THE CLARUS Blog

What’s Next for the Loyalty Industry?

Consumer behavior has repeatedly changed over the past decade and will continue to evolve into the future. The loyalty marketing industry needs to do its part to keep pace with these changes to remain relevant.

Consumers realize they have more power than ever before to influence brands via social media and by where they choose to spend their dollars.

So naturally, they hold a lot of power. But, so do we as loyalty marketing solutions providers and brand program managers.

We can do lots of things these days that we couldn’t do as easily 15 years ago. Sure, we could text then, but it wasn’t easy – especially in mass.

And it certainly couldn’t be personalized and delivered based on location and event trigger, with a digital offer and call to action.

Technology has evolved to the point where almost anything is possible.

So, let’s dream bigger and be committed to achieving a better state of customer engagement and loyalty.

Here’s how it can play out:

 

Consumers Choice Will Decide the Benefits

Consumers will be able to select from a menu of program benefits and offers. One program configuration won’t satisfy the majority of a brand’s customers. Therefore, brands will need to provide options that allow consumers to determine the types of experiences they want to have with the brand.

For instance:

  1. Customer A wants the ability to earn points, accumulate them for various redemption options and a free shipping.
  2. While Customer B desires immediate discounts, early access to members-only events and a brand that supports pet adoptions.
  3. Customer C demands status and couldn’t care less about points, discounts or abandoned animals. She wants to be treated like a VIP in-store and online in a fast, frictionless engagement. Time is her most desired reward.

Millennials are attracted to loyalty programs that include giving back and being connected to charitable causes.

For example, Target Circle members can vote to help direct Target’s giving to approximately 800 nonprofit organizations in their local communities.

 

Quality over Quantity

A move to value/substance over quantity as the true metric of a program’s performance. Some of the most important KPIs to measure in a loyalty program include:

  • Incremental transactions (increase in frequency, AOV, total transactions, etc.)
  • Increased customer lifetime value (stay longer and spend more)
  • Improved customer retention (reduced churn YOY)
  • Program member behaviors vs. non-program members (members should exhibit more brand affinity than non-members)
  • More brand engagements (referrals, social follows/likes/shares, content consumption, event attendance, communications/offer acceptance, etc.)

Learn more about premium loyalty KPIs.

Quantity of members is good. Quality of members is better.

Focus on your most engaged members and show them your brand love. They have shown your brand the most loyalty and deserve your attention.

It’s the best way to drive meaningful business growth.

 

The Closer I Get to You

Tech continues to bring the brands closer. The onus is on brands. Not consumers.

Think about it. Consumers raise their hands to join the program. They provide a great deal of personal information, allowing marketers to know their demographics, gain insight into their lifestyles, and get a jump on their aspirations.

So, now it’s up to us to do our part.

Let’s dust off those CRM/CDP systems we invested in two years ago and turn up the power. Pay attention to what segments of customers have done/are doing.

Customize messages and offers to ensure they are personal and relevant. If not, consumers will unsubscribe, or worse, hit you with a spam tag.

With an abundance of combined content that comes flooding into our inboxes, via SMS to our mobile devices, or through the various social platforms each minute of every day, eliminating irrelevant noise has become essential.

Translation: Don’t become insignificant to your customers.

 

The Rise of the Subscription Economy

There will be more premium loyalty programs, especially for brands that can offer a superior value proposition.

The rise of the subscription culture has demonstrated that consumers are willing to put their money where their desires lie. This mindset has sparked more brands to rethink engagement strategies by launching premium loyalty programs.

In the past two years, there has been an increase in subscription services across multiple sectors, including: Grocery, streaming services, gaming, entertainment, food delivery, and ride-sharing.

Brands that have cultivated a passionate following or who offer a superior value proposition will continue to roll out premium loyalty programs.

Some brands that seem poised to unleash their own premium loyalty solutions include:

Nike

As the No. 1 sports apparel brand across the globe, Nike’s possibilities are limitless. Nike has serious brand advocates, a roster of athletes, college and professional teams, as well as its own direct-to-consumer outlets. Nike’s program can reward members for purchases from any of its retail partners. It also includes an accelerated earning rate for purchases direct from Nike.

Consumers can be recognized for non-purchase behaviors like watching videos, completing surveys, and even sharing images of themselves in Nike gear on social media.

Benefits include everything from gift cards to future product purchases, behind-the-scenes access, celebrity/sports club encounters, and so much more. The possibilities are endless.

Does Nike have to deploy a premium loyalty solution? Probably not.

But would it drive even greater brand affinity and fanaticism?

Most definitely!

 

The Home Depot

To date, Home Depot only offers a loyalty program to contractors, while ignoring its consumer segment.

I like “six months no interest” if I use my store card as much as the next consumer, but it’s not a differentiator.

But what if Home Depot offered a premium loyalty program?

The Home Depot’s premium loyalty program could include an array of benefits including:

  • Free shipping for online orders
  • User groups to share knowledge (e.g. gardening, grilling, plumbing, etc.)
  • VIP store assistants for elite members
  • DIY guides/checklists to increase efficiency
  • Classes for those who want more know-how
  • Installation/construction services that might simply be as simple as creating a network between its pros to consumers and so much more.

Home Depot, literally, has a warehouse full of potential to craft a truly unique, consumer-focused value proposition.

 

Trust It’s Going to Happen

Consumers have shown their desire to invest in services they value most. Many covet an elevated experience with the brands they admire most.

They are willing to pay for those services which has given rise to subscription services and premium loyalty programs.

Brands need to differentiate on value and attractive benefits found in premium loyalty programs. Because personalized, relevant, engaging and valuable programs are what consumers want.

Those are the programs that will attract and retain members now and into the future.

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