Loyalty Programs in retail
According to The Research Insights, the Customer Loyalty Software Market is expected to increase by +23% between 2019 and 2025.
Nowadays, customers are overwhelmed by the multiplicity of choices: Where to shop? How to shop? Which brands to shop?
This represents a challenge for retailers who constantly need to work on the attractiveness of their offers and especially their loyalty programs. Let’s see how they deal with it and what are the alternatives to build loyalty.
Aim of Loyalty Programs
Retail Dive claims that the loyalty program market is expected to reach $201 billion by 2022 with a specific note for “growing demand for customisable digital reward programs”.
Besides offering a unique customer experience, retailers also need to put a rewarding system for shoppers to stick around. In some sectors like beauty, they face continuous pressure as they frequently need to upgrade their loyalty programs to enhance their attractiveness facing giants like Sephora.
Despite what we may think, the aim of retailers is not necessarily to rise the average basket but to increase the frequency of visits to stores. The more frequent the visits, the more the compulsive purchases are numerous.
Indeed, the retailers’ goal is not to bring back shoppers only once but to create a strong connection with them so that they come back more frequently. That is why many retailers have reviewed the level of restrictions of their loyalty program to catch more customers but also to build a stronger relationship with them.
The following figures explain why retailers had to adapt to a new demand regarding loyalty programs:
Retailers’ strategy for membership
According to the previous figures, we can note that shoppers bring less and less their loyalty card in store. That has led to many retailers getting rid of requirements for store-branded credit cards which are harder to sell nowadays, especially to millennials. We have the case of Nordstrom that upgraded its loyalty program by allowing non-card holders to earn rewards only by joining the “Nordy Club” on the retailer’s website or through its mobile application.
Some retailers have managed to appeal to shoppers even through charged membership as did Amazon Prime. Actually, this giant’s membership program is somewhat successful because it created an emotional loyalty with its customers based on status, habit and reciprocity which led customers to being less price sensitive because they’re already paying to receive the benefits of the membership.
What explains the success of their loyalty programs?
- Access to sale prices that regular customers don’t
- Extra points on customers’ account that act as free money for their next purchase
- Free shipping for online orders
- Possibility to upgrade to a charged membership to earn additional points up to 3 times faster
New alternatives for retailers
If traditional enrolment methods are not enough to convert more of your visitors into loyal customers, a new channel is available to overcome common reluctance (whether it requires too much time or information, for example). Although Wi-Fi is a technology known and used by many people in a daily basis, it remains under exploited!
By integrating guest Wi-Fi in stores, retailers use it not only for a connection need but also as a new tool of communication with their customers. By inviting the shoppers to authenticate on the store’s Wi-Fi thanks to innovative phygital animations, they can collect their data and therefore track them (making sure at least to be GDPR compliant if stores are based in Europe). Brands and companies know more about their preferences and are also able to interact with them in their favorite social media. Furthermore, thanks to this solution, customers are recognised when they come back to the store and the retailers can then propose them special and personalised offers!
You can then set up a loyalty program based on the frequency of visits or simply to promote better your existing program by avoiding your customers to fill out long and binding forms. However, not all Wi-Fi solutions can provide these features.
Discover how Cloudi-Fi uses Wi-Fi as a new communication channel that contributes in increasing the foot traffic of the store by bringing back customers and by attracting new ones.