Monsoon Commerce recently hired a Chief Customer Officer, which got me thinking on the need for Loyalty Programs.
The minute a person thinks of buying something that is part of your SKU, he or she becomes your prospective customer. That is where your responsibility begins to transform this potential customer to a first-time customer, from a first-time customer to a loyal customer, and ultimately an ambassador of your brand. While most of the retailers have somewhat mastered the art of SEO to pull customers to their online channels and have deployed innovative methods to boost in-store experiences and invested in supreme CX (customer experience) across channels, it is the next step that sometimes remains a blur.
This raises the question of whether loyalty programs are still worth the investment or not.
76% of US-based grocery retailers with more than 50 stores have a loyalty program, 50% of UK retailers have already implemented a loyalty program and almost 75% of all Americans belong to at least one loyalty program. Numbers don’t lie, so the answer, I am guessing, is ‘Yes’.
The mistake that people tend to make in the initial stages is confusing customer loyalty with customer satisfaction. Customer satisfaction is an opinion of just one interaction. Confusing one interaction with a customer in any of your channels should never be considered as a parameter to call them your loyal customer. A customer can be called loyal only when he or she is committed to your brand or at least one product of your brand and continues buying your stuff even when competitors offer better prices.
Secondly, companies should avoid using a loyalty strategy as a medium to only enhance the visit of the customers so that they ‘may’ drop by again. Loyalty programs should be a well thought out strategy with the end goal in mind – to make as many customers as your brand advocates.
Thirdly and perhaps the most important in this day and age, is the technology aspect. With rapid digitization on the enterprise side as well as the customer side, all strategies need to be thought out with the existing technology and the appetite to invest in newer technologies in mind. Almost all of the retailers have an analytics tool as well as a CRM tool, but the real game changers are the ones who have been able to effectively integrate all their technologies to collect data and provide the right insights to the right departments so that they can ensure the best experience for their customers across all touch points rather than use them in silos.
But still, a majority of loyalty programs end up failing because some enterprises simply mimic the leaders in their industry rather than crafting out a program unique to their business and their customers.
The fact remains that loyalty programs need to exist but the rules of loyalty programs have changed with the times, from being a ‘I spend and get points’, to a more personalized, relationship-focused approach. Enterprises need to understand this subtle change in consumer behavior which could otherwise create a huge dent in their market share.