As we emerge from the pandemic, the once “new normal” is becoming a bit more normal. We’ve adapted to new procedures, social distancing, and changed our shopping behaviors.
Amid changes in consumer behavior last year, retailers were forced to reactively respond quickly making sweeping changes to offer curbside pick-up and higher demands for delivered purchases.
This year, they’re focusing on enhancing their loyalty programs proactively to gain back customer loyalty that may have faltered in the past year.
Here are 3 reasons why it’s more important now than ever to re-evaluate and optimize your loyalty strategy.
Your Competition is Likely Already Planning How to Enhance Their Loyalty Strategies
In a March 23 Clarus webinar, 59% of respondents said enhancing their loyalty program was a priority for them this year.
Walmart came in strong at the end of 2020 with Walmart+ and since then retailers like Best Buy and Urban Outfitters recently announced they are testing out their own premium loyalty programs.
The 2021 Loyalty Industry Data Study revealed that retailers are, in fact, focused on clawing back their loyal customer base by bringing their own loyalty program to market or enhancing what they’re already offering.
Your Customers Don’t Have the Same Shopping Behaviors and Expectations They Had a Year Ago
According to the McKinsey Consumer Paid Loyalty Survey, “35% of U.S. consumers have tried a new brand since the COVID-19 pandemic began while 77% demonstrated new shopping behaviors, including new channels, stores, and brands.”
Think about how you’ve changed in the last year.
Likely quite a bit, right?
You likely shop online more than you have before and you’ve likely also purchased from a brand you haven’t shopped with before or that you weren’t as loyal to in the past.
Choices you made this year have now impacted decisions you’ll make for future purchases.
Consumers have set the bar higher now.
People want to order something for curbside and expect it to be ready in an hour and not have to wait long for your associates to bring it to their car. Convenience and safety are top of mind while brand loyalty may have taken a back seat this past year.
In 2021, those are table stakes.
What matters most now is how you go above and beyond with rewards and benefits that are unique to your brand and your customers.
You Want to Increase Your Revenue Stream and Customer LTV
Last year’s numbers are in.
While many retailers did better than expected over the holidays with extended deals and were up and running with their “new normal” procedures for keeping up with customer demands, not all saw increases last year and many are figuring out ways to make up for lost revenue.
It’s no surprise that premium loyalty programs drive higher purchase frequency, increase basket size, and brand affinity. But what you might not know is the McKinsey survey found that 43% of respondents are more likely to shop with a brand weekly since joining a premium loyalty program, 59% are more likely to choose that brand over competitors, and 62% are more likely to spend more with the brand.
Customer LTV is positively impacted when customers turn into members of a premium loyalty program. If your benefits mix is right for your customers, it will create a natural revenue stream that drives larger purchases more frequently all while creating loyalty. More than half of retailers (51%) with premium loyalty programs consider their members to be at least 4x as valuable as regular customers.
What can you do now?
- Re-evaluate your own loyalty strategy. Is your current strategy hitting your KPI goals? Does it align with what your customers are expecting today?
- Ask your customers what they want. Show your customers that you want to hear what matters to them and then give them more of what makes them want to shop with you. Whether it’s experiential or transactional benefits, if the benefits prove to be valuable to your members, they’ll create loyalty and revenue.
- Talk to loyalty experts. Get a better understanding of the conversations loyalty solutions providers are having with other retailers. Research and ask for advice on figuring out if managing your program in-house or with a vendor (or a mix of both) is the right way to get started.
- Continue optimizing. Once you put your best foot forward with your loyalty program launch or enhancements, don’t stop there. Evolve with your customers and maintain that relationship that drives new, consistent value to their lives.