3 Ways Retailers Can Optimize Loyalty Programs

  • March 14, 2014 at 12:02 PM EDT
  • By Retail TouchPoints Team
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By Jason Trout, VP of Marketing, ShoppinPal

 

While it’s great that a lot of retailers recognize the value of loyalty programs, most businesses aren’t optimizing them as well they should.

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2013 study by Maritz Loyalty Marketing found that “consumers on average are enrolled in 7.4 loyalty programs. However, each year 53% of these members stop participating in at least one loyalty program a year, citing irrelevant reward offerings (68%) and slow reward accumulation (50%) as top barriers.”

It goes to show that just because customers signed up for your loyalty program, doesn’t mean they’re really loyal to your brand. To generate loyalty and engagement, retailers must encourage spending and cultivate relationships with members by making participation and point redemption easy, convenient and personal.

Here are a few ideas on how to do just that:

1. Get rid of physical cards

Shoppers these days don’t want, nor do they need, physical cards. They’re outdated, take up space and don’t provide a frictionless experience. Get rid of them and opt for a mobile-based solution instead.

Consider what Starbucks is doing. The coffee company has a mobile app that lets customers pay and earn rewards using their phone. Users don’t need to have their physical rewards cards on them; they can just scan their phone and be on their way.

Take a leaf off Starbucks’ playbook and eliminate physical cards from your loyalty program. One of the easiest ways to do this is to partner up with mobile rewards apps and services. Do some research, test out their solutions in a few stores and see how shoppers respond.

2. Encourage spending with personalized offers 

Offering generic rewards or one-size-fits-all offers won’t cut it anymore. To effectively engage your customers, send them customized offers based on previous purchases and behaviors.

Add a personalized touch to your loyalty program with tailored rewards. Generic points that customers can redeem for anything are great and all, but it’s best if you could add a more personal flavor to your loyalty program.

For instance, aside from giving discounts for accumulated points, Jamba Juice’s Jamba Insider Rewards program further engages members using birthday smoothies and customized offers based on what customers previously purchased.

3. Reward customers for non-purchase activities

Slow reward accumulation is one of the top reasons why people leave a loyalty program. Address this by making it easier for them to earn points.

Don’t reward shoppers solely for purchases. Customers can add value and show loyalty in many ways, not just through buying stuff. Be sure to give them incentives for non sales-related tasks.

Take Office Depot, for example. On top of letting shoppers earn points for purchases, the retailer rewards customers whenever they connect with the brand and share information about themselves (i.e. by joining the program, completing their online profile, etc.). In addition, customers can also earn rewards by recycling their ink and toner cartridges at Office Depot.

Identify activities that you can reward customers for and include them in your loyalty program. For instance, you can let people earn points whenever they refer a friend, create an account on your site or sign up for your mailing list.

How can retailers further improve their loyalty programs? Share your views in the comments below.

 

Jason Trout is the Vice President of Marketing at ShoppinPal, a mobile shopping solution for retail stores. Integrated with retail point-of-sale systems, ShoppinPal’s mobile app and analytics dashboard are designed to increase foot traffic, basket size and consumer engagement through product recommendations, targeted rewards and mobile checkout. 

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