Loyalty: Life beyond retailer metrics

When we read about loyalty, we often encounter points of view from a retailer’s perspective. And that makes sense, since progressive retailers created loyalty programs after recognizing that, without a means of customer identification, they were unable to recognize individual customers and reward them for a desired behavior.

And so, from an initial foray into box tops, coupons, and vouchers, we’ve now evolved to deeper customer loyalty and engagement models with an understanding that customer loyalty has a massive impact on the bottom line. Indeed, Accenture research shows 57 percent of consumers spend more on brands to which they’re loyal. What’s more, if you combine a loyalty program with your ecommerce platform you can increase average order quantity by 319 percent.  

And there are a number of other reasons why customer loyalty is critical to your success as a retailer. 

The fact is that 94 percent of consumers belong to at least one loyalty program, just under half are actually active users and just a quarter see companies effectively analyzing their needs and sending them relevant offers (GI Insight, Loyalty Frequency: Who’s Tuning In?). It’s clear that retailers aren’t winning here. But then, if consumers aren’t receiving relevant offers, let’s face it, nobody is.

So maybe it’s understandable that the percentage of active loyalty consumers isn’t as high as it could be. And what if you could change that as a retailer? The rewards are enormous. But the approach has to be three-fold:

• Listening (first party data capture and analysis)
• Understanding (insight)
• Rewarding customers in a meaningful way (hyper-personalization)

But very often retailers need a bottom-up business case to show that they could in fact, achieve a lot more by offering customers relevant rewards. The question is not only about listening and monitoring the data but reviewing it on a continuous basis. The impact of the right business process and customer experience around loyalty is what I’m really referring to here: A loyalty relationship that benefits the consumer and retailer alike.

Now we’re talking.

Let’s be fair, if I knew as a customer that I was getting exactly what I needed from a retailer relationship, I would sign up in a heartbeat. And I’d use the loyalty program actively. Wouldn’t you?

But very often consumers know that’s not happening, and so retailers have the following scenarios to deal with:

• Active versus inactive users
• Consumers who prefer to shop anonymously

From a consumer perspective, both of the above situations are easy to understand.

Related: The best retail loyalty programs turn customer activity data into powerful personalization

For an active user, when companies do personalization well, it creates a 6.4x uplift in member satisfaction with the loyalty program. Satisfied, happy customers shop more; it’s a virtuous circle. 

For those who choose to remain anonymous, sometimes it’s a question of trust. In the U.S., 71 percent of shoppers are less likely to join a rewards program that collects personal information like address and account information.

And that mistrust, while not predominant, is relevant with 56 percent of U.S. shoppers saying they aren’t confident that brands have their best interests in mind when they use, share, or store their personal data. Privacy is of paramount importance. With these stats in mind, it should also come as no surprise that over 78 percent of people surveyed believed brands shouldn’t be able to use their personal data to market different things to them.

And why should they sign up? Nearly 50 percent of customers feel brands don’t meet their expectations, according to Acquia, and 60 percent of brand-created content fails to deliver, according to Havas.

Let me share another key finding with you: Loyalty is not a standalone endeavor. For many brands, especially service brands like mobile operators, the customer service experience in the retail environment is a key influence for loyalty. People appreciate great service and will gladly recommend retailers providing great service to those close to them.

Quality of experience is a primary driver in brand growth for any type of retailer. Insight conducted by the NCR Retail Transformation Consulting team into customer experience for telco retailers showed that human interaction is key to how consumers experience their mobile operator’s brand. Findings from our global research conducted in March 2021 show that:

• There’s a level of trust humans provide that a website can't match​
• Consumers feel more confident about their purchases​ when they can sense-check it with a customer service agent in-store
• There’s a perception that customer service provided in person is faster

Additionally, research from Microsoft tells us that 69 percent of U.S. consumers say customer service is very important when it comes to their loyalty to a brand. Retention stats like this show how a superior customer experience helps to improve people’s loyalty to a business. Satisfied customers will make more purchases and even serve as brand advocates who make recommendations to their families and friends, making them extremely valuable.

These insights should serve as a word of caution to those businesses who:

• View loyalty as a standalone initiative
• Disregard the importance of customer service
• Think the answer to a better bottom line is end-to-end (dehumanized) automation

If we view these findings in the context of transforming the retail experience, the answer is not to remove human interaction from stores entirely, but to optimize service interactions to ensure better use of customer service agent time, and consequently, a better brand experience. This leads to active customer engagement and loyalty. 

So  you’re approaching your customers as individuals. Now, how can you address the challenges of large subsets of inactive or, worse, anonymous users? Aside from data analysis and insight (i.e., listening to customers) there are a number of actions retailers can take. Here are five:

Customers increasingly value tailored experiences to maintain their loyalty to a retailer’s brand, and will abandon businesses that lack personalization—a high-level illustration of the power of hyper-personalized services. In fact, the Associated Press reported 61 percent of consumers think surprise gifts and offers are the most important way a brand can interact with them. That’s second only to a more convenient shopping process (50 percent) and solving a problem or question (45 percent).

Microsoft research shows that 77 percent of consumers favor brands that ask for and accept customer feedback; 68 percent view brands more favorably if they offer or contact them with proactive customer service notifications. It sounds trite to say it, but it’s true: an engaging brand is a loved brand.

If your rewards are personalized and meet a customer’s needs, they’ll use your loyalty program. It sounds like a simple solution, but loyalty usage figures across the globe show us that it’s not. In fact, personalization is so important that 37 percent of customers are willing to pay to upgrade to an enhanced tier of a loyalty program, with a whopping 87 percent open to a retailer monitoring details of their activity if it led to more personalized, actionable rewards, according to Bond research.

Artificial intelligence (AI) is a key component of modern loyalty. While human interaction is important, when we lift the hood, we know humans don’t have the time or ability to sift through googolplexes of data to know when and how to personalize, incentivize, and communicate. And AI-driven solution, like NCR’s Consumer Engagement, can make that process more seamless and more personalized. ​

Adding features commonly found in addictive games, such as earned virtual rewards and goals, can incrementally increase the levels of customer enjoyment when they participate in your loyalty program. Users who are actively working towards a reward or goal are more likely to stay loyal to a brand and invest even more money into its products. Ask some of the key game development companies, this gamification stuff is dynamite.

There are any number of things that you can do to reach your customers and help elevate your brand to trusted retailer status. But first you have to want to listen to (analyze first-party data) and understand (conduct regular insight initiatives) your customers.

This is important for everyone in your retail business. Not just the trendy guys in marketing, but those in customer service, those in retail operations, and even those in finance who very often believe the best way to optimize the bottom line is to remove human interaction.

If you want consumers to care about your brand, you have to care about your consumer first.

And in case the advantage wasn’t clear, I’ll leave you with one final thought: Did you know that brands who are perceived as caring and meaningful and viewed as making the world a better place outperform the stock market by 134 percent (Vivendi)?

These brand statistics show that there is a huge opportunity for smarter, caring, socially aware retailers to attract new customers and keep them loyal to their brand. 

Related: Is your grocery eCommerce solution stealing your brand identity?