What a year!
I think we’d all agree 2020 has thrown us for a loop.
We use the term ‘disruption’ in business all the time, but I don’t think that term has ever been more relevant.
From the shopping experience, to the supply chain, to the fulfillment, and the delivery, every part of the process was impacted to varying degrees.
Some retailers were ahead of the curve while others, specifically those with a brick-and-mortar presence only, had a long road ahead.
As COVID-19 changed consumer behavior dramatically, retailers have seen a massive shift toward ecommerce.
With heightened consumer expectations, retailers had to make smart decisions to retain their loyal customers or risk losing them to a competitor who could execute better.
There were three headlines from the loyalty world in 2020:
- The big brands got bigger by using technology and executing on operations
- Brands who listened to their customers and the global landscape won emotional loyalty
- Brands that simplified the process were successful
So, let’s review Loyalty 2020 and see who was able to “Adapt and Adopt” and win the day.
Big Brands Made a Big Impact and Widened the Gap
Lets’ start with Walmart, which launched a subscription-based, premium loyalty program, Walmart+, in September.
Here’s what loyalty experts think of the launch of Walmart+.
In the first two weeks after its launch, Walmart+ secured 11% of Americans as members. Walmart added benefits its customers desired, like gas savings, to help position itself against Amazon Prime and Target Red Circle.
Target executed BOPIS (Buy Online, Pickup In-Store) better than anybody.
At a time where customers moved online and wanted to avoid physical shopping, Target mastered the Buy Online, Pickup In-Store execution. Not only did Target execute proficiently, but it also performed with accuracy and within abbreviated timelines overdelivering on customer expectations.
Costco: When customers needed curbside same day to feed large families sheltering together, Costco stepped up to make it happen with Instacart. Also, Costco was the first to open stores an hour early for seniors and frontline workers empathizing with how the pandemic was affecting them.
Superior technology, operational excellence, and willingness to pivot as needed equaled success.
Year of the Cause – Adding Charitable Elements to Loyalty Programs
Sephora: Sephora listened to its community members and heard that they wanted to do something to contribute to all the change being driven around the world. Sephora’s Beauty Insider loyalty program partnered with several charitable organizations and allowed members to convert loyalty points into donations.
For example, Sephora partnered with the National Black Justice Coalition, a civil rights organization that empowers black members of the LGBTQ/SGL community.
Allbirds: Initiated the Strava Dasher 5K Challenge. With more than 150,000 participants, the challenge resulted in a $50,000 donation to World Central Kitchen’s COVID-19 relief efforts, which served 25 million+ meals to those most impacted by the crisis.
Chewy: This pet brand launched #PetsBringUsTogether, a nationwide brand campaign that highlights positive pet stories during uncertain times.
Chewy donated nearly $19 million in food, medication, and supplies to GreaterGood.org and other animal welfare organizations. Also, it launched a telehealth service in select states, connecting veterinarians to individuals with questions related to their pets’ health.
Today, nearly 70% of the U.S. population donates while each person donates to an average of 4.5 charities and, on average, 1 out of 2 is enrolled in a subscription-based (monthly) giving program. Millennials are the highest percentage with 84% donating to a cause, giving $481 annually.
Solving and Simplifying Loyalty Programs
Gap: Realizing it has customers that shop cross-brand within its portfolio, Gap decided to make its updated loyalty program a family of brands. In doing this, the program allows for earning and redemption across brands to help spark additional shopping while encouraging discovery across brands.
Gap’s family of brands includes Gap, Banana Republic, Old Navy, Intermix, Hill City, and Athleta.
Kohl’s Rewards: Kohl’s implemented a major shift in its loyalty program that made it easier for its customers to understand loyalty redemption by moving from points to cash. With so many valuations out there, simplifying to a cash approach made the program much easier to use.
McDonald’s: Optimizing loyalty with digital and drive-thru with hyper-personalization through the new MyMcDonald’s loyalty program.
The program is aimed at personalizing the customer experience to greater levels. It offers personalized order suggestions and deals at the chain’s kiosks, mobile app, and digital menu boards at the drive-thru.
The more customers engage with MyMcDonald’s, the more customized these suggestions will become.
Thirty-four percent of consumers’ say their top frustrations with the rewards experience include a confusing redemption process.
Often people fail to engage with loyalty programs or even sign up in the first place because they’re confusing and convoluted. Make sure your loyalty program is simple and easy to use.
Listen To Your Customers and Update Your Loyalty Program Every Year
When we say loyalty is not a “set it and forget it” mission, you must update at least once a year now that the clock has sped up.
Many brands employ “rip and replace” solutions that completely remove their existing programs and put new ones in place. Starbucks, Macy’s, and Sephora are all brands that have done this.
Life is changing fast and brands must change so their customers don’t leave them behind. 2020 has proven that.
If you can’t pivot to meet the fast-changing retail landscape, you’re not going to be around a few years from now.
To update your loyalty program, the first and best place to start is with your customers.
Listen to them, identify their pain points, and adjust your program accordingly to meet those expectations in an engaging fashion.
Brands that use technology in engaging ways, listen to their customers effectively, and simplify their respective loyalty programs will be ahead of their competition in 2021.
Tom Baker
Tom Baker has been Vice President of Strategic Partnerships, at Clarus Commerce since late 2015. He has been partnering with retailers for the last 18 years delivering innovative solutions to impact companies' bottom lines. As part of this process, Tom has spent thousands of hours in retail locations and call centers listening, learning and providing advice on how to maximize every customer touch point. He has worked for leading brands creating new consumer engagement strategies, products & services and revenue generation for such companies as Dun & Bradstreet, Oxford Health, GE & Time Inc. His specific areas of focus have been in business development, brand management, direct & digital marketing, new product development and client services. Tom enjoys volleyball and watching his daughters dance. He's a passionate, lifelong fan of the NY Yankees, Giants & St. John's.