You get a discount, you get a discount, EVERYBODY gets a discount! And everybody ultimately loses.
Using discounts to drive loyalty is teaching shoppers to be more price-sensitive and price aware. It encourages them to look for the best deal and best price on any given day. This doesn’t build a loyal relationship with the retailer.
All a competitor needs to do to steal that loyalty is to offer a better deal on the day.
The solution: Treat your customer like someone you have an important or meaningful relationship with. You have to be loyal to your customers and treat them with integrity. You have to see them as a valuable individual, an asset, and not just a means to an end. Show them that you have invested in knowing, understanding and responding to their needs!
If you want to stand out from the plethora of loyalty programs, you can distinguish yourself through marketing strategies centred around your most important asset: your customers.
1. Treat your shoppers as a highly-valued asset and not a commodity.
Loyalty programs are designed to make shoppers more loyal to retailers, but how about retailers finding ways to be more loyal to their shoppers?
Shoppers are your biggest asset, so focus on their specific needs rather than bombarding them with irrelevant supplier-driven deals and discounts. You may think that giving a discount to a shopper is a reward, but is the customer just seeing noise?
Many current loyalty program models focus on how much you can exploit the shopper, rather than reward them for being loyal to you. It's an outdated way of driving loyalty.
By getting to know your shoppers' needs individually and on a personal basis, you can offer them real rewards based on the fact that you know them and not that you've managed to get a supplier to reduce their costs for a promotion.
2. Is your loyalty programme expressing true appreciation to your shopper, or is it just a superficial mechanism to lure them in?
Without an intelligent platform that turns customer data into information that is usable in terms of tailoring deals and rewards to loyal customers, a loyalty program can soon become a waste of money – another expensive marketing gimmick that is not actually cultivating any loyalty.
Retailers need to find ways to ensure their program stands out from the masses and that members feel part of an elite group who consistently choose the retailer's brand over other similar brands.
You need to get beyond superficial interactions and focus on customer engagement using conversational marketing. Customer engagement is key to your loyalty programme.
Ask your customers questions that will help you understand and market to them better, and engage on an individual and personalised basis.
Prove to your customer that you understand them and care for them, and then you'll win their loyalty.
There's a deeper level of relationship when you say “thank you” meaningfully to somebody and share some of the success that they helped you create, back with them.
3. Invest in understanding individuals.
There is a trend in larger corporate retailers to invest in technology that allows them to learn about their shoppers' individual needs, and in understanding their shopping behaviours when designing and implementing their loyalty programs.
If you're investing in a loyalty program, you need to ensure that you're following suit. You need to understand your customers. Shoppers don't want discounted nappies when they're not parents, for example, and a retailer who thinks that deals not targeted to the customers' specific needs are enticing for a shopper, is missing a beat.
The greatest opportunity for retailers today is customer experience transformation through the execution of customer-centred strategies and infrastructures that show your customer you understand them in their individual capacities.
Supplier-driven discounts and deals designed to lure shoppers in are not the way to drive customer loyalty. With the technology now available to really get to know your customer, you can create a whole new experience for them and the way you interact with them.
4. The offer has to be exact and precise.
Get to know your shopper in a way that shows you know them. Understand what represents real value to them and how you can create even more value, specifically for them
Sending offers to customers that meet their exact needs increases customer engagement, improves customer experience and builds loyalty with your brand.
Retailers should be investing in platforms that will enable them to design tailored and individualised service to their loyal customers. This can be done by considering purchase history, analysing the data of each customer, and marketing offers directly to their shopping behaviour.
You need to have the ability to measure what you do and learn from it. If the offer doesn't work, make sure you're partnering with customer engagement specialists that are able to change and adapt your marketing to meet your shopper's exact needs.
5. Discounts destroy long term equity.
Using price to build loyalty is in fact teaching shoppers to be increasingly fickle and disloyal and to shop around for the lowest prices. Rather than increasing loyalty, the loyalty programs thereby create a “race to the bottom” for everyone – retailers, suppliers and shoppers.
There's no long term sustainability or relationship building when you're using discounts and deals as a mechanism for loyalty.
The practice creates a cycle of competitive discounts and bigger deals that are eroding margins, which inevitably must erode the quality of the relationship retailers have with their shoppers.
And so, in the final analysis, loyalty programs unintentionally encourage disloyalty.
The alternative is to join the movement to AI and automated shopper platforms that are able to deliver personally tailored offers and meaningful rewards straight to shoppers’ digital wallets as a way of thanking them for their support and sharing some of the success they helped to create.
Better customer engagement will increase customer loyalty. A one-size-fits-all loyalty program is not an option if you want to grow your business.
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