It’s not uncommon for shoppers to find themselves booking airline tickets, watching television, or walking down the street while viewing an advertisement for an incentive or reward. These offers are everywhere. Buy this product and earn triple the points this weekend! Refer a friend and receive 15% off your next purchase! Purchase any Pepsi product and enter your code online for your chance to win! The list goes on, yet “one off” offers do not incent customer loyalty.
This recently published article from Direct Marketing News reveals that 87% of surveyed consumers are more apt to join a loyalty program that offers rewards for activities other than spending. As well, 84% report they are likely to spend more with a retailer that offers points for non-expenditure related activities. But let’s face it – not all companies think this way. For example, United Airlines, just revamped their loyalty program to reflect that of several other major carriers – rewarding customers based on dollars spent versus miles travelled. Although both models have their pros and cons, a new breed of loyalty program is emerging with pricing at the center.
Rewards need to provide customers with real and perceived value. Often, consumers determine program value based on the number of rewards they receive. Though, it seems no matter how many flights you take or movies you watch, accumulating loyalty points is both tedious and expensive, leading to fractional redemption rates. As well, such programs can actually detract from customer loyalty. Marketers beware, consumers are becoming both better educated and more demanding. Increasingly, you’ll see consumers asking more questions at the checkout when propositioned with a loyalty card. “How much does it cost to join? What are the benefits? How many points do I need to earn a freebie?” With consumers conducting their own cost/benefit analyses on reward programs, it’s important for retailers to improve the perceived and actual value of such programs without a step function in cost. One of the relatively untapped opportunities here is a “price protect” program rolled into a loyalty initiative that delivers a personalized approach, eliminates the individual price match, and improves the customer’s overall experience and loyalty.
Loyalty programs need to be innovative and targeted. Couponomy is revolutionizing loyalty programs by taking them mobile, customizing discounts and loyalty rewards on-the-go, and integrating social media in the process. This is another opportunity for retailers to delve into the competitive pricing landscape to improve and personalize their promotions. Rather than overwhelming customers with a number of generic reward offerings by email at random, use the history of interactions you have to personalize rewards and gain credibility with them. Imagine receiving a reward offer on your mobile device comparing your offer to another retailer’s offer while in-store? That retailer has immediately built rapport with that customer. The proliferation of social media in loyalty-based marketing is the perfect opportunity for retailers to pull out all of the stops and supercharge the next generation of loyalty programs.
Pricing and assortment are the foundation for next generation loyalty. The best loyalty program in the world won’t compensate for constant out-of-stocks or overpriced products. Shoppers will go to a store where they can find the products they want at the right price. Retail rewards programs should be centered around personalized pricing and promotions – what can you offer that competitors do not at the point of conversion.
Revamping your loyalty program to appear most competitive in the current market landscape drives a higher value proposition from your consumer’s point of view, in turn boosting the number of customers opting for your loyalty rewards and spending at your store over your competitors. Contact 360pi to find out how to integrate competitive pricing and assortment into your loyalty or marketing program.