How to keep your loyalty program from failing over the holidays

Oct. 21, 2016

By Jake Weatherly

August research from the Berkeley Research Group shows loyalty programs will be a massive contributing factor for consumers when deciding where to shop this holiday season. A wide range of businesses, from mass merchandisers to office supply retailers, will feel the impact as 24 percent to 55 percent of consumers reported that access to loyalty programs will affect their purchasing decisions. With the National Retail Federation reporting holiday sales will see a 3.6 percent overall increase over last year, totaling $655.8 billion, it's important retailers are listening.

Whether you currently have a loyalty program or are working on creating one for the holiday rush, don't get caught making some common mistakes that end up doing more damage than good. Without doing the proper research into your customers' needs and the types of offers they want, as well as making sure your program runs seamlessly on every channel they shop on, you could be setting yourself up for disaster.

Given that 81 percent of consumers are more likely to continue doing business with brands that offer loyalty programs, here's how to build one that both increases conversions and overall sales:

Listen to your customers

The foundation of any successful loyalty program is built on customer feedback and analysis. Loyalty programs are fueled by providing additional value to customers that they wouldn't have otherwise, which is borne from understanding where that value comes from.

To do that, you first need to listen to your customers. Go beyond transactional data and web analytics. Through a survey, customer service feedback, or simply by asking questions at the register, start gathering data straight from your current customers. What are they purchasing most of? What are they buying the least? Why? What frustrates them about shopping with you? What do they wish you provided during the shopping experience?

The answers will give you a better understanding of where value is lacking, and where you could make up for it in your program.

Include offers they really want

Taking their feedback one step further, you also need to understand market trends around loyalty drivers. Gone are the days of simple "percentage off" discounts being enough to cement customer loyalty. While discounts are still important, today's consumers have greater expectations for what they'll receive by joining a loyalty program. For example, while 80 percent of U.S. Gen Z consumers are willing to sign up for loyalty cards in exchange for deals and discounts, they want more than just 20 percent off an item.

A 2016 study from Bond Brand Loyalty found that 59 percent of millennials value loyalty programs that offer special services like concierge, while others are all about free shipping. In fact, according to the Walker Sands Future of Retail 2016 study, nine out of 10 of the survey participants said free shipping was the No. 1 incentive when asked what would make them shop online more often. Given that e-commerce is growing at a staggering rate, offering a loyalty program that includes deals on shipping may be the key to driving online conversions.

Whatever you decide to offer as a part of your loyalty program, make sure that it lines up with both current market trends as well as the wants of your target demographics.

Create a multi-channel experience

In addition to the increase in overall sales predicted for November and December, the NRF is also predicting the biggest winners of the holidays will be retailers that sell online, as web sales are predicted increase from 7 percent to 10 percent. Therefore, it's important that you plan your loyalty program around your digital channels, as well as your in-store locations.

CrowdTwist notes that 88 percent of marketers say executing coordinated campaigns across channels is an important activity relevant to loyalty efforts, but it's vital you do so with customer experience in mind. Why? Studies have found that 45 percent of companies have seen an increase in customer loyalty as a result of investing in the customer experience.

With that in mind, take a look at your current shopping experience on your digital channels, and make sure it's as simple and seamless as possible. Loyalty members should never have to leave the customer experience to verify their loyalty status, redeem points, or access discounts and other perks. If you're offering free shipping, don't make customers jump through hoops to find a coupon code. The more you invest in making these simple changes, the better your conversion rates will be.

While these are just a few strategies to creating a winning loyalty program, it's common to have to continue to change and tweak based on your customers and their feedback. As long as you listen and respond in kind, your holidays and future sales may just be the gift that keeps on giving.

Jake Weatherly is CEO of SheerID.




Topics: Consumer Behavior, Customer Experience, Customer Service, Loyalty Programs, Marketing, Trends / Statistics

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