Building Customer Loyalty in Retail

Mike Ptak, VP of Loyalty, Sales, Snipp, participated in a comprehensive interview with Loyalty360 about how to build customer loyalty in retail.

Besides offering tips on creating customer loyalty in the retail market, Ptak also discussed the importance of listening to customers, mobile’s impact, and building emotional connections.

Building customer loyalty in retail poses a challenge for marketers. What are a few key tips or strategies retailers can use to help build customer loyalty?

Ptak: The changing digital landscape, paired with evolving consumer expectations, requires innovative approaches to building loyalty. It is vital to identify the goals that you want to achieve and shopper behavior that you seek to encourage. This will guide your design of a consumer loyalty program that is seamless and omnichannel, delivering a consistent on-brand experience for each member, across every touch point.

According to recent research, the cost of having a disjointed and inconsistent program is 10% in lost revenue. Walmart, for example, is moving swiftly to integrate omnichannel digital capabilities, and already offers a pay-with-cash facility that allows customers to order online and pay with cash at stores, so those who do not have a credit or debit card can still buy online.

Additionally, collecting insights and data relating to the lifestyles and challenges consumers face can uncover simpler ways to engage and deliver relevant rewards that resonate. Retailers can bridge digital with in-store experiences – delivering that ‘human’ connection consumers seek and addressing their needs and concerns. For example, Walgreen’s realized that consumers were spending too much time searching for their loyalty card at the cash register. To reduce this moment of stress in the consumer’s journey, Walgreen’s began to use geo-fencing to detect when a consumer is within the perimeter of their parking lot. Once they were within range, Balance Rewards members received a push notification to their smartphone that, when swiped, will open their app directly and show the rewards card and a list of coupons for convenient and easy use while shopping.

There is a plethora of surveys focused on customer loyalty. How important is it for retailers to listen to their customers?

Ptak: It is integral for retailers to listen to their customers, or they risk a high level of store-switching from potentially loyal consumers. Approximately 33% of consumers agree they would not be loyal to a brand were it not for the loyalty program, and 70% modify where they shop to optimize points. That being said, consumers want to be treated as individuals, and they will also expect the retail store they frequent to be aware of offers that might personally interest them.

Retailers must recognize that building a consumer relationship is not a ‘one-size-fits-all’ proposition. Young shoppers – from millennials to Generation Z – are pragmatic, with higher expectations of what program features are worthy of their loyalty. They are quick to share their opinions on their social networks and this can be a great benefit to your program when rewarding these consumers for social sharing. On the other hand, programs targeted at older shoppers may not benefit from a social media component since this demographic has not adopted the medium to the same degree.
In your opinion, how should retailers prioritize customer loyalty in their respective companies?

Ptak: Customer loyalty is an important metric for any business – this should be taken into important consideration when determining priorities. Many companies focus on new customer acquisition, but attracting new customers can cost your business five times more than keeping an existing one.

Additionally, there’s the standard measurement that 80% of a company’s future revenue will come from 20% of its existing consumers. The ROI of investing in a loyalty program that is relevant and interesting for consumers pays dividends in the long run.

Luckily, it seems that retailers are catching on – with 62% increasing their budgets to enhance their loyalty programs with supporting technologies. For instance, Starbucks has credited its loyalty program app, My Starbucks Rewards, as a major contributing factor in its fiscal revenue.

Today, building emotional connections with customers seems as important as anything else connected to customer loyalty. How important is it for retailers to build emotional connections with their customers?

Ptak: An emotional connection to a retailer is the most effective mode of loyalty program that can be built. Consumers want to be treated as individuals and responded to personally – regardless of channel – and receiving personalized offers and loyalty points is a great way to do that. This can be done through offering a variety of fun, value-added rewards from spending, like eBooks, music, movies, and mobile data. It is also important to reward consumers for non-spend activity, where consumers interact with the brand where they are – on social media including sharing, reviews, and games.

This will establish your brand as the reason a consumer received additional data for use on their mobile devices, or watched a blockbuster movie, and gives them a reason to become brand advocates. In making their purchases, they also gained value outside of the direct worth of the items they bought – and when a consumer feels that they are truly getting great value for their money, they will feel emotionally connected to the retailer who brought them that experience.

Mobile is fast becoming such an integral piece of loyalty marketing. What should retailers be doing, or at least considering, when it comes to mobile customer engagement and customer loyalty?

Ptak: Mobile means access, not only to reward mechanisms like points, but to content as well.  Information, videos, specs, whatever can be delivered digitally is always readily received. Retailers should consider making mobile a large component of their program, both for program navigation and point redemption, as that is where consumers can largely be reached. A consumer should, while in-store, have the ability to check their points and relevant offers and promotions on their phone, and then tailor their shopping basket as a result. This has a huge potential for retailers to build a more personalized experience for consumers by collecting data from past purchases to push relevant offers.

Retailers might consider exploiting gamification to make loyalty interactive on mobile. From Farmville to Nike+, game-based programs have been well-received by consumers, as they offer visible progression along a defined rewards path, in addition to the fun competition and social aspect.

Is there one single thing that retailers should focus on, above everything else, when it comes to building customer loyalty?

Ptak: Always be innovating and continuing to deliver customer experience. Despite the statistical evidence, and the constant use of mobile in the American consumers’ everyday life, still 73% of retailers do not provide access to their loyalty programs through a mobile platform, and only 40% let consumers redeem points both in-store and online. To maximize customer experience, listen to your consumers and meet them where they spend most of their time – online and on their mobile devices.

Customers have such high expectations these days and want marketers to know them. How has personalization progressed in the retail industry and how can it be used to spark customer loyalty?

Ptak: The rise of loyalty programs utilizing mobile engagement has unlocked a huge opportunity for personalization with the amount of valuable data it produces. The collection, management, and analysis of Big Data from different sources are crucial to begin the process of customizing the consumer experience.
This data may include the demographic information within a program that a consumer will fill in themselves – such as age, gender, and city. In addition to that, loyalty programs with promotions powered by technology such as SnippCheck receipt recognition can generate data on shopping habits like exact retail location, and information on the basket size and types of brands purchased in one shopping trip.

This data can further aid personalization by creating an understanding of the customer mix at every location, and developing a set of demographic profiles and shopping habits of the retailer’s consumers. Once this is obtained, offers can be tailored to appeal to these consumers through relevant promotions and rewards to either incite or reward engagement.

Recent Content

Join Loyalty360
  • Loyalty360 Membership:
  • Access Complete Content
  • Company Member Page
  • Free Online Account:
  • Read Full Articles Join Discussions
  • And Much More
  • Learn More
Top Posts
subscribe newsletter
Sign up for our email newsletter to stay up to date on loyalty marketing news, insights, events and more!
The Lyalty Pulse View All
Do you feel there is a lack of competitive benchmarks, technology metrics, objective technology assessments, or shared industry terminology that hinders your ability to effectively implement CX efforts?