Why Businesses Must Play the Loyalty Game

  • Alan Irwin, Senior Director of Product at Global Payments

  • 28.07.2022 12:00 pm
  • #eCommerce

Since the pandemic began, an online shopping boom occurred. Although this was to be expected, the rapid rise in online sales saved many merchants who had already built out their online presence. First-time online shoppers discovered the world of choice that is available to them and learned how to browse a plethora of brands within minutes. The result for merchants is that customer loyalty is becoming an increasingly vital element to remaining competitive in the market and, in response, online loyalty initiatives have soared. However, it is now crucial to ensure that these loyalty offers are relevant to in-store customers as they have returned to traditional brick-and-mortar shops.

Tapping into Data

As we move towards unified omnichannel commerce it's fundamental to identify when and where to introduce loyalty plays. This can be achieved by building out a single view of each customer as well as an understanding of larger demographic behaviours and shopping habits. In order to build this omnichannel view of shoppers, businesses can utilise payment processing data to understand the who, what, when, and where of customer behaviour and activities. Concise dashboards can collate and analyse data on average visits per customer, transaction breakdowns over time, new vs returning customer spending, plus recency analysis to give insights into how long it’s been since a customer visited. Benchmarking analytical tools can help compare performance against competitors that are of a similar value segment, operating in parallel verticals, and located within a set radius. Building this omnichannel understanding of customer behaviour can not only show where loyalty initiatives could make a big difference, but can also inform decision-making to improve operational efficiency and the optimisation of marketing budgets. 

Benefitting from Reward Systems

Businesses can increasingly bring in capabilities that recognise individual customers, not just online and in-store, but across all of their preferred commerce channels. This can be taken a step further by enabling the business to encourage customers to pay using their preferred payment methods. For example, it typically costs merchants much more to accept card-based payments than it does to accept Open Banking payments. By offering rewards to customers (for example, an increased number of Avios or Nectar points) for paying using that preferred method, merchants can positively reinforce and generously reward specific behaviours while enjoying a lower payment acceptance cost. 

Using rewards to encourage ‘good behaviour’ can encompass strategies such as offering discounts when customers become ‘members’ or creating an online profile; thus giving additional information to the merchant so they have a more holistic view of the customer. Once a customer has a profile or membership they can set up recurring, subscription or one-click payments to support seamless repeat transactions; in turn, improving their checkout experience every time. This 'membership', also provides the customer with a single account on which they can collect rewards such as spendable points. For example, many companies now offer memberships that grant customers a single omnichannel profile that can be used both in-bar/restaurant at a point of sale and also online, to avail of real-time discounts, deals, and other compelling membership benefits. 

Gamification Nation

Another common loyalty tactic is gamifying shopping experiences to encourage customers to keep coming back to win rewards. A recent example of this I highlighted in a previous post is Pret-A-Manger’s new ‘Pret Perks’. Customers can earn ‘stars’ through in-store and click & collect purchases, encouraging them to create a profile on Pret’s app. Once they collect 10 stars, they are entitled to a ‘perk’ such as a free snack. This builds on Pret’s existing subscription offering where £ 20 a month entitles customers to 5 hot drinks per day.

Untapped Opportunity

As market competition intensifies and the cost-of-living squeezes, maintaining brand loyalty will become more of a challenge, given that customers have less to spend and more options for where to spend it. But as SMEs become more data-oriented and aware of the opportunities that connected commerce brings, we will continue to witness significant new innovations and initiatives in the brand loyalty space. By taking advantage of smart data insights and retaining a focus on developing streamlined omnichannel experiences, there is still huge potential for merchants to differentiate their offerings to boost revenue and contribution per customer by coaxing them back to their platforms with rewards, offers and discounts. 

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