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Tech Guest Viewpoint - Loyalty programs: Time to sign up for retailers


By Shannon Warner, Cognizant Technology Solutions

Talk about a gap: 62% of shoppers say loyalty program membership is beneficial, but only 26% consider retailers’ programs worth joining.

The 2014 Cognizant Shopper Experience Study reveals that too many retailers are squandering a customer base that’s eager to accumulate the programs’ points, rewards and discounts. The upshot? Consumers want to engage, and every retailer, even those without formal loyalty programs, should have a plan to drive customer acquisition and retention.

Retail has long held mixed feelings about loyalty efforts. Many organizations consider them costly endeavors with too few tangible results. Shoppers, however, overwhelmingly support the programs; the study found 75% respondents belong to up to 10 loyalty programs across industries, and 92% belong to at least one retail program.

Why do only a quarter of shoppers view retail programs as compelling? Retailers’ own ambivalence about loyalty programs is the likely culprit, resulting in half-hearted efforts that compare unfavorably with other industries’ far more enthusiastic and sophisticated programs.

This year’s survey included questions about shopper experiences in the travel, hospitality and consumer goods industries, providing insight and comparison into how retailers’ loyalty programs stack up against those of other industries. Airlines’ smart use of frequent-flyer programs, for example, has produced a big payoff with consumers: 84% of survey respondents indicated airline loyalty programs influence them to engage with a particular brand. The hotel industry also scores high, with 67% of guests agreeing the programs are highly influential in their selection.

Among retail verticals, loyalty programs’ influence is much lower. Only the grocery sector demonstrates skill in influencing consumer engagement, and it tops out at 42%. That means well over half of customers in grocery stores and supermarkets, retail’s most visited destinations, give no consideration to loyalty programs when making their shopping choices. The numbers drop off even more dramatically for other verticals such as pharmacies (31%), department stores (20%) and apparel stores (14%).

Successfully closing the gap requires retailers to elevate their loyalty programs to meet consumers’ expectations. Here are five steps your organization can take:

1. Provide the value and convenience shoppers want. Survey respondents were clear about program preferences: when it comes to redeeming points, customers want fewer limitations such as blackout dates (92%) and generous time periods (91%). They also want plenty of options for accruing points (80%).

2. Be transparent. Shoppers are concerned about privacy. Provide full disclosure of your program’s intent and steer clear of covert data manipulation and unwanted promotion.

3. Ensure your program includes elements popularized by other industries. 76% of shoppers consider one of loyalty programs’ most valuable attributes to be recognizing shoppers based on their status. Other industries’ loyalty programs often include the feature, and consumers similarly expect retailers to offer it.

4. Recognize that loyalty’s foundational elements are critical metrics for success. Whether your organization offers a loyalty program, and a sizable number of retailers still don’t, it still needs a plan for influencing engagement. Tracking benchmarks such as shopper frequency, time since last visit and long-term engagement will help your organization better identify and serve your customers.

5. Remember that gaps are opportunities. Loyalty programs represent the chance for your organization to develop foresight and skills that will deepen your relationships with customer, and help them thrive.

As an industry, we have a consumer base that is ready and willing to engage with us. Let’s make it worth their while.

Shannon Warner is associate VP, digital transformation planning and strategy at Cognizant Technology Solutions.

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