6 Things You Need to Know About Customer Loyalty Now

In the great battle for consumer attention, a little loyalty goes a long way. But crafting the perfect program requires both background knowledge of available loyalty types and how to maximize the effect of your strategy.

Read on for six things you need to know about loyalty today.  

1. Loyalty Programs Work—If You Structure Them Right

First and foremost, let’s talk about the reason retailers create loyalty programs in the first place. According to a survey from Bond Brand Loyalty, a third of respondents only stay with certain brands because of their loyalty programs. What’s more, 70 percent of consumers base some shopping decisions to earn more points.

But what does it mean to run an “effective” loyalty program? Capgemini Consulting conducted a survey that asked about the things shoppers hate about loyalty programs. On the list: hard-to-redeem rewards, offers that aren’t personalized and program structures that appeal to wallets instead of emotions. Steer clear of these things and you’ll be on the path to success.

2. There’s More Than One Type of Loyalty Program

There’s no one-size-fits-all approach to thanking frequent shoppers. Here are just a few popular formats:

  • Instant rewards for signing up
  • Member-exclusive discounts, special deals and personalized offers based on past purchases
  • Purchase and reward tracking via credit card or phone number, taking membership cards out of the equation
  • Points-driven partnerships between retailers and online shopping portals that let shoppers earn and redeem rewards at more than one place

3. Mobile is Making Loyalty Even Easier

Two major mobile players—Apple and Google—are getting into the loyalty game. At Google I/O in late May, the search giant announced Android Pay, along with loyalty program integration that takes the punch cards out of the equation and allows shoppers to redeem offers when they tap to pay.

Then, at its Worldwide Developer Conference in early June, Apple announced its own way for retailers to thank shoppers who pay with their phones. Starting in the fall, the company will allow iPhone users to choose which available rewards cards they’d like to add to their mobile wallet. Early adopters that are about to make fostering loyalty an even more seamless experience include Walgreens, Kohl’s, Dunkin’ Donuts and BJ’s Wholesale Club.

4. Technology Helps Drive Brand Relationships

Now that loyalty has gone digital, the data these programs provide can give retailers a deeper look into shopper behavior and ultimately motivate customers to make return visits to a store. Today, systems exist to manage payment and customer relationships, helping sales associates better serve shoppers and helping retailers push out offers to the right person at the right time.

For example, Bloomingdales’ Big Brown Bag app brings customers closer to the shopping experience, allowing them to add local store events to their personal calendars, add or change registry items and use their phone to cash in on points. Meanwhile, Chico’s has taken an omnichannel approach that includes everything from RFID technology to tablets for sales staff to keep track of customer information and make smarter purchase recommendations. Both of these approaches foster loyalty and make customers feel like the store’s top priority.

5. Loyalty is a Seasonal Event

Like clockwork, there are times every year when shoppers flock to both online and brick-and-mortar stores, eager to buy. Perhaps not surprisingly, the winter holiday season is the top time of year for spending, followed by back to school, Mother’s Day and Valentine’s Day, according to a loyalty survey we conducted last year. While shoppers are ready to spend big at these times, that doesn’t mean they’re going to spend at your store.

Building an effective loyalty program helps shift the odds in your favor. Our survey found that loyalty would drive 85 percent of back-to-school shoppers to return to the same store the following year. But make sure that strategy is consistent—91 percent also said they could be swayed to shop at another store if the promotion or reward was better. A few more stats to solidify the importance of loyalty: It can improve market share by 20 percent and customer acquisition by 10 percent. Happy holidays, indeed.

6. It isn’t Limited to Big-Box Retailers

As a small business owner, you might feel like implementing a loyalty program is a huge undertaking. But thanks to many of the technology developments outlined above, retailers of any size can build a program that meets their needs and the needs of their customers. Most merchant service providers also offer the ability to run loyalty programs.

And the motivation to step up your small business loyalty game doesn’t stop there—the customer data brought in by loyalty programs is a valuable tool in assessing your business strategy and making sure everything from inventory to pricing is optimized for success.


How do you approach customer loyalty? Send us a tweet @Cayan and let us know!