Today’s retail landscape is increasingly competitive, and retaining customers has become more challenging than ever before. With countless options available, consumers can be finicky and quick to jump ship if they don’t feel appreciated or engaged by a brand. This is where store loyalty programs come into play, offering retailers a valuable tool for customer retention. However, merely having a loyalty program is no longer sufficient; retailers must continuously innovate and improve to stay relevant in the eyes of their customers.
“People are looking for dollars in their pockets or points they can use to save off their grocery bill, and I don’t think there’s a way of getting around that—value proposition must be central. But when you talk about differentiation, it’s not only about value, it’s also about meaningful connections,” enthuses Joel Percy, a regional director for Eagle Eye, a digital marketing tech company. “The more retailers can tailor, not just the discounts and offers they’re giving, but also the messaging and the method of communication, I think that builds that emotional loyalty that makes a real difference and sticks in customer’s heads.”
Loyalty programs are designed to reward and incentivize repeat customers. They are a mutual win for both retailers and consumers. Retailers benefit from increased customer retention, higher sales, and valuable data insights, while customers enjoy discounts, exclusive offers, and a sense of belonging. “Data science is improving and [companies] can understand what the purchase cycles look like…You don’t run out of shampoo as quickly as you run out of eggs, for example,” states Percy. “You need to tailor those things. Grocers are starting to look at how to personalize beyond the products they’re offering.”
Customer Retention: Loyalty programs create an emotional connection between the customer and the brand. Customers who feel appreciated and rewarded, are more likely to return and make repeat purchases.
Increased Average Transaction Value: Members of loyalty programs tend to spend more per transaction than non-members. The promise of future rewards encourages customers to buy more.
Data Insights: Loyalty programs allow retailers to gather valuable data about their customers’ preferences and buying habits. This data can be used to personalize marketing campaigns and improve the overall shopping experience.
Competitive Edge: In a market saturated with options, a well-executed loyalty program can differentiate a retailer from its competitors.
For those retailers who don’t have a loyalty program, Percy further explains, “You don’t have the data to inform you on what’s happening if you make any changes. How do customers behave differently [as a result of these changes]? Do they visit more frequently when I do this? Are their baskets bigger or smaller? It’s depriving yourself of data that could help the business in a much better way.”
While loyalty programs offer tremendous benefits, many retailers are falling short in their execution. To keep customers engaged and satisfied, it’s essential for retailers to constantly refine and improve their loyalty programs with the following initiatives:
Personalization: Retailers should use the data collected through loyalty programs to tailor offers and recommendations to individual customer preferences. Personalized experiences make customers feel valued and understood.
Emotional Connection: Loyalty programs should not focus solely on discounts. Retailers should strive to create emotional connections with customers by celebrating milestones, anniversaries, and special occasions.
Ease of Use: Loyalty programs should be easy to understand and navigate. Complicated point systems or unclear redemption processes can frustrate customers and deter them from participating.
Mobile Integration: With the increasing use of smartphones, loyalty programs must have a strong mobile presence. Retailers should offer mobile apps that allow customers to easily track their rewards, make purchases, and receive personalized offers.
“Where we see an opportunity for grocers to take the lead is what we call ‘marketing in the moment.’ With everybody walking around with phones in their pockets, we can understand where customers are and what they’re doing,” states Percy. “We think, in the coming years, grocery shopping is going to become a phone out experience rather than a phone in the pocket or phone in the purse experience. Then the lines between e-commerce and physical stores start to blur because now I have a digital way to talk to you as you shop in the physical store.”
Loyalty programs remain a powerful tool for retailers in their goal to retain customers and boost sales. However, these programs must evolve and adapt to changing consumer preferences and expectations to remain effective. In a competitive marketplace, the loyalty program is not just a perk; it’s a necessity for success.
