Rewards: The New Currency
By Craig McLaughlin, [email protected]
There is a growing trend in the loyalty rewards space — using reward points as currency, creating a more holistic, streamlined approach to loyalty programs.
Because of current U.S. economic conditions, this trend has grown faster than anticipated. One-third of consumers find retail loyalty programs "more important" when battling tough economic times. In addition, 32.3 percent of consumers said the recession has made their participation in retail rewards programs more important. (Colloquy)
All told, participation in loyalty programs is up to 19% since 2007 (Colloquy). Over 60% of U.S. households said that loyalty card programs were important in their shopping decisions. (AC Nielsen) And the trend isn’t just for the older shoppers. Participation in loyalty programs — especially among younger adults – has risen 19% since 2007, with retail loyalty programs getting the highest scores for adding value (Colloquy.)
All this said, it’s clear that rewards are no longer just “points.” Loyalty currency has evolved beyond its single program utility to a viable and relevant form of tender incorporated into consumers’ everyday spending behaviors. Consumers have amassed billions in rewards currency across many types of programs but will no longer accept static, analogous rewards for their spending behavior. Careful spending and reward benefits are critical in today’s economy.
But reward programs have remained largely unchanged since the 1970s…providers source preferred relationships with category vendors, offering limited product selection. To avoid the negative connotations, however, of discounting – the “old school” reward program model — many marketers today are taking a more holistic view of their loyalty programs, focusing on broadening customer relationships, offering awards and recognition for existing relationships.
There are three key points in creating “relevant currency” for today’s consumer:
1. Selection –what consumers expect
2. Price – connected into the retail world, real time pricing, participating in sales, etc.
3. Convenience – we want things now
One major trend experts in the marketing space have identified for reward programs is that programs will begin to develop direct merchant relationships, allowing loyalty program members to convert their loyalty points on-site at the merchant partner for discounts, merchandise and/or services. This model allows retailers to offer an unmatched product selection, the convenience of mobile redemption and in-store pickup, while utilizing leading-edge technology for real-time pricing and customized retail promotions. This paradigm-shifting model puts retailers in a situation where they can deploy consumer based marketing opportunities, making consumers more likely to use them and come back frequently. Revenue grows, consumer loyalty grows and everyone wins.
These direct relationships with retailers open up innovative new user experience opportunities such as:
- In-store pickup (Instant availability);
- Mobile Research and Redemption;
- Unlimited access to latest, greatest products;
- Promoting retail offers (BOGO’s Free Shipping, Coupons, Discounts, etc.); and
- Real-time pricing.
A key goal, of course, to any financial provider is to drive card usage, and these direct merchant relationships and the technology behind it does just that, ultimately opening up a whole new world. The incentive of in-store pick up, discounts, promotional offers, etc. drives consumer spending and tightens their relationship with the issuing bank. In short, the bank is giving the consumers more relevant currency — what they want when they want it — with web and mobile offerings.
All of this allows the financial institution to achieve:
- Balance build;
- Enhanced value creation;
- Richer partnership with retailer;
- Innovative and efficient marketing delivery;
- Endless possibilities for partner subsidized earn and burn promotional offers; and
- Volume leverage for strategic banking relationships.
When considering a loyalty rewards program, a more holistic solution involving all parties involved in a single transaction is what is going to resonate with today’s consumer. Many of the world’s top retailers are already seeing the benefits and it’s time to take a look at the options available to you.
Craig McLaughlin is president, CEO and founder of Bridge2 Solutions (bridge2solutions.com), a marketing solutions platform providing innovative marketing and fulfillment solutions. His experience includes CIO of a Southeast incentive firm, where he developed their incentive and promotion platform and over 10 years with Accenture as a senior manager. He can be contacted at [email protected].
Hibbett Sports an attractive Q1, raises outlook
BIRMINGHAM, Ala. — Hibbett Sports raised its full year guidance after posting hefty sales and earnings growth for its first quarter. Sales for the first quarter ended April 28, increased 14.4% to $232.9 million compared with $203.7 million for the 13-week period ended April 30, 2011. Comparable-store sales increased 11.1%. Net income for the quarter increased 23.5% to $26.4 million compared with $21.3 million for the same period last year. Earnings per diluted share increased 29% to 98 cents compared with 76 cents for the same period last year.
Jeff Rosenthal, president and CEO, stated, “The fast pace of sales and momentum we discussed exiting fiscal 2012 continued throughout our first quarter. We experienced across-the-board strength in all categories, which, when combined with continued cost management and margin improvement, provides further confidence in raising our outlook for Fiscal 2013. We are proud of the commitment toward excellence that our Hibbett associates demonstrate.”
For the quarter, Hibbett opened seven new stores, expanded two high performing stores and closed four underperforming stores, bringing the store base to 835 in 26 states as of April 28.
The company increased its earnings guidance for fiscal 2013 to a range of $2.50 to $2.65 per diluted share (which includes an expected contribution of 7 cents to 9 cents per diluted share from the 53rd week) and an increase in comparable-store sales in the mid single digit range. For fiscal 2013, the company expects to open 55 to 60 new stores, expand approximately 15 high performing stores and close up to 18 stores.
Report: Sainsbury in talks to license brand match technology
New York — J. Sainsbury Plc is in talks with retailers in the United States and South America to license the technology behind Sainsbury’s Brand Match, a price promise that has fueled sales outperformance, according to a report by Bloomberg.
The Brand Match program ensures shoppers don’t pay more for branded goods such as Coca- Cola at Sainsbury than at competitors by checking more than 14,000 items, including offers and promotions at the point-of-sale. Customers are given a coupon if an item is priced cheaper at a rival.
According to Sainsbury, the number of customers who believe it sells brands at the same price as other supermarkets has risen to 80% from 68% since the initial pilot of Brand Match in August 2011, the report said. The company issues millions of coupons a week to customers under the program.