2017 Loyalty Program Trend Report for Retailers

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Now that the holiday season has passed and January sales are over as well, it’s time to concentrate on what 2017 will bring in the world of customer loyalty.

This post explores the most significant trends out there in loyalty marketing, which can be incorporated into a successful strategy this year.

1. Shift of focus to elderly customers

Most of the attention has centered on earning the loyalty of millennial customers, who navigate comfortably in the world of IoT. But we also need to recognize that we live in an aging society. Consequently the elderly population, classified as aged 60 and over, has a growing importance for retailers. In fact, a recent McKinsey podcast revealed that this segment will account for about 51% of urban consumption growth.

But in order to be able to target them effectively, marketers have to understand their needs, and this is no simple task, because the 60-plus population is segmented at a high rate, differing in many aspects (including financial standing, location, priorities, and others). That’s why it’s especially important to remember that your loyalty program can be used not only to retain customers by rewarding them, but also collect valuable data as well.

There’s one thing that elderly consumers have in common though: time. That is important from at least two standpoints:

  • Besides supporting their family financially, this segment likes to spend money on travelling, hobbies, sports – activities which contribute to well-being and make their lives complete. This outlines the industries that can profit from their needs the most.
  • They examine and compare product to find the best value for their money. The existence of a customer-focused loyalty program can be just the right extra benefit that encourages customers to choose one retailer over another.

Fun fact: most of the revolutionary developments in loyalty programs usually focus on satisfying millennials’ needs (e.g. quick shipping), but elderly consumers are more interested in receiving special experiences, like having a personal shopper for a day, or enjoying an all-inclusive weekend at their favorite ski resort.

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Typically, luxury brands are the ones where shoppers are looking for experiential rewards. Of course, not just the customer age what influence this tendency, but their financial status, too.   

2. Digitized in-store experience

The buzz around Pokémon Go in 2016 assured everyone that Augmented Reality has a raison d’être. Companies like IKEA and Topshop have proved that it excites in-store shoppers as well. Retail Perceptions predicts that by 2020, AR will generate $150 billion in revenue.

But how retailers can take further advantage of thirs trend? They can digitize their customers in-store experience using the following concrete methods:

  • Beacons: these have started making their way into the brick-and-mortar store experience over the last few years. Their ability to inform customers about current personalized offers through mobile notifications, without customers needing to do a thing is what brings real engagement to their shopping experience. As Chuck Martin said in his article on the Harvard Business Review, “beaconing has been the missing piece in the whole mobile-shopping puzzle”.
  • Mobile POS solutions, like tablet POS: this mobile solution not only handles payments, but it can also foster an improved customer experience (which translates into loyalty) by serving as a customer assistance know-it-all in the hands of a store employee. Shop assistants can use the POS to manage returns instantly, as well as look up inventory and product pricing.

Both of the above described solutions can help retailers satisfy a certain customer need, which eMarketer also reported on earlier this year: 65% customers disappointed about the lack of in-store personalization. Now imagine this: a beacon placed in the brick-and-mortar store can send a 10% off coupon to customers in the store, with their name on it. But then comes the cliffhanger: a smart loyalty program system, like what we have at Antavo, will only trigger this notification if the customer A) is a loyalty member; and B) has already made at least 3 purchases. Now, you can fine-tune this methodology further, for example sending a discount if the customer has a birthday in the upcoming 7 days, or if the anniversary of their registration as a loyalty program member is approaching. Nice, right?

A video from IKEA which shows how Augmented Reality can help them to excite their customers. 

3. Artificial Intelligence

Some industries have already experimented with customer service robots with great success, for example, Connie, who has indulged Hilton’s guests with high-level service. This is just what online messaging chatbots are designed for as well. Chatbots are able to answer more and more complex questions and, based on the data available, they help customers find the most fitting product or service.

In this way, AI not only has the power to handle customer service, but it can also ease the stress of choice overload. Utilizing them in your loyalty program can further increase the customer engagement. In addition, you can encourage loyalty members to use your chatbot service by offering points in return.

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In this example, the bot – your online shopper – helps you find the product you’re looking for, in this case a t-shirt. Then it checks if it’s available in your size, sets your delivery details, and all you need to do is pay for it. It’s THAT simple. (Image source)

4. Loyalty potential of China

Chinese shoppers love loyalty programs! According to Nielsen, 86% of them choose a retailer with a loyalty program over one without – that’s 14% more than the global average.

Yet, the number of retail loyalty program they participate in is only 2.14, while the worldwide average is 2.39. As a result, loyalty programs have great potential in China, particularly on mobile devices. While the rest of the world is struggling to encourage customers to proceed with checking out and completing purchases on their mobile right away, last year Singles’ Day, a significant retail holiday in China, saw 82% of its sales from mobile, which is expected to rise even further this year.

Nielsen shared in their Global Retail Loyalty Report in November 2016 how popular is entering a loyalty program through mobile in China. They surveyed 30,000 internet user during their research. (Image source

5. Unified commerce

In recent years, being omnichannel was what retailers aspired to. Serving customer needs online, in-store and on mobile is still a key to success, but now it’s time to unite customer data from all of these channels into one single database, available in real time. Unified commerce lets marketers examine a 360-degree customer behavior profile.

As Mohammed Raad, Online Marketing Manager of Apsis emphasized, “customer profile will unleash powerful personalisation possibilities that enable retailers to provide dynamic and relevant communications to their customers”, which is decisive in earning their loyalty.

The historical behavioral data of the loyal customer segment can serve acquisition as well, as Jason Grunberg, Vice President of Marketing at Sailthru pointed out. He believes the based on data, marketers can predict “which of their loyal customers will deliver the most revenue to the brand in the future that can serve as the basis for acquisition lookalike modeling in new customer acquisition campaigns”.

Conclusion

As we saw, 2016 trends will continue to evolve into more sophisticated solutions in 2017. Investing in improving data analysis and mobile, as well as the online and in-store customer experience will certainly pay off.

The challenge for retailers in 2017 is to incorporate these tactics into their loyalty strategy and to establish the right technical background to support it all.

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