The convenience offered by the digital revolution was unheard of just a decade ago. Even in the late 2000s, consumers didn’t have access to as much information as they do now, and they certainly couldn’t scan through it as quickly. This shift in the scale and speed of information communication has given consumers nearly unlimited options for all their needs. Because of this, customer loyalty is much harder to come by. Brands need to make sure they continually optimize their programs, offer one-to-one marketing, and even consider premium programs to differentiate themselves. Recently, Loyalty360 sat down with Tom Caporaso, CEO of Clarus Commerce, to discuss these issues.
Clarus Commerce is a hybrid loyalty solution. It specializes in the design, development, and implementation of customized premium loyalty programs. It offers a scalable benefits infrastructure intended to help retailers deliver a range of rewards to customers. It also provides analytics, reporting, and strategic reviews. The company has been in business almost 20 years and powers over 50 premium loyalty programs.
How has customer loyalty changed over the last few years?
It’s changed because consumers have unlimited choices. I don’t think it’s enough to differentiate at a product level anymore. Brands need to find deeper differentiation to gain a competitive edge.
Technology has changed everything for marketers and consumers. Customer loyalty benefits are shifting away from purely transactional. There are now experiential benefits that go a long way toward building greater engagement and advocacy. Loyalty marketers are trying to find the right balance of transactional and experiential benefits to retain their customers.
Social media has also impacted customer loyalty. Consumers have more outlets than ever and it’s easy for them to voice their opinions on social media, either positive or negative. I think a seamless customer experience is expected now, and when a brand promise is reinforced at every touch point, every moment becomes an opportunity to create loyalty.
What is the biggest challenge that your clients face in driving deeper customer loyalty?
I think it comes down to continual monitoring and optimization of your loyalty program. Loyalty programs can’t be “set it and forget it.” I think there should be loyalty moments throughout the customer journey that resonate and are memorable for the consumer. Customer loyalty is now measured as an outcome in a much more holistic way, rather than through a series of transactions.
If you could recommend one thing to a client to help them with this challenge, what would it be?
Optimization as a way of life. Companies should always continue to test and learn. Set it and forget it doesn’t work. You must constantly measure everything to know what works best to engage your members.
What is “next big thing” for customer loyalty?
I think Forbes said it best when it predicted that 2019 will be the year of paid loyalty. Some people call it subscription loyalty, others call it membership loyalty. We’ve heard quite a few terms, but we call it premium loyalty These paid programs are gaining momentum in the retail world.
What is the future of customer loyalty?
Make it personal. It’s about one-to-one versus the traditional one-to-many approach to loyalty. Use the right balance of transactional and experiential benefits. There’s still a place for transactional benefits like discounts and free shipping because they make people feel smart, but experiential benefits make people feel special. Every retailer can offer discounts. Experiential benefits are where retailers can really start to differentiate.
Take Lululemon for example. They’re testing a premium loyalty program right now and it’s going very well. As part of the program experience, for example, members get a free yoga or fitness class at a different location every month. That experience supports the brand fully and wouldn’t make sense for every retailer to do.
Conclusion
Tom Caporaso offers a lot of insight for brands and marketers. Figuring out how to deal with the amount of information consumers have at their fingertips will be a big step in the right direction for struggling companies. This may mean a change of business model, perhaps by curating experiences instead of expanding products, but brands definitely have to take this step. They risk failing otherwise. In addition, they can also consider premium loyalty programs and one-to-one marketing to improve ROI. We expect that companies that adopt such practices will have a better shot at success.