Consumers came out of 2020 having undergone a radical shift in priorities and preferences in their retail experiences. Retailers have mostly managed to address the shift to an all-digital retail experience, but need to continue to adapt their strategies to address the new era buyer persona and earn their long-term loyalty.
Many loyalty programs were already in need of an overhaul prior to 2020, but the pandemic has only exacerbated the shortcomings of programs without the proper rails. FIS’ 2020 Generation Pay report, which surveyed thousands of consumers across the globe, found loyalty programs lacked consumer engagement and didn't meet customer expectations. According to the findings, a full 56 percent of consumers felt that the retailer, rather than themselves, should be tracking their spending and offering rewards. Additionally, 37 percent of respondents believed that earning rewards via a loyalty program is often more hassle than the rewards are worth, a figure that increased by roughly 10 percent when asked to millennial and Gen Z respondents.
However, it's not all doom and gloom in the world of customer loyalty. COVID-19 accelerated many retail trends, but has also served as a catalyst for retail industry transformation. As retailers were struggling to adapt to the new pandemic era, consumers became willing to engage with brands in more creative ways. With consumers willing to try new experiences and share more of their personal preferences directly with brands, retailers now have an opportunity to engage with customers at a deeper level. In 2021, retailers must continue to innovate and reinvent themselves to stay relevant, and can succeed in doing so by following several key tenets.
Focus on Digital Channels
Digitization is not just a pandemic trend; retailers will need to continue to build off the agility and engagement tools that were built during the COVID era. Retail brands need to continue to optimize their e-commerce channels and use that as connective tissue for their customer loyalty strategies.
In 2020, retailers had no choice but to focus on rapid enablement to survive. In 2021, they should broaden these horizons. Focuses should include:
- e-commerce profitability;
- retaining e-commerce purchase volume as the pandemic subsides;
- expediting delivery time frames; and
- using loyalty as currency to increase subscriptions and recurring orders.
Consumers are eager for retailers to leverage digital technology to create flexible loyalty programs that extend across brands and organizations. According to the 2021 Global Payments Report from Worldpay by FIS, 81 percent of consumers wanted a system in which they could accrue and spend points at multiple retailers. Creating that system requires focus and investment in digital channels.
Retailers struggling to digitize should explore third-party partnerships to accelerate digital channel transformation if they're unable to repurpose existing technology.
Go Back to Basics
Retailers in 2021 need to re-evaluate the value propositions of their loyalty programs to optimize expense reallocation as well as potential savings. Figure out where the system is dragging and determine how to make the loyalty program more efficient and less of a cost-burden to the brand.
Additionally, brands need to explore their "social consciousness" so they can better connect with their customers’ non-purchase behavior. Connect at a level beyond the sale by caring about what your customers care about. Whether it's issues of social justice, their community, climate change, or anything in between, brands need to get in front of their customers and showcase similar priorities, rather than reacting to them.
We remain in the throes of the pandemic, but retailers need to begin planning for the customer experience that's beyond the horizon. Through digital savvy, flexibility, and self-awareness, retailers can see themselves not just survive the pandemic, but thrive in the new normal.
Mladen Vladic is the director of loyalty at FIS, an online information tech company that lifts economies and communities by advancing the way the world pays, banks and invests.