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Customer Loyalty in 2020

Customer loyalty…quite the elusive concept in 2020, don’t you think? Most products can be found through many retailers, so what exactly makes customers stick around? With competitive pricing and availability, it’s safe to say loyalty requires some pizzazz.

So here at Loop Insights we contemplated what drives our loyalty to certain businesses. Personally, when it comes to coffee, my allegiance goes to the small cafe down the street because: she (Alice -we’re on a first name basis) has learned to spell my name right; she gives me a free cookie here and there; and there’s never a wait to get my coffee. Even though the price of the latte is similar, or even a bit more expensive than Starbucks, it’s fast and convenient. AND Alice goes the extra mile to make my experience personal, with added value.

For customer retention, there is an increasing need for selling experiences that are convenient and seamless, yet personal and offer value (read more on customer experiences here: https://www.loopinsights.ai/rox-is-the-new-roi/).

Many studies confirm that loyalty is vital for revenue growth:
  • 95% of companies reported that their loyalty program members spend more than their non-members annually (LoyaltyOne Report): 
    • 60% of companies report loyalty customers spend 2-3x more
    • 23% of companies report loyalty customers are spending 4x or more

The goal of this article is to address loyalty painpoints through a discussion of AI integration. In order to keep up with customer expectations and gain their loyalty, new methods have to be introduced to brick and mortar retail.

Why many loyalty strategies are failing:

1. Friction:

When we say friction, we mean anything that would make a customer resist adopting your loyalty program. Some examples include: inconvenient enrollment and redemption processes, uninformed sales staff, unsatisfactory reward offerings; and long wait times.

In fact, a 2019 report by Bond Brand Loyalty states that people belong on average to 14.8 loyalty program memberships, but are only active in 6.7 of them.

2. Lacking value:

Rewards that are generic, lackluster or offered infrequently are no longer enough. Right now, personalized, immediate rewards are a differentiator for many loyalty programs – and a feature that could even draw customers away from other brands or retailers they felt loyal to.

3. Minimal personalization:

It’s simple – loyalty is about building relationships with your customers. The general “spray and pray” method will no longer work – marketing dollars need to go towards personalization. If customers feel understood and valued, they’ll be back.

What’s the solution?

AI accesses and connects consumer data quickly and easily. Based on these insights, business owners can push automated, customized content to each customer. Sound familiar? From Netflix to Amazon, many online big brands use this AI strategy to create a memorable customer experience.

To level the playing field with online retailers, Loop provides these tools to brick and mortar retailers. Because this has yet to be executed in physical retail, early adopters will gain an advantage by standing out against their competitors.

So, let’s reconsider loyalty programs with the possibility of AI integration. What do loyalty programs need to overcome the three pain points above? Let’s see how Loop’s newest innovation, the Tap to Engage device, can help!

1. Seamless experience:

By providing real-time insights on local buying behaviors and foot traffic, AI can help you merchandize your store for convenient navigation. For example, by knowing everything that is in your customer’s basket, you can make merchandizing decisions based on popular items or even products that are commonly bought together. If your merchandizing is found reliable, customers know they can be in and out quickly – a reason to return to your store.

AI also offers the technology to speed up transactions and interact with your loyalty program seamlessly. Customers don’t want to be searching for their physical loyalty cards. They want simple and instant gratification. With Loop’s Tap to Engage device, one tap of a customer’s mobile device immediately accesses the loyalty program through their digital wallet – no app download required. In fact, 79% of consumers would be more likely to join a loyalty program that does not require a card (Harris Poll).

Watch how Loop’s Tap to Engage device automatically enrolls and rewards the device user here: https://vimeo.com/384283908

2. Personalized, omnichannel engagement:

Hyper-personalizing the brick and mortar customer experience is currently unmatched in physical retail – and is a great way to attract new loyalty. It doesn’t have to be difficult either! Loop’s Tap to Engage device connects the transaction to shopper ID securely and easily, so one can attribute past sales properly, and personalize future promotions accordingly.

An omnichannel experience also strengthens customer relationships. AI can integrate a business’ physical and digital assets, so one can engage customers with relevant, customized content – even when they step out of the store! Know what they want, when they want it, and through what medium (physical promotions, email, SMS).

According to the Bond Brand Loyalty study, respondents believe only 20%~ of loyalty programs interact with them through the right channels, at the right time and using the right messages.

Yet, when it is implemented, retail executives reported 54% improved customer retention, and 52% increased loyalty (Retail Touchpoints).

Takeaway? More meaningful interactions help grow emotional bonds with customers because they “feel heard.” Take Alice’s ability to remember how I spell my name! If a customer feels special, they will want to reciprocate and spend money at that store.

3. Rewards with value:

Loop’s Tap to Engage device can be placed at several points of one’s store – increasing the amount of interaction with each consumer. Increasing points of contact ultimately gives you more information to develop customer profiles – to personalize reward offerings.

Businesses are also unlocking the power of brand partnerships to help extend additional value to loyalty members. For example, a hotel could offer transport deals alongside their hotel packages, to increase their appeal. Offering promotions that customers actually find valuable will ultimately end up with more money spent, and a returning customer.

The bottom line

In today’s landscape of unlimited choice, consumer reviews, and influencers, brands and retailers no longer reign as product knowledge authorities. But loyalty programs help change that. With better incentives, customers will explore your business channels for their next purchase first – from here, make targeted recommendations and take control of their sale!

If Loop’s Tap to Engage device sounds like a good fit for your store or venue, please get in touch and book a demo!

 

Studies cited:

Bond Brand Loyalty Report

Wirecard Consumer Incentives Report

Retail Touchpoints Survey Report

Loyalty One Report