The drama caused by Tesco’s decision to shake up its Clubcard rewards scheme, and Waitrose’s announcement that it is dropping elements of its own loyalty program, has shone a light on the fact that retailers are struggling to make traditional loyalty schemes work. Yet, despite the toils of retailers, shoppers still want to be rewarded for loyalty.
So where is the middle ground? How can retailers adjust their loyalty programmes to give shoppers the meaningful rewards they desire, while still maintaining the provision of valuable data? The answer is in technology-led innovation.
The omnichannel approach
The blurring of the lines between physical retailers and e-commerce retailers has been developing for some time, and has most recently been characterised in the much-publicised opening of Amazon Go, the online giant’s foray into bricks and mortar retail. Technology has enabled the omnichannel approach: bringing together digital and in-store, and creating a consistent experience across the shopper journey, wherever that happens to be. When done well, it has the capacity to both improve customer experience and create lasting loyalty.
A practical example of this sees retailers providing rewards and incentives via a mobile app, which can then be claimed in-store. Asia-Pacific supermarket Rustan’s operates a service exactly like this. Certain purchases in-store are rewarded with digital stickers, which can be collected on its Stick ‘N Collect app. Once enough of these digital stickers have been collected, they can be exchanged in-store for plushy toys. In this way, Rustan’s creates engagement across both physical and digital channels, and creates a tangible reason for shoppers to make repeat visits in-store.
With a 2017 study by the Harvard Business Review finding that 73% of shoppers can now be described as “omnichannellers” – buying across any one store’s digital and physical channels – it’s clear that this holistic approach is key to creating loyalty.
According to annual reports from the likes of Tesco, Walmart and other major physical and digital retailers, customers who engage across channels can in some cases be up to six times more valuable than those who do not. The combined use of technology, data & insights, real-time marketing, and hyper-convenience has enabled retailers to create more profitable, loyal and sustainable customer relationships.
Personalised digital rewards
Technology has allowed for greater data collection than ever before, sometimes to the extent that shoppers can feel like “just another number”. However, retailers should be striving to prove the exact opposite–by using data to create more thoughtful, personalised loyalty schemes.
The days of the mass-marketing email are coming to an end, with retailers having the ability to personalise the messages shoppers receive so they stay relevant while offering rewards customers actually want. Starbucks Rewards is a programme which does this well, giving members regular rewards based on their purchase history while other perks like a free coffee to mark their birthday.
Data-led personalisation such as this can be the first step towards creating emotional affinity between retailer and customer, one of the key drivers of loyalty. However, it is worth keeping in mind that shoppers very quickly see through poorly managed CRM, and can become frustrated when retailers’ attempts at personalisation are identified as mass marketing with a thin veneer: it needs to be done well.
Not only can technology identify the rewards customers most want to receive, it can also create fun ways to deliver them through gamification. It’s a technique that many retailers are now exploring.
In 2015, 7-Eleven released the “Skrab 3 Ens & Vind” (scratch three of the same and win) game as part of their app. Working much like a digital scratch card, the app gave customers a daily chance to win small perks, like a free coffee or a freshly baked croissant. Similarly, in 2016 Burger King Russia launched the “KingGo” app, giving customers the chance to win prizes ranging from free meals to tropical holidays by spinning a roulette wheel. These rewards not only get customers regularly interacting with the brand, but also create a reason for shoppers to go in-store.
People are naturally more inclined to interact with content that is simple, playful and fun, which is exactly why gamification works so well to drive loyalty. In the shopper, it can increase brand recall and sentiment, while the retailer can enjoy increased footfall, more app downloads and high click-through rates on gamified advertising.
The modern retail environment is increasingly driven by the experience economy. Research from tcc global has shown that UK shoppers have access to five ‘very easily reachable’ stores on average, as well as 10 ‘easily reachable’ shops and 11 ‘reachable’; simply put, there is more choice than ever before. A key point of differentiation is now through creating experiences.
To do this, retailers are increasingly turning to technologies like virtual reality (VR) and augmented reality (AR). The Goodness Gang range of characters have proven a phenomenal success across the world, and in the Netherlands a large reason for this is thanks to the use of the Goodness Gang Go app. Through the AR app, Lidl stores are transformed into playgrounds in which young shoppers can find and collect their favourite characters; who are magically brought to life via their phone screen.
Immersive experiences such as this take a shopping journey from being routine to being extraordinary; leaving a lasting impression on customers, driving repeat visits and inspiring lasting loyalty.
Loyalty over all
There are a plethora of technology trends impacting the retail sector right now, from artificial intelligence to voice control, bots and AR/VR to name but a few. It can be tempting for retailers to jump on the bandwagon, but rather than simply thinking of the technology itself, the focus should remain on how that technology can be used to enhance the customer experience.
As a new report from The Drum on the use of AR in Business reports, businesses that go for gimmicks will almost certainly lose out. However, those that use technology effectively – whether through an omnichannel approach, personalised rewards, gamification or by creating memorable experiences – stand to profit from new standards of customer loyalty.