It's clear that loyalty programs influence sales and brand affinity, but businesses need to do more than provide discounts to be a loyalty program that stands out.
This weekend I shopped in-store. Is it still hip to do so? (Yes it is: In Australia 93 percent of our shopping is still offline; globally it hovers around 80 percent.) I went to the city with a clear mission: to buy a shirt dress from Country Road from a department store. I took the time to travel to the city, fight the weekend crowd despite the fact there is a Country Road 15 minutes’ walk from my home. Why? Not because I particularly enjoy the in-store experience at the department store, or because of my deep affinity for the brand but mostly because I believe my dollar works harder at the department store and sometime next year when I spend enough at the store I’ll be rewarded with a $20 voucher — my loyalty was bought with $20.
Loyalty Programs Work and They Work Hard
I’m not the only one. Seventy-one percent of consumers belong to at least one loyalty program. It’s clear that loyalty programs influence sales and brand affinity. Boot’s Advantage card members spend an average of 60 percent more per transaction. Ninety-two percent of people in Asia-Pacific have admitted they are more likely to shop at a retailer with a loyalty program. And like me, 57 percent of them modify their shopping behavior to maximize the benefits they receive from their loyalty card. Loyalty programs clearly work, which explains why it is starting to feel that every business out there has their own loyalty card. The average consumer belongs to at least eight loyalty programs but is only active in about five of them. Businesses need to do more than provide discounts to be a loyalty program that stands out.
Make Signing Up to Your Loyalty Program Easy
Here's the kicker to this story, I also belong to Country Road's loyalty program…I think. Step one to signing up to the Country Road loyalty program was easy enough, a few answers to the cashier in store and I was in. Country Road has a two-step process that requires you to complete the process online. I received an email, clicked on a link to complete my application and was redirected to a page which didn't clearly state whether I joined or did not join their program. They’ve already lost me. 39 percent of people in Asia-Pacific would not join a loyalty program if the process was too complicated. Signing up to your program should be seamless and intuitive, and contact post sign-up immediate. There’s not much worse than struggling to sign up to a program and then wondering if you’ve completed the process.
Build a Relationship Not a Promotional Channel
While it’s true that a large part of wanting to be part of a loyalty program is driven by financial incentive, for most people it goes beyond that. Seventy percent of loyalty program members see their membership as part of their relationship with a brand and feel it increases their likelihood to continue conducting business with the company. Often brands approach loyalty programs as a means to drive sales, rather than a means to build an actual relationship. The digital age seems to have accelerated this increase of purely promotional direct mail. I know I receive my fair share of communications from brands which tout "Buy this now!", "Exclusive deal ends this week!" week after week. All which tell me that they just see me as a dollar sign and not a valued customer. Part of participating in a loyalty program is buying into a brand’s identity and values: a study by Maritz indicates there is a strong correlation between member satisfaction in a program when the brand demonstrates it is aligned to a customer’s personal values. You need to demonstrate those values in communications and interactions with your consumer.
Communicate Often and Well
One of the foundations of any good relationship is communication. Ninety-four percent of members of loyalty programs want to receive and expect communications from their programs. As a loyalty program enthusiast, my Promotions tab in Gmail is constantly being filled. It’s easy to forget programs that only email me once every six months, but equally easy to gloss over brands that email untargeted and irrelevant communications. Clearly this isn’t a call to spam your customers on all available communications channels, but regular communications are required.
The key to not becoming a spam-brand is to be relevant in your communications. Sadly only 53 percent of members in loyalty programs describe the communications they receive as relevant. Myer, an Australian department store, emails me at least once every two weeks — prior to writing this article, the last time I opened an email from them was more than a year ago. When I first joined their program I was receiving emails about stocktake sales: 50 percent off men's wear! Fifteen percent off kitchen appliances this weekend! They were generic and uninspiring and eventually I stopped opening them. The truth is that the majority of companies struggle to use the data. Only 10 percent of Australian companies confess to using their data well and a mind-blowing 27 percent of them are doing nothing with their data. Even basic tailoring of promotions by location can increase revenue by more than 4 percent. It baffles me why my local supermarket where I have a loyalty card, which has all my details on how often I shop at the store and what I purchase, does not send me targeted promotions or communications.
Good news for Myer, though, the last few eDMs I've received have been beautifully styled and had I opened them, would have definitely incited interest. Why didn’t I? The email subject line was so similar to what came before I saw no need to open them. So if you’re changing your content, make sure you tweak your subject lines as well to indicate the change.
Live Up to Consumer Expectations
My shopping trip ended on a disappointing note. I went in-store, found my shirtdress, but left without it, because I had a terrible in-store experience. They only had one fitting room open on the floor, the staff were uninterested, and a queue had built around the cashier, so I gave up. Ultimately, it was the actual shopping experience that let the department store down. That’s the thing with loyalty programs - your $20 can buy my attention and my footfall, but ultimately if your product isn’t up to scratch you will lose me.
Jeanette is Director of Insights at Isobar and leads its research, analysis and insights team. With a background in media planning and strategy, Jeanette brings extensive experience in international markets, consumer research methodologies and the development of consumer insights across categories. With three years’ experience working on the Proctor and Gamble account in Malaysia, Singapore, and Hong Kong at a media agency, and nearly two years across Australian clients for Isobar, Jeanette’s background in media has given her an understanding of business processes for a range of sectors and a strong skillset in multi-stakeholder team management.
With the ability to respond to diverse client requirements, Jeanette has devised a number of processes for the Insights team Isobar, providing strategic communications solutions for both business needs and consumer insights.
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December 2, 2015
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