Article

Why customer loyalty is way more than just offering a consumer discount

Deploying a retail customer loyalty strategy is much more than just offering a discount: it's a connection between a consumer experience and the customer journey.

June 13, 2016 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

Deploying a retail customer loyalty strategy is much more than just offering a discount for continued patronage. As Beagle Research Group founder and managing principal Denis Pombriant explains, it's the connection between a consumer experience and the customer journey.

And, when done right, it can pay off big, said Pombriant, noting industry research revealing the potential to boost profits by as much as 20 percent.

The problem, however, is that the majority of retailers aren't developing, deploying or managing strong, lucrative and rewarding loyalty programs. Many tend to 'set it, then forget it,' explained Narina Sippy, CMO, Stellar Loyalty.

Sippy and Prombriant offered up expert insight on loyalty strategy during a session at the Interactive Customer Experience Summit 2016 held in Dallas last week.

"Many are poorly designed and can end up hurting and destroying a brand's value,” said Sippy. But then there are some retailers boasting superior loyalty programs, such as Marriott, Sephora and Amazon Prime.

"Loyalty is all about the customer. You can't buy customer loyalty but you can earn it," said Sippy. Stellar Loyalty is a two-year-old app provider offering cloud-based, big data customer loyalty solutions.

While there are many approaches to promote loyalty, such as contracts and what Sippy called ‘high wall gardens,’ sometimes the most basic can prove valuable. She referred to the decades-old green stamp grocery loyalty programs used to keep shoppers coming back to the same stores.

"Brand loyalty," said Sippy, "should be a two-way street and more than rewards and more than the transaction." The two experts described a vital loyalty strategy as one that enhances the customer experience and the retailer-customer interaction.

And that, said Pombriant, requires knowing how to make the customer happy. Prombriant recently published a new book, “Solve for the Customer,” identifying how brands can better engage customers by using customer science.

"Delight is in the eye of the customer, so be efficient for the customer; this will boost stickiness," he said.

"The genesis of true loyalty is when you figure out how to get a customer engaged with your business and how to keep the customer interacting with you,” he added.

The key to that is gaining as much awareness about the consumer as possible.

One good first step, said Pombriant, is to identify the "customer moments of truth."

"Every brand has different moments of truth and they change over time and change in terms of frequency. It is critical to stay in touch and aware of the customer journey to gain the understanding needed in developing loyalty."

In an audience participation segment the speakers asked for insight on favorite loyal programs and what made the brand programs so valuable. Hilton Honors was cited for its app and innovating all the time. Starbucks was cited for its fast order and pay capabilities.

"Loyalty isn't always about coming back to buy but serving as an advocate," said Sippy.

The ride sharing service Uber was also noted for strong customer loyalty and one reason, said Sippy, is that the service and the loyalty program are tightly integrated for an engaging experience.

"Loyalty should eventually be something without a rewards program," said Sippy.

And while most of the loyalty programs mentioned during the talk are pretty sophisticated, admitted the speakers, it doesn’t mean the old standby, the coupon, should be put on the shelf.

"Coupons serve a very valuable purpose but are typically aimed at the marginal customers. They are not dead," said Sippy.

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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