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Customer Loyalty in Today’s Multi-Channel World

Posted on: September 7, 2018 | Posted by: Sona Sharma

“Sometimes you want to go where everybody knows your name; and they’re always glad you came.”

Many of us will remember this line from the ‘80s TV show Cheers. The sentiment behind this sentence resonates with most of us as consumers. We desire the experience that we used to get from our local mom and pop shops — where the sales associate knew most shoppers by name, knew their preferred brand, style and color;  Restaurants knew exactly what their regular customers want in their sandwich; Grocery store associates would point out the arrival of a fresh stock of the customer’s favorite apples.

Such a personal touch creates memorable experiences for the customer and engenders commitment and loyalty. A happy and satisfied customer means a repeat customer. Moreover, loyal customers are also a brand’s best spokesperson as they spread the good word about their great experience.

As mom and pop shops gave way to bigger stores with multiple branches, replicating this level of personal touch became increasingly difficult. Then we added digital channels — website, mobile apps — to this repertoire of touch points between consumers and brands. With so many channels in the play, getting to know the customer got more complex and challenging.

… Or did it?  

Going Back to the Basics of CX

One could argue that the addition of the digital channels just made the challenge of personalized customer engagement easy again. As Neiman Marcus VP of customer insight and analytics Jeff Rosenfeld told CMO magazine, the task of observing and remembering customer preferences is now done through data collection on the digital channels.

In order to collect this data, most retailers have some variations of loyalty programs that require customers to log in, provide their email, phone number and other information. Through these programs brands are able to identify repeat customers and offer them exclusive discounts and other benefits that other unregistered customers are not privy to.

However, while consumers enjoy these programs, lately they seem to  be afflicted by loyalty program fatigue. A study of more than 28,000 consumers shows that while membership for loyalty programs is up, active participation has gone down. Three key findings jump out from this study as an explanation for this phenomenon :

  • A majority (57%) of consumers said they don’t know their points balance
  • 38% said they are unaware of their points value
  • And only 25% said they are satisfied with the level of personalization they experience with their loyalty program

As a result, a whopping $100 billion in points are left unredeemed by program participants.

“Personalization is the New Loyalty”

Rosenfeld of Neiman Marcus hit the nail right on the head when he pointed out that personalization is the new loyalty.” The story from the above numbers is pretty clear. As in every other aspect of marketing these days, the one-size-fits-all approach no longer works for customer retention. Customers are demanding personalization. They want to cut through the noise and focus on what’s relevant for them. Is the offered discount on items that I am interested in? Do I have some reward points in my account? Are my points applicable to the product I want to buy? Today, marketers have to provide information that is pertinent to an individual, rather than to a generalized segment of many, to make the shopping experience convenient and pleasant.

Let’s consider an example with with two different scenarios to elaborate this further:

Scenario 1

Let’s say Sally frequently buys clothes for her children from KidsStore. She is signed up for the store’s loyalty program and gets a gazillion emails from them about discounts and new products, not always about items that are of interest to her. Mixed in these numerous emails is also information about her Loyalty Rewards points.

Sally goes to KidsStore to pick up some clothes for her daughter and wants to use her Rewards points when she is checking out. The sales associate requests Sally to show the email she has received about her points, a standard policy at the store. Now Sally is searching high and low in her emails to find that particular email. After a while, she gives up and completes her purchase without using her points. The experience left quite a bad taste in her mouth. Chances are that Sally might still visit the store on and off, but might not be quite the spokesperson for KidsStore.

Scenario 2

Now, let’s consider how this could have gone differently. Sally, a loyal KidsStore customer has been browsing for T-shirts on the website for her toddler. She adds one to the cart, but does not purchase it. Next day, Sally is in the mall and remembers that she needs to buy leggings for her daughter.  She enters KidsStore and immediately, her mobile phone chimes with a welcome notification from the store that says:

“Welcome Sally. You have $5 in Rewards that can be used starting today. The t-shirt in your shopping cart is now $10 with your Rewards. Click here for details.”

At the checkout counter, Sally just taps on the notification that takes her to the exact page with the details of her reward points, avoiding the hassle of looking up emails. Sally ends up buying both the T-shirt and the leggings in that trip.

It’s anyone’s guess which of the two experiences would be a winner for  KidsStore. To make this happen, KidsStore needs a technology stack that would make such an individualized interaction with Sally possible. This would require:

  • real-time knowledge of Sally’s presence in the store;
  • that she has $5 in reward points;
  • that she has a T-shirt in her digital cart;
  • that this T-shirt is available in this particular branch of KidsStore

With ZineOne’s customers, we are seeing that such real-time and personalized reminders are increasing loyalty redemptions by 14%.

New Technology for a New Paradigm of Engagement

While a 1:1 engagement is not a new concept, the technology stack that is needed to deliver such individualized interactions at scale, in today’s world of online and in-store customer journey, is new. It is built from the ground up to engage every customer as a segment of one. This technology, along with sales associates, does the job of collecting information from a myriad of customer touch points and systems of records — website, apps, point of sale, CRM. The delivery of these personalized interactions could be through a sales associate, email, website, chat bot, mobile app, and so on.

At the heart of such an engagement strategy is to know every customer at an individual level to win their lifetime loyalty and their business. It’s all about adding value to every customer journey seamlessly across all channels, in a highly personalized and high touch manner to make your brand be the place where everyone knows their name.