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Data for today’s episode is provided by Mercator Advisory Group’s report – Gamification and Other Strategies for Merchants to Enhance Customer Loyalty
- Loyalty is key for merchants, as a low estimate – retaining an existing customer is 5 times less costly than landing a new one
- Successful loyalty programs integrate a mix of 5 features:
- Frequency of visits
- Cash back & discounts
- Points & tiers
- Membership
- Contests & challenges
- Frequency: The classic “punch card” has gone digital, and recording the frequency of customer visits is table stakes
- Cash Back & Discounts: Typical credit cards offer 2% of purchase value whereas 3-5% is typical for store cards
- Points & Tiers: Point rewards programs employ gameification by offering benefits in tiers; but at large scale, tiers become confusing
- Membership & Subscription: A new form of loyalty is subscription which often bundle together special pricing, delivery, and/or targeted offers
- Contests & Challenges: Another newer category in loyalty which evolved from sweepstakes – games and challenges maximize customer engagement: time
About this report
Most studies find that merchants spend at least five times more to gain a new customer than to keep an existing one. Further, higher customer retention typically leads to greater business profits. A new research report from Mercator Advisory Group, Gamification and Other Strategies for Merchants to Enhance Customer Loyalty, assesses different types of customer loyalty programs across various retail verticals and discusses key success factors for merchants to act upon.
“Getting shoppers to keep coming back is critical for both brick-and-mortar stores and e-commerce in the retail world. Consumers can choose among a variety of competing brands, and engaging loyalty programs are often a differentiating factor encouraging continued patronage,” commented Raymond Pucci, Director of Merchant Services at Mercator Advisory Group, author of this report.
