. Before the customer walks in the door/website. Consumers encounter two-thirds of brand touch points during their “active evaluation” phase before they make a conscious decision to purchase. This is why the Guess gift-giving guide is so smart because it informs their customers during their evaluation stage.
2. At the first sign of trouble. Each fledgling relationship hits a few snags; a consumer might get distracted by a rival offer or an early customer-service interaction might go awry. By reviewing the interaction information gathered about these customers, retailers can act quickly to save the relationship. A retailer might flag the best customers for preferential treatment, more liberal return policies and recognition.
3. During a life change. Use data analytics to anticipate major events in customers’ lives, from a marriage or pregnancy to the purchase of a new home.
4. When joining the loyalty program. Today’s loyalty programs are the most effective means to build long-term ties with customers. So when a retailer invites a customer to join, the experience must be executed flawlessly. If the experience is cumbersome, or if a retailer fails to deliver on promised value, the relationship will fail before it even really starts.
5. At the first sign of life. Early signs of program engagement by a customer can be highly predictive of future customer value. Retailers should strive to understand and act on insight from early loyalty program interactions.
6. During program redemptions. Reward redemption is that point at which a loyalty program proves its value; Aimia research finds that customers who redeem at least three times maintain higher spending and greater lifetime customer value.
7. During make-good situations. Bad customer experiences are inevitable, but it’s all about how a retailer reacts to a failure that will define the future of your relationship.
8. By exceeding expectations. Use customer data can provide retailers with insight into how to recognize and reward the best customers.
9. When anticipating a customer’s needs. Today, retailers can use customer data, analytics and multichannel communications to identify a customer’s need before the customer is even aware that the need is unfulfilled.
10. When the customer sings your praises. Use technology to identify, reward and recognize advocates and reap the benefits.
By requiring loyalty programs to deliver a differentiated customer experience, retailers can go beyond transaction-based programs, and engage customers at key inflection moments to drive greater loyalty and sales.
Michael Zea is president and CEO of U.S. operations for Aimia, a global leader in loyalty management, comprised of 4,000 employees in 20 countries.