As we transition to a world that focuses more on sustainability, we have seen a shift in consumer habits. Customers have become more loyal to specific brands based on their actions as a company and the promotions they offer.
Prompting this shift has been an uptick in Gen Z and Millennial shopping demands. They have diverged from previous generations, focusing less on cost savings and more on supporting brands that help them express their persona. As a result, companies and brands have started to rely heavily on building and managing customer loyalty through a myriad of customer loyalty programs.
What Are Customer Loyalty Programs?
Loyalty programs are offered or sponsored by retailers to help attract and retain customers. They are designed to encourage brand loyalty, which prompts repeat customers.
To leverage these programs, businesses rely on loyalty technology to implement and track different offers. This technology includes member databases, customer service, points of sale, advocate marketing, and artificial intelligence (AI) chat functions, to name a few. By using such programs, businesses can develop and modify their loyalty programs based on customer demand.
The most common example of a customer loyalty program is a stamp card – every time a customer visits a store, they receive a stamp on a company card. Once they earn a specific number of stamps, they are rewarded, often with free products. This system encourages existing customers to visit often to earn a specific reward.
However, customer loyalty programs have come a long way since their inception. Consumers now rely on technology to implement customer loyalty programs. Bond, a brand loyalty firm, has found that 95% of loyalty program members want to engage with their brand’s program through new and emerging technology — think AI, virtual reality (VR), mobile (contactless) shopping experiences, and more. So, the question remains, what are these new loyalty programs?
Customer Loyalty Program Tips to Build Loyalty
There are multiple aspects to consider when implementing a loyalty program, and companies seeking success should consider them all. Leveraging technology is essential, and platforms such as the Ombori Grid can enhance the experience. Here is what every company should consider when developing its loyalty program.
#1: Understand the Elements of Customer Loyalty
There are various levels of loyalty to consider when creating a platform to engage your clients. Brands must be conscious of these four elements when developing their programs:
- Cognitive loyalty: Understanding the cost-to-benefit ratio of a product – the cost should be competitive, and the product should be quality.
- Affective/attitudinal loyalty: Creating a solid brand that is recognizable to consumers.
- Conative loyalty: Developing a memorable brand, specifically, one that customers will purchase from multiple times and refer to others.
- Action loyalty: Establishing a brand that connects with customers and reflects their social, individual, or financial preferences.
#2: Simplify the Experience Through Technology
As mentioned, technology is key to an effective customer loyalty program. Users need to be able to engage and monitor their experience via a mobile device. Paper cards are no longer appropriate.
To start, signup and engagement should be easy and accessible via the retailer’s point of sale (POS). Customer engagement should be tracked on an internal system, and redeeming awards should be automated. The system should also prompt updates to mobile apps. In fact, studies show that 85% of customers who have redeemed loyalty points through their mobile devices say that technology improved the experience.
Bond reports that 95% of members want to engage with brands through a mix of new, emerging, and growing technology, including augmented reality (AR), VR, card-on-file, and more. Research further reveals that members who have engaged with loyalty technology say it has substantially improved their member experience.
- Automatic, location-based offers when inside a store improved the experience for 83% of members who have tried this functionality.
- Instantly redeeming points for purchases at other merchants improved the experience for 84% of those who have done so.
- Using AR to engage with a program improved the experience for 63% of members.
- Among those using card-on-file, 85% say their experience was improved.
Technology like Ombori’s Store Assistant has bridged the gap between in-store and digital shopping. Use of the store assistance is simple: When a visitor wants additional assistance, whether it be finding an item in the store or selecting an item based on their personal preferences, the Store Assistant can help.
Users engage with the digital sign via voice or touch and are navigated through a series of questions. The product enhances the customer experience and allows users to either purchase their items in-store immediately or order them online and have them shipped directly to their homes.
Such solutions provide retailers with the opportunity to simplify and personalize every shopping experience. Furthermore, by collecting data based on the clients’ selections, the retailer can target their loyalty program to that customer.
#3: Promote Client Engagement
Brand awareness is also about using technology to instill your companies’ concepts into the minds of your audience. This includes using digital signage to promote interactions and leveraging QR codes to engage prospective and current clients quickly.
H&M's Selfie Mirror is an effective tool that promotes client engagement and enhances loyalty. This voice-controlled program allows customers to take a selfie using the retailer’s digital signage. These photos can then be shared via messenger services, including WhatsApp, Facebook Messenger, and Line, and downloaded to customers’ phones. Data shows that around 10% of all customers who have used a photo booth opt to leave their email addresses, and up to 76% of those who have taken a picture leave their phone numbers when collecting their selfies through WhatsApp.
#4: Personalize the Approach
In support of client engagement, companies need to adjust their marketing to promote a more personalized touch. This means directing their efforts toward understanding the consumer needs and modifying the loyalty program accordingly.
If a client is shopping in-store, a product recommendation accompanied by a unique offer can increase their satisfaction. For example, guided selling devices allow customers to build product selections based on their preferences. Effective loyalty programs monitor these interactions and use the data to launch targeted campaigns.
#5: Keep It Authentic
While maximizing the efficiencies of technology and increasing client engagement are crucial, maintaining an authentic brand is just as important. Consumers, especially younger generations, want to experience a personal touch during their shopping experience. They do not want to rely on technological interactions solely, but instead, they want retailers to understand that their brand loyalty is supporting the company and its employees. Programs that establish a positive emotional connection with members see 27% more members increasing their purchases with the brand.
#6: Decrease Wait Times
Various studies have shown that customers feel as though their time is not valued by a business if they are kept in a state of "waiting" for an extended period of time. When building brand loyalty, it is important to consider how leveraging loyalty program technology can also help to eliminate wait times, and increase convenience. For example, VIP or loyalty rewards customers can benefit from special queue management interactions, or push notifications highlighting their place in a queue.
#7: Be Transparent, Share Your Values
In today's global climate, customers care about where their products come from. More than ever, consumers are choosing brands and products based on manufacturers' ethics, production information, and ingredients. Thus, transparency is key to creating a trusting relationship with consumers, and thus, harnessing loyalty.