Gone are the days when businesses used to focus on acquiring as many customers as possible without a strategy to retain them.
In a world recovering from COVID, a robust customer retention strategy is a must-have to ensure sales and growth.
This is turn, has led to the rise in the popularity of loyalty programs as a key engagement strategy.
In fact, loyalty programs don’t just benefit large-format retailers anymore.
Even online retailers, new-age brands, and Kirana stores are incorporating retail analytics, payment processing, mobile experiences, and other digital solutions to create differentiated services and brand equity. Additionally, they also leverage customer data gathered from programs to offer personalized products and services.
Transactional Loyalty Is No Longer Enough Post COVID.
A customer’s purchase decision is dependent on the value they receive from the brand. With the new normal, the definition of value has changed and it’s important for businesses and retailers to recognize and respond to it. Safety, technology, payment processing ease & transactional efficiency are now at the forefront of customer experience. In fact, these have become the new loyalty drivers for brands and play an important role in determining the success of a brand in a post COVID world.
|“Loyalty Programs aren’t just rewarding points anymore- they are becoming as good as money in your e-wallets given personalization and seamless, multi-dimensional catalogs.” Nidhi Agarwal, Head – Times Point|
So What Are The Latest Trends In Loyalty Programs?
- The Rise Of Mobile Wallet:
With the onset of the pandemic, mobile wallets have become an integral part of the loyalty program environment. Mobile wallets overcome 2 of the biggest hurdles of conventional loyalty programs; consumers forgetting their cards and consumers forgetting that they had even signed up in the first place. In fact, studies show that 69% of consumers are more likely to use a loyalty program when it is on their phone.
With wallets like GPay, PayTM, and Apple Pay becoming increasingly popular, there has also been an increased interest in marketing strategies and partnerships between brands and merchants. A good example of this is the partnership between wallet service provider Mobikwik and loyalty program provider Payback.
- Artificial Intelligence On E-Commerce Platforms
Every time a customer performs an action i.e. a product view, purchase rating- AI software can be used to record and analyze this information. Segmenting customers and creating customer profiles gives your business the insights it needs to understanding buying trends. This in turn can help personalize incentives and loyalty rewards that keep customers engaged with your brand.
Companies like Amazon and Flipkart are prime examples of companies that use AI to customize their loyalty programs and offers. Their deep learning system tracks the number of decisions like purchase orders to provide engaging, relevant, and up-to-date rewards.
- The New Age Loyalty Programs
Traditional loyalty programs are often closed loop programs. These tie down the customer to one specific chain or one outlet for the redemption of the points they have accrued. Innovative players in this segment have overcome this issue with interoperable loyalty programs with multi-point benefits to the customer as well as the merchant. The points earned by a customer with one outlet chain can be redeemed in online or high street retail stores. This increases the adoption of the program by the consumer. It’s also been noted that merchants who are willing to accept the “burn” (i.e. redemption of points) have made significant gains in their sales numbers. Another add-on is the campaign engine which allows the merchant to run specific campaigns for their customers in a few simple steps. These programs can also be customized for merchant reward programs by the banks/ fintech players.
|32% of consumers strongly agree that their brand experience is made better with a loyalty program|
- Gamification Through In-App Rewards
While financial aggregators like mobile wallets may be effective, many companies also find great success through the use of their own loyalty apps. The problem however lies in retaining a customer’s interest and keeping them engaged.
“Gamification is the process of using game mechanics to motivate participation, engagement, and loyalty.”
In layman’s terms, it’s a process of setting goals in your loyalty program that your customers can aspire to. For example, after a certain number of loyalty points, your customer’s membership gets an upgrade or your customers could get a free gift.
A great example of this is the Starbucks My Rewards Program. Customers register through an application and every time they purchase a Starbucks product, they accumulate stars. The more stars they accumulate, the higher the chance of them being eligible to upgrade to a “higher level” which opens up more perks and benefits.
A well-planned consumer loyalty program that has an interoperable feature in it, will increase customer retention, purchase frequency, and keep users engaged for the long-term. It’s a win-win for both the brand and your customers as it gives them a chance to avail of exclusive benefits by consuming content that they love.