As loyalty programs and online shopping continue to grow, retailers have a tremendous opportunity to build loyal customers through rewards programs, according to experts who discussed the topic during a recent Loyalty 360 webinar on What’s Hot in Rewards? Best Buy’s Secrets for Leveraging Loyalty Points for Merchandise Your Customers Want Now.
Loyalty programs are more than simply points or rewards, pointed out, Mark Johnson, Loyalty 360 president and CEO. “It’s about creating a mutually beneficial dialogue between the brand and the consumer. The brand has the ability to create a very unique dialogue to understand what the consumer wants.”
Loyalty is growing, Johnson added. The average consumer has more than 18 loyalty cards. The average brand’s loyalty funding is $14.5 million, a figure that 80 percent expect to maintain or increase.
Yet 74 percent of consumers state that companies need new and better ways of rewarding loyal customers. Eighty-one percent of regular loyalty consumers wanted to join a program that offers “instant discount and savings.”
“Individuals want to engage with brands that understand their unique needs,” Johnson added. So the ability to understand what consumers want and to deliver it to them has great value for those consumers. Forty-five percent of loyalty consumers wanted to join a program that let them redeem points in an online shopping mall.
A lot of brands struggle with critical aspects of loyalty programs including:
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Collaboration: Companies need to offer unique dialogue for the entirety of a customer life-cycle and understand what customers want and need at different stages.
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Community: The most successful loyalty programs create and nurture brand advocates and allow them to collaborate with other brand advocates.
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Differentiation: Only 22 percent of brands allow redemption with network partners, so it’s important to find relevant partners who are a good fit with the network.
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Innovation: Seventy-eight percent of regular loyalty participants wanted to join a loyalty program that “lets me redeem my points for products and services.” People still want to be able to get discounts, particularly in a tough economy.
Looking to 2013 and beyond, the rewards program should be a multi-faceted earnings opportunity, Johnson said. So companies need to structure rewards that offer higher levels of customer engagement. That means building one-to-one marketing systems. Customers are no longer interested in mass communications that go out to everyone; they want personalized messages.
Customers also want a multi-channel redemption model and the ability to truly judge the value of rewards. Consumers don’t want points with hard to quantify values.
“It’s a great time to be a marketer, but it’s also a challenging time to be a marketer,” Johnson said.
Amy Lee, BestBuy.com web director for services, added that marketing through the online channel will be more important than ever this holiday season.
Online spending expected to grow 17 percent to $54 billion in 2012, compared to 2011, similar to the growth rate over the last three years. Ten percent of consumers said they would spend more on gifts this year (regardless of channel), 46 percent expect to spend the same amount.
The busiest days for online shopping are expected to be “cyber Monday” (the Monday following Black Friday) and the two succeeding Mondays.
Lee added that the percent of online purchases as a percent of total sales doubled from December 2010 to December 2011, and could grow to 20 percent of sales this year.
“Four in every five smartphone users accessed retail content in July,” Lee added. “So mobile and tablet strategies should be on everyone’s radar.”
For a limited time, access playback to the webinar, What’s Hot In Rewards? Best Buy’s Secrets for Leveraging Loyalty Points for Merchandise Your Customers Want Now. Click here to watch now.