Today, retail marketers are challenged to connect with consumers in new and changing ways as traditional channels wane in light of the current situation. As retailers adjust their marketing efforts, the role of customer loyalty has become more important than ever.
Just as the 80/20 rule dictates that a small group or action can have an outsized impact, a retailer’s most loyal customers — likely a small share of their base — can account for more sales or revenue than any average group of shoppers. That’s why now is the time for retailers to double-down on their most loyal customers to keep them engaged, and just the same, to focus acquisition efforts on consumers who mirror their best current customers.
58% of retailers believe that consumers are eager to sign up for every loyalty program, but 50% of consumers are much more selective when signing up for programs.
For retail marketers, loyalty can be an objective defined with Key Performance Indicators (KPI). New measures include 'Brand Engagement' or 'Share of Wallet.' It can also refer to a strategy where marketers operate a formal loyalty program consisting of points, levels, incentives, and rewards. Within that program, the focus could include frequency of website visits to growing the average order size or encouraging brand advocacy.
Achieving the objective with a loyalty program strategy is as much art as it is science. Of course, it is essential to have effective technology. But it is equally, if not more important, to design and execute a program that meets the loyalty members where they live with a clear, compelling, and relevant value proposition. According to Oracle Retail's The Loyalty Divide global study, while 58 percent of retailers believe that consumers are eager to sign up to their loyalty program, 50 percent of consumers are much more selective, only signing up to relevant programs and 19 percent of consumers rarely joining loyalty programs at all.
But for the purpose of this discussion, let's keep our eyes on the prize. We all want to achieve overall loyalty objectives. So, what more can we do?
To move the needle in customer loyalty and maintain high loyalty with their best customers, retailers need to be ‘relevant’ to their customers. The more information retailers obtain from their customers, the more effective they can be at communicating with them and motivating behavior. Loyalty programs can provide a tremendous amount of customer insight. But no matter how well-designed the program is, the data is constrained mainly by how customers engage with the brand.
There is an excellent opportunity to put the customer value in a broader context. Of course, retailers can evaluate the share of wallet against their competition; the real power comes from understanding customers more comprehensively. An individual is defined by what they spend their time on and where they spend their money. This enhanced data can be like a super-charger, increasing the horsepower of a retailer’s loyalty machine, building current followers’ dedication and drawing in new devotees alike.
Even a moderately successful loyalty program should enable the retailer to identify their most valuable customers. Retailers can derive tremendous value by matching loyal customer characteristics with customers (‘first-party data,’ to use an industry term) to the broader consumer universe (‘third-party data’).
Accelerated insight helps retail organizations and their decision-making become 'data-led.'
Retailers will be able to identify and focus resources on high potential prospects who are most likely to be receptive. Not only that, but the organization will gain valuable insights into their consumer market to better inform strategic decision making. In other words, accelerated insight helps retail organizations and their decision-making become 'data-led.'
Whether discussing loyalty as an ongoing objective or as a priority strategy while other tactics are in flux, retailers need to truly know their customers. A key to unlocking that wisdom lies in identifying general behavior with consumer insights. If knowledge is power, this means retailers will have the ability to take their customer loyalty and engagement strategy to the next level.