Customer LoyaltyAs a retailer, one of the most pressing questions you might have is: how can I get customers to keep coming back to my store?

The key answer to this question lies in forming quality relationships with your customers that focus on building and sustaining customer loyalty. This involves building a deeper level of engagement among your customers, and getting them to value not just your products and service, but the whole shopper experience that you offer them.

But why is this important to develop?

With competitors sprouting around almost every corner, it’s important that you forge long-lasting customer relationships at every opportunity possible because loyal customers will:

  • Buy from you more often, increasing your cash flow
  • Refer your services and products to other potential customers, if they are happy
  • Provide you with invaluable feedback, as they understand your processes

Learn about the top four best-practices adopted by some retailers to increase customer loyalty:

Offer a ‘now’ incentive – not a free sandwich on a customer’s tenth visit!

Offer a now incentiveWhat drives a customer to make a purchase from your store for a second time?
They’re probably not notching up visits so that they can redeem that free sandwich you’re offering them on their tenth visit: that type of loyalty incentive isn’t strong enough, because it offers a reward sometime in the future.

In reality, customers get more excited about receiving a reward or a discount
now – a strategy that worked for Soap.com (an e-commerce site run by Quidsi).
The e-commerce site wanted to implement a loyalty reward model that was easy to explain and allowed instant gratification for customers – not one which revolved around the ‘earn-and- redeem’ concept. In 2010, Soap.com implemented a program called
‘My 5 Faves’, which let return shoppers pick their five favorite products across categories including hair care, skin care and bath and body, after which customers could obtain 10% off each of those items every time they bought them from Soap.com.

By the end of August 2011, the initiative had enrolled more than 15% of the “active shoppers” on Soap.com. The huge popularity of the program encouraged the online retailer to roll out a new and more ambitious one in 2012, which will reward customers for every purchase they make across Quidsi’s entire family of sites.

Reward your customers for just walking into your store

Reward your customersThe development of context-aware and location based technologies allows you to target specific campaigns at specific customers at a certain time — such as when a customer is right inside your store. This lets you provide customers with real-time offers that might be crafted specifically for their tastes, based on data of their past purchase behavior and shopping patterns. However, to minimize the perceived feeling of invasiveness that is often associated with these technologies, you can also simply choose to reward customers for just having walked into your store – a strategy currently employed by Target and American Eagle Outfitters.

The two retailers have recently tied up with Shopkick, a location-based shopping app that rewards shoppers — for just walking into stores. For instance, when customers (who have the app) walk into Target stores, they are rewarded with points known as “kicks.” They can then scan products as they walk around the store for additional “kicks”, which can be redeemed for Target gift cards, Facebook credits, dining gift certificates, iTunes downloads, donations to charities and more.

Throw your loyalty program a lifeline

Throw your loyalty program a lifelineAs a retailer, you may have already chosen to implement a loyalty rewards program for your customers – but don’t just stop at that. Like any other long-running scheme, you might find yourself trying to differentiate your brand’s voice in the growing chorus of loyalty rewards programs by the competition. Don’t let the effectiveness of your loyalty program weaken – make sure you periodically refresh the benefits you are offering to your customers to keep them coming back for more.

One of the reasons why Rite Aid Corporation, a leading drugstore chain, has a thriving Wellness+ loyalty program is because it is an important part of the company’s promotional campaigns. RiteAid breathes life into its loyalty program by introducing new rewards, such as those for members who earned 500 points and became Silver-tier members: apart from obtaining a 10% discount on front-end purchase, Silver-tier members can choose from various reward choices, including a health screening or membership to a well-known fitness center.

Members of the Wellness+ can also use the Load2Card coupon tool. This enables the download of online coupons directly to their wellness+ card, and the amount gets automatically deducted when they use the card in the store.

Wellness+ members accounted for 74% of front-end sales and 68% of prescriptions filled during the quarter ending March 3, 2012. The rejuvenation of the loyalty program on a regular basis ensures that customers remain interested in the brand, as well as loyal to it.

Don’t forget the importance of ‘the human touch’

the human touchDespite the entire buzz around the use of cutting-edge technology that can revolutionize the retail industry, there’s still something to be said about the value of human interactions – and these play a sizeable role in increasing customer loyalty. This is evident in the case of video game retailer GameStop and the success of its loyalty program, PowerUp.

Though a large part of the company’s clientele presumably comprises gamers who are often found tucked away behind a flickering computer screen, the true value of GameStop’s PowerUp program lies in the data-driven interactions program members have with “game advisors” (store employees). This is enabled by customer kiosks, which can be activated by the swipe of the customer’s PowerUp card. Game advisors, with instant access to the customer’s transactional data, make tailor-made recommendations on games suited to the customer’s tastes.

Even when trying to pitch the GameStop Pro membership, game advisors will use different approaches with different audience segments. To a mom buying games for her son, game advisors will take the value-driven conversation approach and will focus on talking about the 10% discount that the Pro membership offers. Hard-core gamers are more likely to be motivated by the free-with-signup Game Informer magazine.

This personalization improves customer experience, and re-affirms that the retail store is the hub of much of the retail experience. Apart from driving footfall, the concept of providing personalized recommendations by game advisors builds a relationship of trust between the customer and store, thereby increasing loyalty.

Customer Analytics: Get the most out of your loyalty data

Customer AnalyticsAlmost all of the best-practices referred to here require you to have a robust and enhanced retail analytics system in place. The entire operation of pin-pointing what ‘loyalty pressure points’ to trigger in a customer lie in your ability to capture accurate information about the customer during their first few transactions. This information can tell you:

  • Who are my most loyal customers?
  • Which of my loyalty campaigns did they react to best?
  • Which of my loyalty campaigns didn’t work?
  • How should I segment my customers if I want to increase loyalty?

Comprehensive retail analytics can help you tweak your loyalty programs over time to adapt to the needs of your customers, as well as you competitors’ offerings.

So, does your retail analytics system help you do this?