Not-so-fantastic-plastic: Why the Best Loyalty Schemes Have Gone Digital
The handy loyalty card which slips seamlessly into a wallet was a slick solution in a world where the vast majority of shoppers paid by card or cash in person and in-store. Remember those days? Customer engagement started and ended with the transaction, and the passive accumulation of points was all that was needed to keep customers coming back.
Things have changed in the world of rewards programmes, and the companies that have adopted emerging digital rewards technologies are the ones reaping the benefits of investing in engagement. The pandemic has transformed buyer behaviour; online shopping is now king, which means that older analogue loyalty schemes are now rendered redundant for many. Companies that were already a little behind in their technology solutions are now being left in the dust.
Communicating with Customers Digitally
In a world where stores are closed, and customers are interacting with retailers in an entirely virtual way there are as many compelling opportunities as challenges to overcome. Real-time online engagement is not a new concept, and around 56 per cent of US retailers are looking to invest in this platform, way ahead of other channels (Forbes, 2020).
“Retailers and brands have focused on real-time communications to customers in order to provide a better consumer experience. According to a Deloitte study, brands at the forefront of real-time engagement with customers are not only increasing the speed of their reaction time, but they are also fundamentally shifting the culture and organizational structure to support real-time customer engagement. An area of concentrated effort during the pandemic, when many customers are focused on contactless shopping environments, is SMS (short text messaging) technology.” Forbes, 2020
Global Banking and Finance report that the rapid adoption of messaging platforms means that direct to consumer (DTC) interactions through messaging channels “keeps customers engaged while generating trust and intimacy”. Automation and artificial intelligence (AI) also mean that interactions can be personalised in staggering ways, integrating transaction history, buyer behaviour and creating bespoke loyalty rewards that surprise and delight customers. There is no greater potential for this level of customisation than via social media messaging like Facebook Messenger and WhatsApp.
Making the Most of Digital Loyalty
With companies ditching their plastic, what are the opportunities and benefits for digital loyalty and engagement?
Customers Spend More
With integrated omnichannel campaigns where customers see the same messaging consistently, Harvard Business Review reports that spending increases by 10 per cent. What’s more, direct messaging could help reduce basket/cart abandonment rates. Digital gift cards are another way to encourage online spend.
Reward Actual Loyalty
Rather than offering standard rewards to all customers, you can target your most loyal customers (according to FunMobility 20 per cent of customers drive 80 per cent of sales) with exclusive offers. This allows you to track who your most loyal customers are.
Create Trust and Intimacy
Personalisation creates conversation and allows customers to feel a sense of connection to your brand. Replicating that ‘small business’ feeling of a store knowing you are is great for engagement and ultimately repeat spend.
Know Your Customers
Quizzes are being used more and more as a way of both creating leads and generating more information about the needs and wants of your customers. Petra Odak, CMO of Better Proposals states, “The type of quizzes we use are those where we ask our customers about the results, they can achieve by using proposal software instead of writing proposals manually.”
Beware of the Digital Pitfalls
As with any great thing, there are some key watchouts for the move to digital. Wonseok Oh of the Korea Advanced Institute of Science and Technology, Sang Pil Han of Arizona State University and Sungho Park of Seoul National University looked at the loyalty scheme of a multinational restaurant company that operates 18,000 locations under five brands. They found some important trade-offs in the move to digital loyalty:
‘Deal Susceptibility’
– digitally engaged customers can check for offers and lower prices in an instant via their mobile device. This means many will choose to shop only when there is a deal on. This can lead to perma-discounts and only keeping unprofitable customers coming back.
Loyalty Dilution
– multi-vendor loyalty programmes like Nectar or Rakuten are attractive to companies, but these schemes can drive customers to be less loyal according to the research. Due to the choice of partners available, it can mean that customers will simply shop where is cheapest.
Smart businesses will get to know their customers better without diluting the value of their products and services, not any easy task, but one that is sure to benefit from greater personalisation and customer intimacy.
