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Personalization and Customer Loyalty Programs

 

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Introduction

The mobile device has become a central part of the customer engagement strategy of consumer-facing businesses, such as retail and quick service restaurants. It provides a direct route to engage each customer wherever they are, using apps and push messages to drive traffic to the closest restaurant or store and then supporting cross-selling and up-selling once they get there.

As such, an effective mobile strategy begins with creating a great onboarding experience for customers to download these mobile apps. However, it doesn’t end there: the real measure of success is how well each brand can keep these customers engaged as active users over time. That requires a new level of engagement that is personalized and meaningful to each customer. Loyalty programs are part of this engagement strategy to deliver an experience that keeps the customer coming back for more.

Why Focus on Loyalty?

Customer loyalty programs are the key to transforming one-time customers into active brand stewards. A well-designed loyalty program will work throughout the buying journey to keep customers engaged, and as a result,  improve customer retention, increase customer spend, and help onboard new customers, as well. In fact, according to recent reports, the most loyal customer base of a brand spends 3x more per order than the average customer. Not to mention the savings on the cost of acquiring new customers — it costs five times as much to attract a new customer than to keep an existing one.

These repeat customers are also more likely to discuss trusted brands with others, influencing the 92% of consumers who prefer suggestions from acquaintances over advertising. Today, 72 percent of adults online belong to an average of nine rewards programs, and nearly half of them claim that these programs influence what they buy. And whether the mission is to collect virtual points that equate to real money off their next purchase or to earn an exclusive members-only card at their favorite department store, customers not only are more likely to return to the store or restaurant that rewards them, but also are more likely to recommend the brand to friends and family. That’s why so many enterprises are focusing on ways to incentivize loyalty and ensure patrons come back to them again and again.

Mobilizing Customer Loyalty

Looking at the evolution of loyalty programs, with the introduction of new technologies came the gradual fading of “inconvenient” loyalty programs—punch cards and mail-in prize vouchers—which required customers to carry around extraneous items in order to receive a reward. Instead, brands turned to programs that fit into the customer’s lifestyle, and the mobile loyalty program was born. With the average American viewing their smartphone 52 times per day, that gives enterprises a multitude of opportunities to connect with busy customers and keep their brand and offerings top-of-mind.

When developing a mobile loyalty strategy, the first hurdle the enterprise must overcome is attracting customers to download their app. Yet, a single mobile app download does not a loyal customer make. In fact, the average mobile app retention rate after 90 days is only 22%. Instead, brands must consider, “How can I maximize my mobile approach to inspire long-term customer engagement?” It starts with understanding how customers typically interact with loyalty program apps.

Here are four fast facts about mobile usage and what they mean for enterprises seeking to create a personalization strategy that inspires long-lasting customer loyalty.

Fact 1: 43% of mobile users always or often approve of an app’s request to send push notifications. 

There’s no better way to make certain that a customer sees a message than to push it directly to their phone’s home screen. Critical to making certain users not only continue to enable push notifications but also look forward to every message an enterprise sends is making certain the content is highly relevant to that particular customer. That means leveraging their historic behavior and in-the-moment context to determine the right content to push, at the right time (e.g., a notification about points soon to expire or a free shipping coupon applicable to items they recently left in their cart).

Fact 2: 242 million users enable location-based services on their mobile devices. 

Understanding the real-time context of every customer empowers enterprises to serve up content relevant to their in-the-moment needs. When location-based services are activated, this comes into play through geo-fencing, which enables enterprises to deploy targeted notifications and offers when a customer enters the range of a particular location.

For instance, imagine a customer views a particular quick service restaurant’s drink menu, and then closes out of the app. Later in the day, when the customer is walking through the mall and is in the vicinity of the restaurant, they can push him a $1 off discount for a drink, effective that afternoon only. Beyond this, location services can also be used to evaluate environmental conditions to determine relevant offers or helpful information, such as if the coupon should be for a hot or cold drink based on the temperature in that particular zip code at that particular time.

Fact 3: 80% of survey respondents are more likely to shop where they can also benefit from some sort of a points system. 

Although physical punch cards for rewards have fallen out of vogue, the point-based reward system still holds appeal to the customer—now just on a mobile app. In particular, mobile loyalty programs can engage guests who are on the fence to secure an order, and encourage those below specific spending thresholds to increase their total order to unlock a spending reward. For instance, if an enterprise’s goal is to increase total spend per transaction, they can push a customer who in the past generally won’t make a purchase unless they have a coupon a loyalty reward for 10% off their online purchase of $100 or more.

Fact 4: 50.3% of all web traffic generated worldwide in 2017 could be attributed to mobile accounts. 

Of the utmost importance to maintaining customer loyalty is meeting patrons where they are at. With over half of web traffic stemming from mobile devices, it’s highly important to develop a multi-channel approach to personalization. Say a customer begins to fill in an online form to apply for an exclusive rewards credit card but stops halfway through. Later in the day, her loyalty app could push her a reminder about the form, prompting her to tap the notification to pick up right where she left off. In so doing, the enterprise creates a seamless, cross-device experience, for a more simplified, satisfied customer interaction.

Gaming the System to Enhance Loyalty Programs

Once the customer has downloaded the app, the challenge is to keep them engaged on a regular basis. A 2017 study revealed that only 46% of loyalty memberships are active—meaning that more than half of customers enrolled in a loyalty program aren’t using its benefits, sharing its advantages with friends and family, or being successfully transitioned from prospects to purchasers by retailers.

Enter gamification. By introducing gamification into customer loyalty programs, retailers can rapidly regain loyalty, improve customer retention, and drive increased sales. A gamified customer loyalty program might enable customers to compete on a leaderboard based on frequent brand interactions; earn additional points depending on the location of purchase; gain access to an exclusive rewards club that celebrates their brand achievements; and much more. Regardless of the gamification method, gamified customer loyalty programs are a differentiated outlet for shoppers’ natural inclination towards competition, praise, and exclusivity.

What does gamification look like in action?

Gallup survey shows that when companies use a tactic like gamification to successfully engage their customers, they have been proven to see 63% lower customer attrition and 55% higher share of wallet. Here’s an example of how it works:

Jessie is enrolled in a customer loyalty program at a clothing store near her workplace, but she hasn’t used her membership to earn or redeem points on a purchase in months. In fact, she’s been shopping elsewhere, at a different retailer closer to her home.

While leaving work, Jessie stops for groceries in the same shopping center as the clothing store. She receives a notification on her smartphone from the store’s app: “Jessie: Be the first to spend $150 at your local store this month and win a $300 gift card!”

Intrigued by the offer and excited at the chance of winning, Jessie decides to stop by the clothing store before heading home and start making her way to $150 this month.