We all know that retail is going through a lot of changes. What I believe as a retailer is that loyalty is the answer.
Loyalty allows us to break through and give us confidence that our customers will be connected to us, we will provide a service for them and, ultimately, they will stay with us for the long term.
When I am looking to build a brand, what I am really focused on is this:
Is there a passionate fan base? And can I hit that fan base with the right story at the right time with the right product?
This is about retention and reducing churn. That’s an important distinction.
The benefits for retailers who can do this are phenomenal.
Loyalty Is The Opportunity To Connect
Loyalty is the opportunity to connect and will allow us to break through. It gives us confidence that our customers are going to be connected with us (52.3 percent of customers will join a loyalty or VIP program).
That’s a tremendous opportunity to connect with customers and continually demonstrate the brand promise. Only 18 percent of customers engage with all the loyalty programs in which they belong. That percentage should be much higher. That means that even though lots of people sign up for loyalty programs, engagement falls short.
The key is providing enough value so that our customers want to stay in the program, and thus connected to us.
Loyalty is Providing a Valuable Service
Most traditional loyalty programs are the same. Just think about some of the programs you belong to. They require you to spend now to earn points that can be redeemed for discounts later.
For example, would buying nine cups of coffee to receive the 10th one free really make you loyal to a brand?
Conversely, millions of people love the Starbucks Rewards loyalty program. Why?
The program offers a clear value proposition based on what Starbucks customers love: The ability to order ahead, get exclusive rewards, and personalization are all things its customers desire. That keeps them engaging over and over.
The program continued to grow throughout 2018 and currently has around 15 million active members. If the value is there, a loyalty program keeps your customers engaged for the long haul.
Loyalty is About the Long Term
Whenyour loyalty program focuses on your customers and provides value, members tend to stick around.
When you have a passionate fan base, you must figure out how to hit that fan base with the right product and the right message at the right time.
Take Amazon’s highly successful Prime premium loyalty program, which eclipsed 100 million members in April 2018.
In the beginning, shipping was the biggest pain point for online shoppers.
Then, Amazon continued to add enticing benefits to its free shipping benefit. As consumers started demanding digital music and video, Amazon responded by adding Prime Music and Video.
Amazon continues to add more value to the program. Grocery shopping is now a better experience for Prime members. Soon, Amazon may open 3,000 Amazon Go stores to make shopping for convenience items even more convenient.
Here’s a staggering statistic around the Prime program: Analysts have pegged Prime’s retention rate at over 90 percent.
Loyalty programs aren’t about collecting email addresses. Loyalty programs are about retention and reducing churn. And that is achieved by keeping customers engaged with your brand.
The Key to Retail
You can use all the marketing tactics you want, but they will only get you so far.
Retail is about keeping your customer engaged. It’s about retention and reducing churn.
Loyalty programs give retailers the opportunity to connect with their customers, demonstrate value every day, and keep those customers engaging for the long term.
To really break through the noise and build meaningful relationships with your customers, loyalty is the answer. Putting customers at the center is the one thing that remains the same in a changing retail world.
In a time when differentiation is more important than ever, isn’t it critical for your loyalty program to help set you apart from your competitors?
Bill Brand
Bill Brand served on the Clarus Board of Directors and is the SVP & Chief Retail Officer at Carnival Corporation. He brings over 30 years of experience in retail commerce, media, and technology and a wealth of insight on customer loyalty.