What do the best retailers do to keep your business? Frequently, a strong loyalty program has an immediate and lasting impact on customers, keeping them coming back for more and choosing your brand over a competitor.
According to a study by Gartner, 71% of retail brands use loyalty programs to increase customer retention and generate valuable insights about customer behavior.1
Effective loyalty solutions offer a more personalized experience for customers, ultimately empowering them to keep coming back while providing valuable insights for retailers. As a result, more and more retailers are turning to tech-based solutions that go beyond traditional membership cards and points systems to capture behavioral data and richer customer feedback.
To truly understand the value of loyalty programs, we sat down with Julianna Vanoli, Principal Product Manager at SwiftWIN, and a leading expert on customer relationship management (CRM) strategies.
Loyalty solutions are put in place by retailers to encourage and strengthen customer engagement, but they are not all created equal. Vanoli explains that “loyalty manifests in diverse ways, so the meaning of loyalty is contingently held.” In other words, your loyalty solutions should be informed by your strategy for delivering on your key performance indicators (KPIs). By structuring loyalty programs in this way, you’re positioned to measure the direct impact the solutions have on your organization’s goals and pivot the program accordingly.
It’s important for loyalty solutions to be tailored to your business. Because of this, Vanoli emphasizes, “not all loyalty programs are rewards programs; loyalty is an outcome.” Strategies for achieving high customer loyalty often rely on coupons or points programs, but they can also include more interactive strategies like AI/ML-powered surveys, which allow customers to provide individual feedback while simultaneously collecting, aggregating, and analyzing valuable insights across your customer base.
Feedback is mutually beneficial as customers can exercise power to affect change where they choose to shop, and retailers can improve operations and customer management in an informed way. Studies have shown that giving your customers the ability to narrate their experiences helps show that you are committed to them as much as they are to you.2
Committed customers display loyalty behaviors by repeating meaningful interactions with a retailer, like repurchasing a product, referring another customer, or leaving reviews. A holistic loyalty program integrates customer data from a retailer’s existing e-commerce infrastructure to track, inspire, and retain these behaviors.
Only e-commerce infrastructures with integrated loyalty solutions will know what information is relevant for the retailer and how to collect it. In fact, studies have determined that for any loyalty program to succeed, you first need to identify who is, or will likely be, loyal to your retailer3. Without this information, it’s difficult to develop a loyalty solution that is well-aligned with the organization’s overall KPI.
Loyalty solutions collect and analyze loyalty behavior data against KPIs to ultimately determine the worth of any given behavior and rate the behaviors for rewards.
According to Vanoli, “if you don’t have an integrated loyalty program, you’ll be missing a key lever for driving greater loyalty behaviors because you won’t know what information to collect and track.”
This information gives perspective into the reasons customers are consistently coming back. The lever, Vanoli goes on to explain, “helps drive your strategy to facilitate growth metrics.” What’s more, an ill-fitting loyalty program won’t just undermine your ability to leverage behavioral data, it may decrease customer loyalty, hindering the value it should otherwise be equipped to offer.
Vanoli suggests two things to help you optimize a loyalty solution. First, as mentioned above, you need to make sure the loyalty solutions work with, not against, your KPIs. To know if the loyalty solutions complement the strategies for delivering on your KPIs, the program must track growth metrics. Second, it’s important to know when and how to adjust a loyalty program if it is unsuccessful.
Concord takes an iterative approach to loyalty solutions because KPIs transform as retailers mature. As your company changes, so can your customer base. Ongoing tweaks to loyalty programs are critical since change is inevitable and even desirable. Retailers need to think about, as Vanoli says, “not just how to architect and handle various solutions in the near term, but also how to improve and automate solutions to support the future growth of your business and respective customer base.”
Tech-based loyalty solutions transform your relationship with customers by providing valuable insights about how to better serve your customers. Data informs improvements to products, services, and customer experiences. Each of these fosters loyalty, therefore helping your company achieve sustainable success.
Our eBook, Data to Dollars – Driving Retail Revenue with AI and Analytics, helps you gain a deeper understanding of how analytics and AI can increase your retail profits.
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