Get insights on recent changes in the loyalty environment, keys to success, what top loyalty programs are doing well and predictions for the new year.
- Programs and companies are becoming more socially responsible, and loyalty programs are beginning to incorporate that mindset.
- Instead of comparing your loyalty program to other loyalty programs, it’s becoming more important to compare the entire, omnichannel customer experience.
- Consumer expectations continue to change, but creating shopper loyalty and retention still requires creating an emotional connection.
- We’ll see more personalization within loyalty, fed by data collected within loyalty programs and translated to personally meaningful benefits and messaging that’s relevant to why that person is a member.
Customer loyalty. We all want it. But every year it seems harder to get and maintain. Yet, through the pandemic, the recession and the ongoing evolution and proliferation of technology and channels, some retailers are still building those long, strong, profitable customer relationships. Moral of the story? There’s always hope.
To fan the spark and find some inspiration, we turned to a pair of veteran retail loyalty experts we’ve had the pleasure to work with in the past and present: Sheila Hayward and Lesa Haas. We asked them to share personal and professional insights on the challenges we’re facing in shopper retention, essential keys to loyalty success — and their favorite loyalty programs. We also asked them to dust off the old crystal ball and forecast some general loyalty and loyalty program trends for the new year. I hope you enjoy their insights.
Lisa is a former director of loyalty and CRM programs who currently works as a consultant. She has 35 years of experience with retailers including Neiman Marcus, Lands’ End, Victoria’s Secret and Chico’s.
Sheila is a loyalty and CRM strategist with 20 years of experience in the field. She has worked with retailers including Hallmark Cards, Food Lion, Off Broadway Shoe Warehouse and Rack Room Shoes.
What has been the most important recent change to retail brand loyalty?
Lesa Haas: Programs and companies are becoming more socially responsible, letting you know how they’re socially responsible and even allowing [the customer] to be socially responsible — for instance, letting customers use rewards to donate to a charity. They’re also giving back themselves. For instance, running a promotion where, if members purchase during a specific time period, the company will give back [a certain amount to a charity]. And it’s important to more than millennials.
Sheila Hayward: Retailers already knew they had to adapt or adopt new technology, but it became more important during the pandemic, especially for brick-and-mortar stores. Often online was very siloed from brick-and-mortar, and they were even seen as competitors. With COVID, they began to see, “We both work for the same company and if one of us does well, we all do well.”
I also think retailers woke up more to the idea of an omnichannel experience and are realizing the consumer sees it as one brand. We need to meet the customer wherever he or she is, and be able to show up the same way across all channels — technology enables that. Retailers who’ve done well are those who embraced that change.
What are the keys to success in shopper loyalty and retention today?
Haas: Personalization is one key, along with getting someone emotionally connected to you. People like deals, yes. But you have to have meaningful benefits — not just “spend X, get Y” discount programs. I think if you can get someone really engaged with you, they’ll hold up their hand to say, “I’m a member.” To get that, you have to know what’s important to them. You need to listen to be relevant. Survey them. And your customer base may be changing. New consumers value different things than older consumers.
Hayward: Understanding the customer is important for success not just today, but all the time. And the basics of loyalty have not changed. The goal has always been to engage the customer, and meet or exceed their expectations so they choose you instead of your competitor. Now we’re seeing that consumer expectations have changed dramatically — and we need to keep up.
Before, we were comparing one loyalty program to another. Now it’s about the consumer experience with other brands as a whole. If a customer can get real-time updates in other areas of life — like getting an alert that her Amazon package is just three stops away — she believes she should be able to get real-time updates on her loyalty program, too.
Consumers also want more control — that’s one of the expectations that’s a little different. Historically with loyalty programs, we pushed rewards to consumers on our schedule. But with one of my favorite programs, Chick-fil-A One, members decide when to redeem their rewards. It’s a dialogue between brand and consumer, not a one-way conversation, not just “this is what the brand is serving up to me.” Consumers expect some input, not to just be on the receiving end.
And consumers want convenience. The work I did with CCG for Rack Room and Off Broadway — which were among the first digital loyalty programs — all these years later, that’s still so important. People don’t want to fumble with coupons, paper and plastic cards. It’s too inconvenient.
Social responsibility is another thing that’s more import to consumers today. People expect companies to have a point of view, to be ethical, to be socially responsible. Loyalty programs with [those traits] appeal to consumers.
What is your favorite loyalty program?
Haas: Nordstrom’s Nordy Club. I’m emotionally connected — it’s my favorite brand. I have a Nordstrom debit card and a Nordstrom loyalty credit card. Whenever I get a reward, I want to spend it immediately. And that’s the whole purpose — to create those incremental visits. It also has good benefits, including free alterations. I’m short, so I always need alterations.
The program also has pick-your-own-double-points day. I drive an hour to get to a Nordstrom Rack, so I only go a couple of times a year. So, that [benefit] is meaningful to me versus when [a retailer] announces double points or a sale on one particular day.
I also like Publix. I don’t think they advertise it as a loyalty program, but if you have their app, you can digitally clip coupons, scan a QR code at checkout to pay — it’s more a convenience. But they also sent me a free bouquet of flowers for my [cardholder] anniversary and for my birthday I think they gave me a free small dessert. They appreciate their members. They present offers of things that I bought, not just something that’s on sale. They’re personalizing the experience for me.
Hayward: Chick-fil-A One. I like that it’s an extension of an overall great customer experience. The in-person and digital experiences are designed with the customer in mind. The app makes engaging with the loyalty program very convenient. You can order through it, see your rewards status and see what you can redeem your points for. It’s easy to earn and redeem points, and even pay, using a QR code in the app. It’s a one-stop shop — everything I need is right there.
I like that I choose how to use my points, and I determine the schedule. They don’t tell me I have to use it this month or next. Reward options are also clearly identified. And I can gift rewards or product to a friend via text — I recently sent my daughter some fries!
I get surprise-and-delight offers in the app from the [local] store operator, which strengthens the connection with the individual store. I even got an invitation for a “backstage tour” [of the company headquarters]. That’s something unexpected, and it extends the connection with the brand in a way that isn’t product related.
What are some retail customer loyalty and loyalty program trends for 2023?
Haas: Rewarding behavior that’s good for the environment will be even more important. Also, personalization of loyalty. You have all this information about me, you know what I buy, how I shop, so you should personalize your messaging to me, not treat me like everyone else. Tell me how many points I have. Be relevant to why I’m a member.
With attention to privacy and consent being so important, loyalty programs will become more the medium for collecting data. I see that as a trend more for companies that do a lot of third-party data now. Your best customers want to be heard, so ask your best customers and they’ll tell you. Give them points for their information.
Also, partnerships. I think grocery stores recognized how important that could be, like with gas cards. It can be very helpful to a program to understand that you don’t have everything a customer needs, so what complements your program? It doesn’t make sense for a clothing retailer to partner with a gas company. But, for instance, Omaha Steaks partners with wine companies.
Hayward: I think AI is going to continue to be more and more important. Knowing the customer is important — the intent and understanding has been there, but we have not been able to do it because we’ve been limited by manpower. When I got into loyalty, one of my first assignments was to segment a database for a small retailer with less than 1 million customers. It took about four hours. Now, that segmentation is being done in real-time by machines.
And it’s not a one-time thing. We need to continually iterate and update, making adjustments based on the latest data. AI will allow us to have that data constantly to deliver the proper offers and messages, at scale, that no human would be able to do. That will really change loyalty. We’ll still need to have the people to support that. It won’t run on its own. But the right people with the right tech, that will be a powerful combination.
Personalization is a trend that will continue. Technology will allow us to do it better, customers will appreciate that, and it will deliver better experiences as a whole.
Also, advocacy. I’m hoping we’ll see more of this. Loyalty is not just transactions. It’s about the emotional connection. As brands move away from transactional loyalty, I see them moving more towards creating advocates — where people are referring you and are truly invested in your brand. Then they’re not going to be lured away if there happens to be a better price on a particular item somewhere else.
What will 2023 bring our way? No one knows for sure. But learning from what’s changed in retail loyalty, focusing on essential elements of success and letting customer knowledge guide you is a time-tested way to build, keep and strengthen those profitable, loyal customer relationships we all want.
Prepare your customer loyalty and shopper retention initiatives for the new year with help from CCG’s retail customer marketing experts. Our customer engagement agency has 45 years of experience developing, refreshing and managing loyalty programs and other customer relationship marketing efforts. Learn more about our retail marketing solutions, then call 303.986.3000 or click below to schedule a free consultation.