Published May 22, 2023
As technology becomes commonplace, loyalty programs are now entering the digital realm. Giving customers personalized rewards can improve customer retention and encourage repeat purchases. They can also provide insights that help businesses offer more value to their customers. Even so, these systems do not come without their challenges.
Data from the University of Pennsylvania found that while loyalty schemes can be beneficial, they can increase friction with customers if things go wrong. The survey reported that 47% of customers say they are part of a loyalty program, but they were also experiencing more problems due to the higher frequency of engagement with a brand than regular consumers. The lesson is clear. Unless digital loyalty programs run smoothly they can damage relationships with your customers.
Digital loyalty programs can run into all sorts of problems with the most common being:
Each of these must be addressed and resolved if loyalty programs are to be successful.
Related: Keeping your loyalty programs fit for the digital age
To overcome pain points, businesses need to have a clear idea of what they want their digital loyalty programs to achieve and put the systems in place to make sure they do this effectively.
To improve customer engagement, retailers can use personalization, gamification and social media integration to provide a richer and more fulfilling experience.
Users actively want greater personalization in their retail experience. According to Forbes, 66% of customers expect businesses to understand their personal needs and 52% expect all offers to be personalized. People have come to expect businesses to know what they want before they want it. Retailers who offer generic one-size fits all approaches will feel out of touch.
The good news is that digital technology provides much more information about each of your customers. If that information is captured and used, you can build up a unique profile about each customer and their buying history. That information can be used to provide personalized incentives and offers based on products they want and need.
Gamification, meanwhile, can make loyalty programs fun. Straightforward points programs feel stale and forgettable. Alternatively, you can encourage customers to take part in exciting games or competitions. Using coupons, leader boards or progressive prizes can provide a new layer of engagement. It drives competitive elements and shows customers what they could get with just a few more loyalty points. Points could be won by making searches, playing quizzes or other games.
Gamification and other elements of loyalty programs can also be linked to social media engagement. This allows you to reach customers where they are. For example, a food retailer could invite customers to share pictures of their meals or recipes made for the product. They can run prize draws in return for shares. These efforts not only raise the profile of a business online, but they can also keep customers engaged and entertained with the brand message.
Improving data visibility
Data insights are perhaps one of the biggest advantages of digital loyalty programs. All interactions can be captured, stored, processed and transformed into valuable insights. These can help you tailor digital loyalty programs more effectively and improve the overall customer experience.
For that, retailers should focus on data analytics, cross-functionality and integrations with other sources.
The secret to good metrics is simplicity. Retailers should start with a clear goal for what they hope the program will achieve. For example, are you looking to achieve increased overall sales, boost revenue per customer or increase sales in a particular vertical?
Once you have this, you can build out a set of relevant metrics. These might include data such as the number of new program members, revenue per person, the size of each transaction, repeat purchase frequency, and average basket size. By focusing only on a small number of metrics relevant to your main objectives, you can obtain a clear, simple narrative about the success or failure of your loyalty scheme.
This allows you to deliver clear, data-driven decisions that allow you to refine your strategy to get the most out of your strategy.
As essential as digital loyalty programs are for retailers, they come with many challenges. By focusing on customer engagement, data analytics and simplified ROI, you can take control of your programs and ensure they do what they are intended to do— namely drive growth, customer retention and transform the customer experience.
David Wilkinson, President, NCR Commerce on the Future of Self-Checkout, POS & more