Consumer Insights
May 18, 2017

Going Beyond Behavioral Metrics to Become a Loyalty Company

The biggest challenge for retailers today is adapting to the empowered and entitled customer – one that has access to limitless amounts of product information and pricing data across multiple channels. Modern consumers expect brand experiences to be seamless across all buying channels. Adding to this litany of challenges, it is easier than ever to quickly switch brands. The bar has been raised on expectations when it comes to the customer experience, including loyalty programs. Many retailers are still using loyalty programs mired in the past and heavily dependent on discounts that eat away at margins and often annoy customers with an endless barrage of email imploring them to buy more.

As part of Forrester and Bizrate Insights’ 2017 Digital Thought Leadership Series, we have partnered on new research to understand how today’s consumers are using loyalty programs, and what they expect from these in the future. The Rewards Loyalty Pulse Survey (March 2017) reports that nearly three quarters (72%) of US online adults have signed up for a loyalty program, and they belong to an average of nine programs each. For retailers, these are their best customers – spending more and often acting as advocates/influencers to others.

These programs are used frequently by members to purchase, redeem or otherwise benefit from most, if not all, of the programs to which they belong. Consumers use the programs because they believe they save them money, and as a result feel these programs influence their purchase decisions. In fact, the vast the majority of those who belong to these programs look for coupons, special discounts and points towards future purchases. In summary, consumers have a behavior-based, transactional relationship with the retailer through loyalty programs. This is not surprising because this is how most marketers design loyalty programs – to drive repeat buying behavior – but, is this really driving deep loyalty between the customer and the brand? Probably not, as these programs are not creating emotional connections that engender real long term loyalty.

When asked why they signed up for loyalty programs, consumers revealed the desire for personalized experiences and to be rewarded for being loyal. In the White Paper: 2017 Loyalty Trends and Best Practices, Forrester describes the way that retailers are transforming their mindset and culture to become a loyalty company rather than a company with a loyalty program. In fact, 67% of marketers told Forrester they are increasing their budget to improve the customer experience and their loyalty initiatives.

Marketers understand that they need to think more holistically about loyalty and strengthen both the rational and emotional bonds with customers. To get there, retailers must solve several internal issues such as the ability to derive more actionable insights from their mountain of customer data and to better align their communications strategy and cadence with customer desires. Research indicates customers don’t want a weekly generic email, but rather they want these emails less frequently and more personalized based on context and relevance to their needs.

The whitepaper and accompanying webinar goes on to describe several best practices retailers can undertake to transform their loyalty program to be one that delivers deeper engagement. These include: special treatment, better measurement, understanding the consumer journey/mobile shopping moments, exclusive offers, experiential benefits and surprise and delight. All of these tactics can deliver a superior customer experience that leads to real loyalty-based relationship vs. a margin eroding program based on discounts and coupons.

To learn how to improve your loyalty program, download the white paper here: http://bit.ly/2o3ZhCX

To watch a webinar based on the exclusive research results go here: http://bit.ly/2pojggp