Embracing the Future of Retail Loyalty

It’s no secret that the retail landscape is changing. With the rise of direct-to-consumer brands, widespread adoption of mobile and m-commerce, and the so-called “retail apocalypse,” retail’s status can only be described as complicated in 2019. As retailers evolve and adapt to this new normal, loyalty and rewards programs remain a mainstay tactic. Ubiquitous across big-box, supermarkets, department stores, and even mom-and-pop shops, you’d be hard-pressed to find a retailer that doesn’t offer some sort of rewards program to its customers. However, with such a significant presence, what was once a game-changing differentiator in driving shopper loyalty now has less of an impact. This is due in part to staleness in approaches, resulting in transactional experiences instead of balanced value exchanges. Consumer expectations are changing, and loyalty programs, in many cases, are falling behind.

HelloWorld, a Merkle Company, recently released the results of its second annual Loyalty Barometer report, with a sole focus on helping marketers ensure that their loyalty initiatives stay relevant now and well into the future. The report analyzed changing customer mind-sets and uncovered where retailers need to pivot to accommodate consumer expectations. Among the findings, four key takeaways stood out.

First, because of the prevalence of loyalty programs across industries, consumers’ standards have increased. While offers and discounts are still the main reason shoppers participate, they're truly motivated when brands acknowledge and reward them in ways that feel special and differentiated. For retail, this means via recognition and personalization. Sephora and Home Depot are widely recognized for their strides in personalizing the shopping experience. Sephora’s intelligent integration across every channel allows its Beauty Insider Community and mobile app to serve up unique, multifaceted content and products for an uberpersonalized experience. The functionality, special features and usability of Home Depot’s mobile app works like a virtual customer service agent to deliver information and products specific to each user. For retailers that aren’t there yet, simply saying “Thank You” ranked among one of the most important ways a brand can interact with consumers.

Another insight centered on consumers’ biggest loyalty program pain points. Difficulty earning and redeeming rewards were the top complaints among those surveyed. Therefore, it’s essential to invest in solutions that allow consumers to easily redeem their hard-earned prizes. To examine this, create or revisit your customer journey map to identify moments that could be better, focusing on places with the most friction. Macy’s recently completed this exercise and as a result launched a feature that allows shoppers to purchase and apply rewards or coupons via their mobile app while in-store. Even if seamless integration into your point-of-sale system isn’t an option, journey mapping can uncover other opportunities to enhance the experience and increase reward utility.

Creating an emotional connection is the third key theme for retailers. When asked about the most important way a brand can interact with them, survey respondents overwhelmingly chose “Surprising me with offers or gifts just for being a customer.” Consumers like small, unexpected tokens of appreciation more than anything else, and retailers, no matter their size, should incorporate these tactics into their loyalty programming. Whether it’s a targeted one-to-one offer or a discount applied at checkout by an empowered store associate, a little surprise can make a big impact. Test to understand the best approach, build a business case for further investment (if needed), and once developed, ensure there’s a plan in place to measure the impact and optimize over time.

Lastly, the report revealed that consumers expect to interact with loyalty programs in the same way they would interact with the brand. Because of that, it’s important for retailers to require teams across their entire organization to work together toward the desired loyalty outcome. While the loyalty tactic or program itself may sit with one team, driving real and lasting loyalty must be everyone’s job to truly connect with consumers.

The loyalty landscape will continue to change, but making sure your organization is working together to drive a true connection with consumers will set you up to remain relevant and impactful. Offering a differentiated value proposition, ensuring your customer experience is optimized, and making sure to acknowledge your valued shoppers are keys to creating emotional loyalty. And remembering to integrate your loyalty experience throughout your brand experience will further cement that bond. While there’s no real way to future-proof a loyalty program or initiative, paying attention to how shoppers engage and interact with your brand and staying on top of their changing expectations will give you a leg up.

Gina Fleck is senior director of strategy and insights at HelloWorld, a Merkle Company, a digital marketing solutions company working with the world’s leading brands across all industry verticals.