Statistics show that existing customers spend 67% more on a brand than new customers. While this shouldn’t be a reason to ignore new customer acquisition, the importance of an evolving customer retention strategy should not be underestimated, either.
With constant changes in the way businesses operate, loyalty program organizers are continually challenged with modifying their programs to keep with the trends while continuing to drive value and engagement.
Here are some of the top loyalty program trends that we’re seeing across major industries, and the brands who are applying them most effectively:
For retail loyalty programs, this is the year of the “seamless” transition between brick and mortar, online and mobile shopping. Today more than ever, advances in mobile and online technology make it possible for consumers to have a complete virtual shopping experience – one that includes fast and free shipping, returns and exchanges, and the ability to return online items to the nearest physical location. To stay ahead of the trends, more retailers are hosting platforms for mobile loyalty programs to track customer purchases and document preferences, facilitating mobile payments, and using GPS technology to send relevant offers to shoppers’ mobile devices. When tracking these purchases, smart retailers are also using the data they collect to learn more about individual customers, offer personalized shopping recommendations and ultimately connect with shoppers in store. Most prevalent in customer loyalty today is the integration of social media and virtual shopping. According to the Walker Sands’ 2014 Future of Retail study, 78% of modern consumers interact with social media channels like Facebook, Pinterest and Twitter to learn more about the brand, get discounts and special offers, and read other customer reviews. Walker Sands’ 2015 Future of Retail study revealed that more than a third of consumers (35 percent) say they would shop more online if they were able to try on a product virtually using a product like Oculus Rift, and 63 percent said they expect it to impact their shopping experience in the future.
Success Story: Amazon.com has mastered the art of personalized recommendations with customized pages like “Related to Items You’ve Viewed,” “Inspired by Your Shopping Trends” and “Recommendations for You.” By doing so, Amazon is capitalizing on the fact that users are more likely to purchase products based on relevant offers – a business practice that has industry experts predict has impacted Amazon to the tune of $100 billion in revenue last year.
Between 2006 and 2012, the financial services industry witnessed an increase in loyalty program membership by 130%. However, as technology rapidly changes and Millennials become the future of this industry’s growth, more loyalty program participants demand products and services that coincide with their lifestyle. An estimated 83% of consumers believe they should be rewarded for their loyalty to the brand, and 93% want banks to tailor rewards to their individual circumstances. In line with this changing lifestyle, experts believe that financial services loyalty programs will continue to build an omnichannel approach integrating more mobile technology and social media – where banks can empower program members using compelling engagements and personalized messages sent through multiple channels of communication. With mobile and social platforms making it easy for users to access their accounts, read member reviews and deposit money quickly and easily – and banks giving consumers more incentives to grow their rewards – banking has become more practical and efficient than ever before.
Success Story: The industry continues to compete aggressively for new acquisitions — lots of different sizes and flavors. The Chase Sapphire Preferred Card is incentivizing consumers by giving away 40,000 bonus points for program members who spend $4,000 on the card during their first three months. Chase’s Marriott Rewards Card offers 50,000 bonus points for members that spend $1,000 on the card in the first three months. Citi’s American Airlines Card offers 50,000 bonus miles for spending $3,000 in the first three months, plus other incentives.
According to recent studies, more than 355.9 million U.S. travelers belong to an airline loyalty program and 288.7 million U.S. members belong to a hotel loyalty program. Frequent Flyer programs built the roadmap for formal loyalty programs in the early 80’s. They have a reputation for being some of the largest and most popular programs in the industry; and have long been known for attracting active and inactive members by expanding the program with earn/ burn activities that go well beyond airline trips only. Another study shows that only 44% of travel and hospitality members are actively engaged with the program and 50% believe they are actually limiting their value by enrolling in memberships that only focus on one airline alliance or hotel. So how do you respond to this issue? With more Millennials making up the bulk of travelers, we’ll witness new loyalty strategies that incorporate social media, mobile usage and digital behavior to gain real insight on consumer preferences and increase their level of engagement beyond their floor hotel stay. On the burn side, expanding rewards and promoting miles/points + cash, such as ‘mix and match’ rewards, and access to once in a lifetime experiences continues to resonate well. And with 25% of airline and hotel program members begging for rewards they can actually redeem, we’ll see travel loyalty programs opt for flexible points options that keep Millennials coming back for more.
Success Story: Recognized as a top hotel program, Starwood’s Preferred Guest program offers enhanced customer experiences with integration, such as Apple Watch and customer flexibility by allowing members to transfer Starpoints rewards to one of their network of partners that include air travel, ground transportation, and gift certificates from some of their members’ favorite retailers – from iTunes to Starbucks to Amazon.com. Members can even donate their Starpoints to charity or use as cash to book rooms or pay for other indulgences.
Whereas restaurant patrons and retail shoppers can benefit from incentives that keep them coming back frequently, telecommunications loyalty programs have a different challenge. Many customers sign annual contracts and brands have less opportunity to grow sales through increased additional lines, so programs had to think differently. Telecom brands have seen significant success leveraging loyal customers for referrals through formal Refer-A-Friend programs.
They also are leveraging technology advancements including mobile integration, cloud computing and sensing technologies to collect important data about customers to drive growth, while social media outlets serve to connect potential consumers with brands and offer incentives to earn loyalty rewards. Incenting incremental behaviors is also a rising opportunity for telecom loyalty. As spectrum constraints impact profit, incremental behaviors that drive revenue and decrease expense, such as getting the customers to pay their bills on time or incenting them to enroll in paperless billing, has real impact on the bottom line.
Success Story: A couple years ago, the popular mobile phone carrier, Sprint, used their Ninja Ambassador Program to train 3,000 employees to reach out to customers through various social media channels – like Facebook, Twitter, LinkedIn, You-Tube, community forums and more on pre-selected topics to facilitate customer engagement.
For the entertainment industry, brand loyalty strategies should focus on expanding incremental behaviors at the POS or key brand touchpoints. While many entertainment brands have focused on new customer acquisition, we’re also seeing an increasing focus on segmentation strategies to retain their most loyal customers. Loyalty program operators are executing innovative tactics to engage members through multiple channels – like mobile apps, smartphones and gamification – and using collected data from customer interactions to drive customer insights. Using modern technology help brands develop and send more relevant offers to members.
Success Story: Disney’s “Magic Bands,” computerized wristbands containing Radio-frequency identification (RFID) technology, allow team members to identify guest preferences and personal information by scanning their band. Through this same technology, visitors can collect Fast passes for popular rides, make payments, order parking passes and access their resort rooms – data that is all collected – giving Disney team members more flexibility to have meaningful interactions with resort and park guests throughout their stay.
Keeping these trends in mind, loyalty marketers across all industries can gauge opportunities for data collection that can lead to meaningful customer interactions, increased consumer trust and influence purchasing behaviors and decisions. As you seek out creative ways to deepen engagement with new and existing customers, the performance of your loyalty program is being more closely monitored than ever before. And whether the goal is to entice members to return or promote the opening of a new store, for loyalty programs to deliver on these performance goals, you’ll need to move beyond simple behavior/reward models and strike a balance between strategy and the channels you engage customers on. Finding this balance will require a deeper understanding of what customers are looking for, as well as a broader knowledge of the loyalty landscape in your space.