The Future of Customer Loyalty Programs – Now and for the HolidaysArticles • August 17, 2017
Last week, as I was sitting at my messy desk and drinking my coffee (in reality, it was more like a mug of milk with a splash of coffee…), someone recommended that I read an article. It was a new piece from Yotpo’s CEO, Tomer Tagrin. In it, he detailed some great eCommerce trends that will affect offline and online retail in the upcoming months. Like, how offline retail isn’t going to die anytime soon. The proof? Amazon acquired Whole Foods.
Hmmm…so what’s going on?
In short: Online eCommerce giants are moving into the offline sphere and we’re seeing more and more innovative solutions based on Big Data.
In detail: We’re seated in the front row, witnessing vital strategic movements that affect the entire world of eCommerce. Businesses (like Amazon) that were originally rooted in the online space are now getting a physical “form” and vice versa. Offline brands are strengthening their online eCommerce forces, too. Just take Adidas for example. Last year they grew their online eCommerce by 59%, which drove €1 billion in revenue. Okay, but we all know that for long-term success, it’s not enough to just sell things online. Amazon proved it.
I liked how big data entrepreneur, Bruno Aziza, called Amazon’s innovative strategies “Amazon moments” on Forbes. He clearly explained that the real essence behind the AMAZON MOMENT is the enormous amount of customer DATA they have. This data, combined with machine learning and artificial intelligence technologies, help them to realize the three main principles summed up by Rick Kenney from Salesforce Cloud Commerce: successful online/offline retailers should aim for: “findability, personalization and brand connection.”
And you know what?
What works for Amazon can work for retailers
A French retailer used software to monitor shoppers’ movements and facial expressions in store. When a customer expressed unease or dissatisfaction, a salesperson was called to help. The result? A 10% uplift in sales. Online it’s the very same story! There’s a customer online, whose shopping behavior is being monitored, and when he is about to abandon his cart… KABOOM! An irresistible discount pops up on the page. Or, a salesperson (or an AI) reaches out to help him on live chat.
And I haven’t even mentioned the news from July, which really made my heart race: established European retailer Zalando, launches an Amazon Prime-like loyalty program – called Zet – in Germany. Wow. If you ever read my posts at Antavo, you know how attached I am to this fashion eCommerce giant (thanks to my colleague, Andy). Zalando’s invite-only loyalty program will be based on a membership fee and it offers fast delivery, same-day pickup returns, personal fashion advice over the phone or on Facebook chat, in addition to many other members-only benefits.
On Fortune.com, Lisa Schöner said that the new Zalando loyalty program aims to provide a fully personalized customer experience.
So my point here is: every company CAN have their own Amazon moment. They just need to think outside of the box. And actually, a loyalty program is what can help to achieve this goal. So, let me jump into my own field of expertise and show you how loyalty programs are affected by all of the changes above, and how you can take advantage of these innovations during the fast-approaching holiday period!
Where is the loyalty program market leading and how can retailers take advantage of these trends during the Holiday season
First of all, let me clarify one thing: if you would like to launch a loyalty program to surprise your customers during the holidays, you should do the following:
Implement the loyalty program technically and complete its full marketing strategy by the end of October at the latest.
We all know that “Christmas creep” sneaks right in, in September, but the real promotional madness and competition peaks in November and December. So, if you don’t have a loyalty program yet, but plan to start one, you have less than two and half a month to go for it.
If you already have a loyalty program up and running, this is the right time to revolutionize it! Always remember that a loyalty program can help re-engage and re-activate your holiday shoppers during Q1, which is typically a slow season for all.
Now, let’s see which loyalty program innovations are already here or are coming soon:
1. Building relationships through customer-centricity
Have you ever heard about Rakuten Ichiba? It’s a Japanese online retail marketplace and financial company, which issues credit cards, has a loyalty program, hosts online travel sites and owns the mobile app Viber. According to a post from McKinsey & Company, in terms of size and strategy, this company is comparable to Amazon or China’s Tencent.
These companies’ customer-centric philosophy is what led them to build an ecosystem, in which customers can reach several products and services from a single entry point. This makes it difficult for retailers selling in just one or two categories to compete. However, it’s also an opportunity to use a loyalty program to help even the playing field, by incorporating the very same philosophy.
Engage customers outside of the concrete shopping process
There’s a lot you can (and should) do to reward non-purchase customer activities. For example, in the athletic supplies or sports apparel industries, you could reward customers for participating in athletic competitions i.e. “Run 5 kilometers and earn 200 bonus points!” This is what successful companies do to fit into their customers’ everyday lives. (And is there anyone out there who doesn’t like being rewarded for the things they already love to do?) Technically, it’s easy. For this particular example, all that’s needed is an integration with sport activity tracker apps, like FitBit or Runkeeper. (Hello more data on my customers! And hello more ways to send personalized messages to them!)
Sport fashion retailer, New Balance, rewards customers for connecting with Strava, a mobile activity tracking app, within their loyalty program. Plus, they reward customers for performing certain activities in their workout. (Source: My NB Rewards)
Use new opportunities to share in causes and eliminate pain points
One of the clients we’re working with (that we cannot yet name!) has a sweet spot in all of our hearts at Antavo because of their creativity. They plan to reward customers that bring their used clothes back to their stores to recycle. It’s typically a benefit which I would really love to engage in! My unused clothes are piling up like a huge ogre in my closet, who I’m actively trying to avoid seeing. However, if a loyalty program would remind me, and offer an incentive like this, I definitely wouldn’t miss the chance to clean house!
Here is how American clothing company, Madewell, encourages customers to recycle their old jeans. (Source: madewell.com)
The sad reality is that, at the moment, only 35% of retailers reward customer activities other than a purchase (source: Intelligence Report 2017). The good thing is? By rewarding a greater range of non-purchase activities in your loyalty program, you can differentiate yourself from your competitors and gain more positive feelings towards your brand. Especially during the holiday season, when the majority of brands are bombarding people with the SAME discounts. But building real relationships with customers? Sadly, it’s a rarity.
2. Unique treatment and experiences rule the rewards
Remember the French retailer I mentioned at the beginning of this post? They’re providing the same level of personalized treatment that loyalty members expect. How would you feel, if I told you: “Starting today, you’re an Angel Forever VIP card holder at Victoria’s Secret! Or you’re a Premium member in Hugo Boss’ loyalty program!” I would be so excited and curious about the new status I earned, that I’d check the benefits came along right away! And as a high-level member, I would expect that the company is really going all out by offering me:
- Early access to products
- Priority customer service
- Same-day returns
- Shopping advice over the phone or on Facebook chat
- Exclusive experiences to redeem my points for; for example, having a weekend at a luxury hotel, participating in a contest to win a trip to the Himalayas or going to a cooking class with a Michelin star chef
Oh, and did I mention that these are real examples of rewards from successful loyalty programs that we’ve helped build? Furthermore, according to Intelligence Report 2017, loyalty program members don’t want discounts in the first place. They want improved tiers, product samples and VIP experiences – things they can use and remember. Want to give your customers a holiday surprise? Announce improved tiers or a unique reward or experience to treat your top customers.
Here’s a list of VIP experiences that LUISAVIAROMA is offering members. They use their newsletters to notify members about the arrival of enticing new rewards.
3. Omni-channel loyalty program visibility & functionality
In 2017, a time when technology has allowed us to do almost ANYTHING, it’s a shame that retailers haven’t been able to meet one simple customer need: loyalty programs should be visible and have working functionalities that spread across different channels. Just check out this list, which shows where loyalty programs were mentioned most often:
- 71% in email subject
- 55% on homepage header
- 41% elsewhere on the homepage
- 38% app homepage
- 27% SMS message
(Source of data is the Intelligence Report 2017.)
When Amazon is going offline, and when big brands like Adidas strengthening their online presence, companies with loyalty programs can’t ignore these changes! Loyalty programs shouldn’t “just” work in stores with a plastic card, or work “only” online. Retailers need to make their program accessible on mobile, on the web web, in store… The loyalty program should be equally as omni-channel as the brand itself! Just take the big box giant, Toys”R”Us for example. They wanted to digitize their offline card-based loyalty program in their European markets, and start incorporating gamification to provide a better customer experience for their shoppers. That’s the main reason they chose Antavo as their loyalty program provider.
Antavo’s loyalty solution allowed Toys”R”Us to manage their customer base from one online environment, and track offline purchases made at their POS system. The company plans to introduce gamification functionalities online and in-store for a better customer experience.
And the list doesn’t end here. Retailers should invest more, not just into being omni-channel, but into their program’s mobile visibility, too. No wonder, that Pampers included their rewards program in their mobile apps.
Other ideas include mobile-optimized landing pages for loyalty programs, menu items for the loyalty program in mobile apps, or SMS and push notifications about loyalty incentives. In fact, customers WANT to receive SMS or push notifications about loyalty incentives, but 50% of retailers just use these way of communication to send out discounts! Only 7% of retailers leverage the power of these channels in their promotion of the loyalty program. So the takeaway is: share loyalty incentives throughout all the communication channels you own!
+1: Personalization through machine learning and AI-based recommendations
We know very well that eCommerce product recommendations, chatbots and email marketing automation systems are all about artificial intelligence and machine learning.
Similarly, this is the very-near future of loyalty programs:
- Automatic point calculation (even real-time changes) based on loyalty members’ behavior and predictive loyalty revenue analysis
- Personalized loyalty incentives on an individual-member-level to move that particular customer up to a higher stage in the customer lifecycle
And all of these changes are not so far off into the future. I believe you can imagine how these innovations could help reduce the workload and drive more sales during the holidays. The future innovations of loyalty programs will make it possible for retailers and brands to send the right incentives to the right customers, and maximize sales – whether we’re talking about the holiday season, or any other time of the year.
Finally, I’d like to give a special thanks to Tomer Tagrin, CEO of Yotpo, who inspired me to write this post!