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Transaction-Based Loyalty’s Not Enough to Win Consumers


Clarus Commerce CEO Tom Caporaso discusses that even though many retailers based everything around loyalty in 2017, it will take a different approach than traditional loyalty to be successful going forward.

(As originally published on PaymentsSource on January 31st, 2018.)

It seems like the holidays came and went in the blink of an eye, but there was a lot to take away from the 2017 shopping season, especially regarding customer loyalty.

Many retailers centered their entire holiday strategies around loyalty, which is the right idea, but traditional loyalty programs aren’t enough anymore.

Kohl’s encouraged customers to keep coming back with their Kohl’s Cash financial rewards program. While Kohl’s, like many other retailers, tried to encourage consumers to do their shopping with them alone, 87% of consumers still shopped around.

That’s because transaction-based loyalty programs that focus on discounting simply train customers to wait for coupons and incentives, so they will naturally shop wherever and whenever they can get the best deal. That’s not really loyalty.

If retailers want customers to stick with them around the holidays and beyond, they need to adopt a different loyalty strategy.

Customers today want the best benefits 24/7/365 and they are willing to pay for them (as well as give up valuable data). No one has proven this more than Amazon. Prime members engage much more than nonmembers and Amazon collects a wealth of data on their best customers.

Prime set the stage for premium loyalty programs over a decade ago, and it’s taken the retail industry a while to catch up. Now, there’s no choice.

However, in 2017, we really started to see more retailers getting on board. For example, Restoration Hardware has fully bought into the premium loyalty movement and it’s turned their business around.

Since the launch of their RH Grey Card premium loyalty program, 380,000 customers have paid the $100 annual signup fee and the program is driving 95% of their sales.

GNC also made a big splash with the launch of the myGNC PRO premium loyalty program. For an annual fee, members get premium benefits such as members-only sales days, monthly customized PRO boxes, free shipping and more.

PRO members purchased twice as much as nonmembers and visited their brick-and-mortar locations twice as much, too.

Newegg, Costco, Barnes & Noble, REI, Jamberry and Bed Bath & Beyond are more example of retailers that have listened to their customers and upgraded their loyalty efforts. We expect more brands to follow suit this year.

The most important thing to remember is that companies don’t create loyalty trends. Customers do. It’s the job of retailers to follow the trends and give customers what they demand.

Your loyal customers should get benefits every time they engage with your brand. And they should experience those benefits as soon as possible.

ebbo™ is an all-in-one loyalty company. With our data driven strategy, full-service approach, and the unwavering support of the people behind the platform, our dedicated team will work with you to understand your loyalty goals, innovate solutions and help you build customer engagement on repeat.

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