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Online Loyalty

Barnes & Noble is driving revenue with its Web loyalty program, while providing shoppers with discounts and rebates.

As shoppers rely on the Web to research merchandise and make purchases, they are also demanding that the medium support store-level services, including loyalty programs. But traditional point-based, or clipless coupon-style programs, just won’t do.

As convenient e-commerce channels continue to boom, shoppers don’t want to present traditional loyalty cards at the point of purchase. Instead, they are demanding immediate, specific and individualized attention that fits their needs and behaviors. So retailers are looking beyond basic store-level methods as they shift their loyalty efforts online.

Some companies are unsure of where to start their online loyalty journeys. Others are already using new programs to collect shopper data, and learn how to attract and cater to each shopper.

For example, Barnes & Noble, New York City, partnered with Norwalk, Conn.-based Webloyalty.com to launch its online loyalty-program initiative. Webloyalty, a company that offers revenue-driving services that enable retailers to deliver loyalty-based discounts and rebates, developed a marketing database that applies algorithms to customer data, and anticipates the interests and preferences of potential members. The retailer uses results for direct-marketing promotions and targeted-marketing messages.

Barnes & Noble represents a group of retailers that have successfully explored this new wave of loyalty. Lisa Bradner, senior analyst for Cambridge, Mass.-based Forrester Research, warned retailers to avoid embarking on loyalty programs just for the sake of doing it.

“If you are interested in changing your loyalty program or starting a new one, take a step back. Avoid doing so just because the other guys are doing it,” Bradner said.

“Think about how you are differentiating yourself from competitors and what you’re doing to drive loyalty, vs. the others,” she said. “And once a program is in place, make sure you leverage it.”

But the bigger challenge is getting started, according to Rick Fernandes, CEO, Webloyalty. Here are a few of his hints on where to begin:

■ Understand your goals.

“Sometimes retailers come to us and they aren’t sure what they want,” he said.

For example, some want to increase the margin of transactions; others want to drive new business.

“Retailers must be clear about final goals,” he said. “Once you identify exactly what you want, it’s easier to generate a goal-specific program.”

■ Try before you buy.

Before embarking on a program, retailers should pretend they are customers.

“Go through the process yourself,” Fernandes said.

“Sign yourself up, redeem points and then terminate the program,” he added. “If you run into any major issues or if it’s not the way you envisioned it, re-think the process or switch services.”

■ Check references.

When picking a Web-based loyalty program, getting company references is key.

“But don’t stop there,” Fernandes said, adding that retailers should talk to other companies, too.

■ Map back.

Make sure the loyalty program links back to the company brand and retailing strategy. “Broaden your perspective by looking at the design, then determine how the program fits your needs,” he said. “Be sure to stress a strong link between your retail channels.”

■ Determine the cost of loyalty.

“Since retailers put a price tag on loyalty, determine how much it’s worth to your company,” Fernandes said. “Tie the answer into the goal.”

Different goals may cost different prices. In the end, however, the benefits may outweigh the financial negatives.

■ Establish a marketing strategy.

Webloyalty.com markets through a variety of customer touchpoints. These can include sending marketing messages via order confirmation and status e-mails, and on a variety of places within a retailer’s Web site.

“We may offer a $10 cash-back deal and find other incentives, as well,” Fernandes said.

By homing in on the objective, and then complementing that point with the right marketing strategy, retailers can warrant strong results, he said.

© 2014