According to a leading analyst firm, which surveyed around 5,000 U.S. adults, 68% said they were members of a retail brand’s loyalty program. Another recent study from Bond and Visa, which sampled 25,000 North American consumers participating in over 450 different loyalty programs, found that only 30% of consumers said they feel loyal to the brand and only 20% feel the brands are loyal to them.
Many technology suppliers offer a breadth of different loyalty, payments, and customer experience capabilities that enable retailers to run comprehensive programs. But are retailers more focused on what they could be doing, instead of what they should be doing?
To learn more about how retailers can increase customer loyalty and drive meaningful business outcomes at scale, PaymentsJournal sat down with Aaron McLean, Chief Marketing Officer at Stuzo, and Brian Riley, Director of Mercator Advisory Group’s Credit Advisory Service.
The word of the year is ‘personalization’
Retailers must put the wants and needs of the customer first. In 2021, this requires personalization. “What that means is getting the right message to the right loyalty program member through the right channel at the right time,” said McLean. “Now, that is not an easy thing to do, but it can be accomplished.”
The first crucial step is for retailers to streamline enrollment: get as many consumers enrolled in the program as possible. The more consumers enroll in retailer loyalty programs, the more opportunities retailers have for winning loyal customers. The best way to increase enrollment is by removing barriers to entry. Stuzo, a company that helps “Everyday Spend Retailers Know and ActivateTM more customers,” enables consumers to enroll from any channel with as little as just their phone number.
The next challenge is maximizing engagement. This is where personalization comes into play—by offering choice and flexibility in how members interact with the retail brand and participate in the program. Retailers should build a 360-degree comprehensive member profile by using all available wallet data, behavioral data, transactional data, and personal identifiable information (PII) data.
The final challenge is to use that data purposefully and programmatically in real time. This all-important last step is what will drive a greater share of wallet to the retail brand. “The challenge with all of this, of course, is that when retailers don’t get this right, it results in a low emotional loyalty sentiment, and can also lead to program attrition,” McLean explained.
The cost of attrition can be quite high, costing retailers as much as $8-12 billion in rewards that did not reap the benefit of customer loyalty, according to Riley.
“Could vs. Should”
With so many groundbreaking new technologies coming out, how do retailers figure out which ones will actually drive business outcomes? Retailers may be tempted by “shiny objects,” McLean warned, “Remember when chatbots came out? That was going to be the thing to revolutionize engagement with brands, to reduce the need for customer service reps, and that consumers were going to love working with these chatbots… well, it didn’t pan out the way the industry thought it might.”
For many retailers, investing in new technology may receive short-lived press, but will not drive meaningful business outcomes commensurate with the investment. Still, the huge amount of technological innovation allows for countless choices involving how to drive business outcomes. “There’s not much we can’t do,” McLean said about Stuzo.
The question is: How do retailers avoid new features that are merely fleeting novelties, which do not generate a sustainable advantage or compelling point of differentiation?
Answering this question can be extremely difficult, but it starts and ends with targeted business outcomes. Each contemplated feature should lead to greater share of wallet, and, as Stuzo puts it, “more visits, more gallons, and bigger baskets.” Moreover, each feature must operate profitably and at scale. If a feature loses viability as the business grows and costs increase, the return will not match the investment and the feature will ultimately not aid in customer retention.
Driving business outcomes at scale
“When we say at scale, we think about up to 100% of consumers,” McLean emphasized, citing Amazon as the gold standard for integrating customer data into its business model from day one. The goal should always be to activate 100% of the customer base, even if that goal seems lofty.
McLean offered the example of cutting-edge technology that enables program members to pay from the touchscreen of a car. “That might sound really exciting at first, but then you have to stop and do the math.” If a retailer surveys a million of its customers and finds that 2% have modern enough cars to install the application, that would be 20,000 members out of a million. If 5% plan to adopt the technology—which would be a good percentage—that is 1,000 members out of a million. Put differently, one tenth of one percent. Those numbers will not drive meaningful business outcomes at scale.
To ensure that its retailer partners are focused on implementing the most effective loyalty programs, Stuzo uses its proprietary Wallet SteeringTM System. Through a combination of Open Commerce® products, program management services, and unique methodology, Stuzo intelligently “steers” consumers towards behaviors that result in loyal outcomes for retailers. When retailers understand their share of each customer’s wallet, using Stuzo’s software and services, they can make the decisions that lead to more active program members, increased wallet shares, and increased customer lifetime value.
Stuzo offers a 1.5x performance guarantee for retail partners. “We’re aligning our business as a strategic partner to our retailers,” McLean concluded. “We will contractually guarantee business outcomes, or our retailer partners get money back. It’s that simple.”
