Revamping Retail: Loyalty Pain Points and How to Solve Them
This article previously appeared on Total Retail's sister site, Women in Retail Leadership Circle.
Everyone loves to feel appreciated, and loyalty program participants are no exception. While rewarding shoppers for ongoing engagement and purchases is generally a positive experience, it can also create moments of friction. From security concerns to an overabundance of communication, retail loyalty programs need to overcome consumer pain points to ensure success and build long-lasting connections. As 2018 unfolds, retailers should look to streamline experiences and improve value, prioritizing how to best leverage data, deliver instant gratification, and implement hyperpersonalization. Want to strengthen your loyalty game and remedy the industry’s biggest hurdles? Read on.
Create Early Momentum
When it comes to loyalty programs, experts in behavioral economics tell us that consumers respond well to temporal discounting, or immediate validation over higher-value, delayed rewards. In fact, HelloWorld’s loyalty research shows time to earn an award is the most prominent loyalty pain point, with 53 percent of consumers saying it takes too long to earn. As such, brands should demonstrate value within 30 days to 90 days. To set a strong precedent — and a promising first impression — brands can employ this tactic at acquisition with a free gift upon sign-up.
Beyond sign-up rewards, it’s important for brands to maintain early momentum and reward customers frequently. To properly engage customers and drive excitement about reward milestones, consider layering gamification and strategic communications into loyalty programs. Progress bars, for example, are an effective technique because they show participants how close they are to receiving a reward. These mechanisms can be inserted into apps and should be shared via text or email when a consumer is nearing their next reward. Though a small measure, this tactic is quite effective. For example, if a customer sees they’re just two stars away from a coveted reward, they’ll be more incentivized to make a purchase.
Be Smart About Data
Security is also a concern among consumers, as 32 percent worry about their personal information within loyalty and reward programs. Be mindful of the data used to power your engagements. Using profile information — e.g., name, location, birthday, favorite products — is a quick hit because that information may be directly provided by consumers. Leveraging browsing behavior to customize communications is also acceptable, but diving too much into the social sphere can be considered a turnoff.
Meanwhile, excessive communication can be another pain point. Generally, consumers don’t mind when communications are relevant, but they could do without generic email blasts that stray from their specific interests. To streamline correspondence and provide valuable content, analyze customer data — from surveys to open rates — to determine the frequency of outreach and the content that drives the best engagement.
Ultimately, the more a brand tailors correspondence to individual preferences, the more it will alleviate communication concerns. Fashion retailer JustFab, for example, quizzes first-time visitors on their sizes, top styles and favorite celebrities to power highly personalized emails, which continue to evolve based on behavioral data. Looking to improve program participation? Consider incorporating customers’ points balances, personalized rewards recommendations and exclusive benefits for higher loyalty tiers into emails and other forms of consumer communication.
While data-driven personalization can bolster brand loyalty, individualized experiences that make it easier to find products and content really spur program longevity. For example, Sephora’s app experience truly up-levels personalization with assisted self-service, adding a level of intimacy that not only encourages purchases, but promotes deeper discovery. Consumers are encouraged to upload a picture of themselves and virtually try on makeup. Not only does this remove the obstacle of going in-store, but it educates them on products they might not have otherwise considered. When a consumer sees how a bold shade of lipstick looks against their hair color, it creates a more personal experience and drives stronger connections to offerings. Furthermore, Sephora’s robust “digital shopper” tool tailors recommendations to a customer’s exact skin type and tone, in addition to their hair and eye color.
Acknowledging common loyalty pain points allows retailers to create strategic programs that eradicate friction and prioritize the customer experience. When devising loyalty programs, be sure to match overarching brand goals with your customers’ specific preferences, then create experiences that directly speak to their needs. Designing with instant gratification, hyperpersonalization and strategic communications in mind will bolster customer engagement while powering long-standing programs.
Michaela Baxter is the senior director of loyalty at HelloWorld, a company that offers a combination of native technology and marketing strategy that allows brands to create unforgettable interactions, drive consumer demand and accelerate growth.
Related story: How to Successfully Make Changes to a Loyalty Program