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Customer Retention During the Pandemic and Beyond: The 3 Things Your Brand Needs to Focus On

COVID-19 has certainly changed consumer behavior.

Online credit-card transactions have soared, according to The Wall Street Journal.

Also, e-commerce sales in the second quarter increased 44.5% compared with the same period in 2019 and now comprise 16% of all U.S. retail sales.

It’s clear that the pandemic has driven an increase in consumer online spending that carries long-term implications.

Brands need to be more than just mindful of this shift and account for changes in their respective loyalty programs.

Brands need to revise store-centric program benefits and messaging to reflect current consumer behavior to acquire and retain consumers, creating a pathway to support the slow process of store reopenings.

The Walmart+ premium loyalty program, which launched Sept. 15, offers store-centric benefits like Scan & Go, which makes shopping in-store a lot faster and avoids the large crowds at checkout.

Customer retention, speed of new tactics adoption, and related costs will determine the success of your loyalty program adjustments.

Keeping your best customers has never been more important for retailers.

And here are three things you need to focus on going forward.

1. Focus on Retaining Your Loyal Customers 

Acquiring new customers is important but keeping top of mind with your existing customers is paramount.

Two thirds of consumers say their loyalty is harder than ever to maintain.

And this has become more challenging because everyone is now online price shopping.

Listen to your customers and respond with retention tactics to keep them loyal, especially during this sensitive time when they are seeking value and convenience.

For example, Starbucks recently added more payment options to simplify the customer experience and make it more seamless.

This was the company’s most requested enhancement.

Now, customers can link their credit or debit cards, or PayPal accounts to pay within the app, making it easier for Starbucks Rewards members.

It’s understood that online shoppers are less loyal than their in-store counterparts.

This reality mirrors my own behavior.

I will shop at certain stores based on a variety of factors: proximity, product pricing, retailer social standing, and prior experience including associate attentiveness, are just a few.

Online I’m transactional: Do you have the item? What does it cost? How quickly can I receive it?

Site characteristics like ease of browsing, mobile app technology, ease of checkout, and site speed are table stakes for brands.

While total consumer transactions are down across the board, average online transaction values have increased.

That’s why you must make every transaction count.

One way to do that is with a premium loyalty program.

In this model, consumers pay a membership fee in exchange for enhanced benefits that they can use every time they engage like instant discounts and free shipping.

While traditional programs focus on acquisition, premium loyalty focuses on retention.

The opportunity to purchase anything at any time drives that behavior and, marketplaces like Amazon with millions of SKUs, rewards it.

Premium program members engage more often and spend more often. They also talk about the program more often.

Consider that 89% of consumers would recommend a retailer to friends or family if the retailer’s premium loyalty program offered valuable benefits.

It’s because members know that they are getting the best possible experience every time they use the program, so engagement increases.

Whichever way you think about it, you must act quickly.

2. Increase Your Speed to Market

The time to employ new consumer retention tactics is now.

And if you are following best practices, any new tactics will be vetted, tested, and benchmarked prior to rollout.

You will want to engage your data analytics, creative development, and performance marketing teams and review prior ideation and test results to move quickly.

What if you don’t have access to or the time to acquire these capabilities regardless of an available budget?

Game over? Of course not, due diligence is required, but there are any number of third-party service providers that can be engaged to assist in your response.

Here’s what to look for:

  • Demonstrated acquisition, engagement, and retention capabilities
  • Defined success metrics
  • Case study support
  • Partner testimonials
  • Performance based compensation structure

There is an immediacy to online testing and the read react process that is not present in-store where exposure can be limited by turning a test on or off in real-time.

Your efforts need to be focused on immediate results, hitting singles and doubles, as opposed to taking one big swing for the fence.

The opportunity to capitalize on increased online consumer spend is now.

Your loyalty partner must deliver on tactics that drive immediate consumer engagement.

A 6-to-12-month timeframe to review performance doesn’t fit here.

Urgency is of the essence.

The other challenge is cost.


3. Manage Your Costs

You’re tasked with delivering program performance improvements in lieu of staff furloughs and no budget.

The option of securing a partnership that has a 7-figure upfront compensation structure can be revisited in 2022.

For a brand looking to hire a loyalty provider to launch a free program, the cost would range from $1 million to $2.78 million.

Look for flexibility in the loyalty program pricing structure.

Again, brands should focus on hitting singles and doubles and not looking to hit a home run every day.

Your prospective partner’s fee structure should reflect this. The optimal scenario is one where a partner that checks all the capabilities boxes and presents the flexibility to have compensation tied to performance.

Here’s a different approach to loyalty program pricing.

Why It’s Not Business As Usual

We’re living in a time where consumers are more sensitive to the shopping experience and less patient.

Brands need to understand this and act accordingly.

Brands need to commit to retaining their best customers through attractive loyalty program benefits, great customer service, and value.

For example, lululemon’s premium loyalty pilot program mixes transactional and fitness-focused experiential benefits.

Recently, lululemon held membership launches in Edmonton, Toronto, Chicago, Denver, and Boulder.

For $168, members enjoy their choice of exclusive lululemon membership gear valued over $100; 12 passes to their choice of the hottest sweat classes or events; 20% off lululemon gear on members’ birthdays; and live digital workshops designed and facilitated by lululemon.

Lululemon CFO Patrick Guido said the company’s loyalty program expansion has been deliberate, continually reaping impressive results along the way.

“There are a lot of different types of membership loyalty programs out there and majority of them are very easy to operate and execute,” Guido explained. “And the reason I think the guest is responding so well to ours is it fits with who we are as a brand being experiential.”

It is not business as usual for brands as consumer behaviors have changed since the pandemic started and could be the new normal.

This marks a new beginning for retailers as consumers are less brand loyal. It evens the playing field and offers huge opportunities, and challenges, for retailers.

Brands that were a little bit “safe” in the past due to their brick-and-mortar presence don’t have that now.

How will you retain your best customers in a time when loyalty is harder than ever while minding your resources?

Tony Muro

Tony is Vice President of Strategic Partnerships at Clarus Commerce. For over 25 years, Tony has driven revenue generation for Financial Service, Retail, Ecommerce and Travel & Hospitality partners by delivering winning customer acquisition, activation and retention solutions. Tony is an empty nest newbie with two daughters just taking flight. He's also a lapsed Minnesota Vikings fan who can be found tormenting his over 40 soccer league opponents on the weekends.

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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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