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How to recalibrate retail loyalty programmes for 2023

By Becki Francis, Director of Client Strategy, Retail at Movable Ink

In the retail space and beyond, customer loyalty continues to erode with retailers facing decreased repeat purchase rates and declining customer lifetime value.

Various factors are behind the customer loyalty challenge. In the early months of the pandemic, the well-documented flight to digital meant that many e-commerce retailers saw their customer lists grow as shoppers looked to new brands in the face of store closures and limited product availability. This gave rise to an increase in customer fluidity as shopper behaviour was driven by a need for in-demand products rather than brand affinity.

The pandemic also introduced a new wave of customer expectations. Faced with unprecedented circumstances, retailers rushed to provide new offerings and value-adds to meet customer needs, such as buy-online-pickup-in-store and extended loyalty statuses. As rolling lockdowns become a distant memory, customers will continue to expect and demand the same level of ease and convenience that they were previously afforded.

Most importantly, economic pressures are further eroding brand loyalty, as consumers shop around to seek the best value for their money. To make matters more complex, disposable income now also faces greater competition from a resurgence in tourism, restaurant visits, sports and live events.

But tough economic times present an opportunity for brands to redouble their effort to meet current customer needs. To maintain share of wallet and mind, retailers need to focus on communicating value first and foremost.

Here are 5 ways to recalibrate your loyalty programme in 2023.

  1. Understand your customers’ preferences

New and existing customers alike are more inclined to purchase from brands that are able to meet and predict their needs. With reduced access to third-party data, retailers are increasingly focused on collecting first and zero party data to learn about their customers’ unique preferences, and to use that understanding to better personalise the customer experience.

Leading footwear brand Hotter Shoes, an Unbound Group plc company, launched a powerful example of collecting and utilising customer preferences within their most recent Black Friday campaign. In the first image below, the customer is able to select the category they’re most interested in. If a consumer clicks on ‘deck shoes’ the brand knows that they are looking for a Black Friday deal on deck shoes. They then follow-up in a subsequent communication with a further discount nudge, checking if the consumer is still interested in the indicated category, highlighting best selling products from that category and showcasing further 40% discounted prices.

With a long-term approach in mind, capturing zero-party data is arguably as precious as generating a transaction through your marketing programme. Think about ways to incentivise customers to share the data that can help you bring more personalised shopping experiences to life. That incentive doesn’t always need to be a discount – often the expectation that their data is going to be used to deliver a more relevant experience is enough of a value exchange to encourage customers to share preferences.

  1. Integrate loyalty messaging across the customer journey

In a world of digital window shopping, retailers can use their loyalty programmes to incentivise consumers to stick with them.

But simply having a loyalty programme isn’t enough. Consumers need to be made aware of the value in their participation if they’re to continue engaging with your programme.  Make it easy for customers to understand where they sit in their loyalty journey by showing rewards progress, points to the next voucher or any unused benefits in a visually compelling and easy to understand way.

According to a Deloitte study, “more than 80% of consumers identified ease of use as a highly desired attribute of a retail loyalty programme, and 60% selected an accessible, enjoyable digital experience” so be sure to integrate these reminders across customer touch points.

  1. Bring loyalty data to life in a consolidated way

Stand-alone loyalty summaries provide a consolidated view of all the benefits the customer has received by shopping with your brand. A monthly summary is also a great opportunity to encourage the customer to redeem new benefits that they may not have taken advantage of yet. 

Loyalty visualisations don’t have to showcase money saved necessarily, they can also demonstrate the impact that customers have made by partnering with or purchasing from a brand. 

In the example below, a personalised year-in-review email was created to show customers the impact they made by partnering with a brand. Along with money raised and personal goal completion, other stats such as events participation are recognised to motivate further engagement.

  1. Consider offering exclusive value-add services

While the number is surely increasing, according to a recent Deloitte study, only 31% of consumer loyalty programmes allowed members to earn through non-transactional means.

Meanwhile, 67% of consumers identified exclusive services, such as free expedited shipping and returns, as important to their satisfaction in a loyalty programme—highlighting a missed opportunity for retailers.

These loyalty drivers are aimed at making the experience more convenient and valuable – increasing the likelihood of programme participation.

Over the last few years, retailers have been hard at work standing up a range of convenience options such as buy-online-pickup-in-store, subscribe & save services, as well as booking appointments, be it for delivery or ad-hoc services like make-up consultations or styling advice. 

Identifying some new value-add services for loyal customers is a great way to show differentiation from other brands, but once these are established, it’s essential to weave it prominently into your communications, so that the right people know about them.

  1. Create a seamless path to purchase

Creating a seamless path to purchase is an essential way to make customers feel like they are fully equipped to make educated decisions about what to purchase.

There are several ways of ensuring that you are giving customers information upfront. Sending your customer personalised product reviews is a great way to help their decisioning.

Likewise, providing BNPL breakdown payment instalments within email campaigns can help customers assess affordability at the moment they see the product.

Finally, showing transparency when it comes to notifying customers about specific product availability (especially if it’s a previously browsed product), can be particularly helpful if a customer is after a product that can run low in stock. It also creates a stronger sense of urgency, if they see that there’s a limited amount of the products they need.

This example below from Toolstation achieves just that – it showcases both online and in-store inventory of featured products, as well as how many have been purchased in the last 7 days.

Despite inflation headwinds, tightened wallets, and fears of a looming recession, retailers have an opportunity to drive customer retention and loyalty in 2023. To do so, retailers need to focus on communicating true value to their customers by constantly tailoring and retailoring their services to meet consumers’ evolving needs.

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