With a constant barrage of advertising, consumers are more particular than ever about where they shop. Similar products are available at many locations and brands, so today’s consumers gravitate to experiences that go beyond the purchase and include rewards. A combination of payment and rewards has become an expectation and fosters a stronger relationship with the brand.
According to the International Council of Shopping Centers, most Americans are loyal to brands (82 percent) and even more (84 percent) are loyal to specific retailers. This presents a golden opportunity for merchants to adopt payment strategies that build and retain customer loyalty.
Here are five strategies that leverage today’s consumer preferences around both payment and rewards consumption:
Link with debit.
Debit – whether card or mobile based – is by far the favored payment method in the U.S., representing two-thirds of all transactions. Programs that combine debit with rewards are proven to accelerate consumer participation and generate higher sales than separate payment or rewards programs on their own.
Based on a new ZipLine survey of 500 American consumers, more than 45 percent prefer debit payments for transactions between $10 and $250, compared to 36 percent who choose credit and only 18 percent who use cash. Debit is clearly consumers’ most popular choice for everyday purchases – from groceries to gas refills. And that’s not all: 53 percent of Americans prefer debit-based rewards programs over credit-based ones.
Across all age groups, debit cards account for roughly two-thirds of all U.S. card payments by number. And the growth for debit card usage outpaces that for credit cards within the Millennial age group, which accounts for 30 percent of the purchasing public.
Merchants are meeting consumers’ needs with private label debit, a merchant-branded card or mobile app that utilizes an automated clearing house (ACH) to directly debit consumer checking accounts. Private label debit puts your brand front and center with every purchase, building loyalty and increasing sales. Used in a closed-loop environment, it also guarantees safety and security through PIN protection or tokenization.
Private label debit operates outside the traditional card networks, so you spend less on interchange fees and can redirect the savings towards your loyalty programs. In total, the convenience services industry pays about $11 billion annually in fees and earns no brand loyalty for those consumer transactions. With private label debit, you can self-fund your own rewards program and start building loyalty with each purchase.
Make payment and rewards easy.
You can only create loyalty if your rewards program is easy to use.
Make it easy for customers to enroll in your program with an intuitive process that asks for the minimum necessary. Require a single card swipe for paying, earning and redeeming rewards. Offer simple visual cues within a mobile app, allowing customers to quickly get oriented and track their progress.
Show that you care.
The most effective rewards programs are individually tailored to the consumer. Take Colleen, who is a rewards member at her local coffee shop. She orders a mocha and biscotti every morning. If she receives rewards offers for more mochas and biscotti, Colleen will feel that the cafe understands her. However, if she’s given offers that are completely unrelated, Colleen will feel unappreciated and may even take her business elsewhere.
Show your customers that you care by offering rewards based each customer’s unique preferences. One example is to offer a “surprise & delight” reward, based on customers’ shopping habits and provided with an element of surprise and without counting points.
Integrate with your customer’s life.
If a customer like Colleen is brand-loyal, then she considers the brand important and is more likely to recommend it to others. Consider social sharing that encourages customers to send a discount to a friend or share a coffee rewards with a family member. Allowing your customers to share rewards with their social networks is a great way to inspire loyalty among entirely new customers. Building this “refer-a-friend” mentality builds your brand and ultimately grows market share.
Make ‘rewarding’ part of the brand experience.
In the end, your goal is to make the act of rewarding synonymous with your brand. Your customers will associate your brand with the frequent offers in your mobile app or the discount referrals that they can share with their friends. Your ongoing messages of ‘thank you’ and ‘we care about you’ become an important part of your brand culture. By wrapping your customer communications around your rewards, you can more easily arm your in-store team with welcome messages for easy enrollment.
American consumers are particular about where they shop but adopting the right payment strategies will encourage them to choose you. That goes beyond the purchase: the strategic combination of debit payment and rewards not only meets the market demand of today, but differentiates you from your competitors