Build a Better Loyalty Program in the Digital Age

Any retail marketer today understands that the value of a loyalty program lies in the data it collects and the ability to target consumers based on that data. But in today’s omnichannel environment, consumers have expectations on of how retailers are using their information what that data is “buying” them -- expectations that retailers are struggling to meet.



Digital Challenges

Consumers are increasingly connected to retailers both offline and online through multiple devices. A recent study from Deloitte Digital found that 84% of shoppers at traditional bricks and mortar retail stores used their devices before or during a shopping trip. So the demand is certainly there for a digital approach to loyalty, but as many retail marketers have found out the hard way, legacy systems and data integration can be huge obstacles. But that’s not the consumers’ problem.



At the same time, consumers have all-time high expectations for how they should be rewarded for sharing their data. They want relevant messaging: day, time, product – even down to payment preferences. They want targeted offers, focused on items they want when they want them. And they want it Now.



Thanks to icloud and other data sharing and storage environments, consumers assume that retailers have a 360-degree view of their activities – not just purchases – but social network activity, abandoned carts, product reviews – the list goes on and on. It’s not an assumption you want to challenge. If they feel that view of them is missing, they are gone — just like that — to a competitor that makes them feel connected and appreciated.



Best Practices

For retail marketers, the best defense against these challenges is a good offense, capturing consumers’ loyalty before they have any reason to doubt their value to you. They don’t see the heavy lifting, and they shouldn’t, but you need to observe key best practices to build a better loyalty program in the Digital Age.



First and foremost, you need a central source of customer data – including in-store, ecommerce, mobile, social networks, etc. None of the rest matters without this omnichannel view; most of it won’t happen, anyway.



Consumers need to feel that there is two-way communication; they know they are talking, they need to know you are listening — and will respond. Smartphone and tablet apps that allow push messaging are a very necessary way to kick-start a conversation based on their needs.



Loyalty demands rewards, now more than ever. Your customers should have access to loyalty program rewards (currency) in all channels. And those rewards needs to be issued and updated in real time.



Then there is the data privacy conundrum: consumers expect you to know not just their wants, but their tastes, and they want those desires fulfilled, ideally, without even asking. That’s a lot to know about someone. Meanwhile, many of these consumers are concerned about their privacy, that their information is protected. Massive data breaches haven’t helped. Some may see only a thin line between Big Data and Big Brother. So it is crucial that retailers maintain rigorous data security processes. And there need to be clearly defined policies for using customer data; such as knowing when it is inappropriate to push messages to avoid being obtrusive and raising privacy concerns.



Doing It Right

Here are some examples of major brands that have begun the arduous journey toward digital loyalty:

• Kohl’s new multi-tender loyalty program, Yes2You Rewards, has an app that rewards members with 10 points for checking in when they’re in the store – giving Kohl’s valuable information and the ability to leverage beacons for customized messages and offers.

• Starbucks reaches across channels to members who can earn “stars” on Starbucks products whether at a branded brick and mortar location or a third-party grocery store.

• Northface builds relationships face-to-face by letting VIPeak members earn points for attending Northface events.

• Walgreens motivates with Balance Rewards. Members can participate in health choice® and earn 20 points per mile walked. Walgreens is also testing location-based offers through augmented reality software that will push offers based on a member’s location in a store.

• Best Buy catches customers on the go. My Best Buy members receive bonus points for checking in through the mobile app at the store. They also have the ability to manage account and rewards through the app and earn points for rating and reviewing products.

• Sephora uses insights from its Beauty Insider program to tailor rewards in a variety of ways, such as targeting the offering based on skin tone and sending promotions for specific products based on past purchase history. Sephora also has both smartphone and tablet apps that stream beauty tips and info to members and allows them to see their past purchases as well as track and redeem points.

• Sears’ Shop Your Way app personalizes the member’s home page based on past purchases and location – including a store and out-of store-feature. The app also supplies access to exclusive deals and even offers chats with associates.

In many ways, building a better loyalty program for 2014 and beyond is a balancing act: Balancing consumer expectations with their need for privacy. Balancing points of contact for deeper interaction. And balancing all that data to create a multi-dimensional, more human relationship – one in which we will increasingly see marketers respond to consumer needs before they even ask.