Loyalty programs are everywhere in the retail industry. Customers encounter them multiple times almost every day—whether shopping at a convenience store, buying a cup of coffee, or even purchasing a new car.
Retailers have many questions about implementing a loyalty solution. Do loyalty programs really work? Can they influence people’s behavior and entice them to spend more money? Will a loyalty program reduce the likelihood of customers shopping at one of your competitors?
An Oracle loyalty study found that retailers that can develop and sustain distinctive loyalty programs that change customer behavior will create a true competitive advantage.
There is a clear need for loyalty programs in the retail industry.
However, rather than simply copying current programs, which will only lead to a competitive stalemate and increased costs, retailers — both those planning to introduce a loyalty program for the first time and those wanting to tune up their existing program — should design loyalty program offerings to yield a true competitive advantage and showcase a brand’s identity.
The benefits of loyalty are many. According to Loyalty 360’s newly released 2024 State of Loyalty Report, brands putting effort into their loyalty strategies are experiencing increased sales and greater customer retention.
A strong 63% of consumers cite a willingness to pay more to shop with the brands they’re loyal to — up from 59% just a year ago. Even better, this positive movement is observed across age demographics, from Gen Z to Baby Boomers. Consumer behavior is evolving. And with it, marketing tactics that allow us to provide more human experiences — more personalization, more relevance, more timeliness.
Loyalty 360, a loyalty marketer’s association, also found that consumers have developed a taste for these experiences and are rewarding the brands that can provide them with loyalty. This loyalty becomes a major differentiator during times like now.
If you want true customer loyalty, you must become an active listener to your customers. The 2024 State of Loyalty report found that listening is just as important as speaking to your customers. Retailers must give customers opportunities across touchpoints to voice their preferences, motivations and interests. Ultimately, these data points will enable chains to deliver the relevance today’s consumers demand.
The Loyalty 360 report identified four key areas on where to focus your loyalty program efforts. They are:
Personalize. Deliver contextually relevant messages to consumers on an individual level. Leverage basic data points and create message triggers to improve relevance even with limited customer knowledge. This will give you time to expand your data profiles with richer zero-party data.
Incentivize and Reward. Play to the economic desires of consumers. Provide discounts or coupons in exchange for data sharing, and ensure you recognize and reward loyal customers.
Optimize the Human Experience. Treat your customers like humans, not machines who are merely receiving data. Work to create more seamless experiences by uniting your marketing channels and eliminating silos.
Communicate Brand Purpose. What is your mission? Your purpose? Is your brand doing good for the world? The answers to these questions matter, especially to younger consumers.
To accomplish all of these goals, retailers need to make sure they have a trusted partner. A major challenge of executing loyalty is offering a personal touch that differentiates your program from the countless others whose appeals start and end with points-for-purchases.
Quantifying your loyalty program’s success and keeping a finger on the pulse of your audience becomes much easier when your marketing solution can intelligently synthesize reporting metrics and customer insights. This is why listening to your customers is so important.
So, what do consumers want from loyalty programs? According to the 2024 State of Loyalty report, customers seek various incentives when participating in a loyalty program. Customers polled by Marigold Research for the 2024 Loyalty Report said these key incentives include:
- Points/Reward Systems, 55%
- Exclusive product or service discounts ,54%
- Exclusive access to products/events/services, 32%
- Ability to take part in contests, sweepstakes, or challenges, 25%
- Product/service recommendations based on loyalty program usage, 24%
- Communications via preferred channels, 21%
- Ability to connect with others who like the brand, 14%
- Community recognition, 12%
Today’s retail customers are not only technologically savvy, but they crave programs that fit their lifestyles and appreciate their loyalty. Don’t lose your customers to competitors who can execute better rewards programs. The data shows that loyalty is the backbone top-quartile marketers can count on to protect their business.
Elie Y. Katz is the CEO and president of National Retail Solutions (NRS).
