Purpose-based loyalty is not exclusive to niche brands or new entrants. Major retailers like Walmart are making it easier for shoppers to support causes that are important to them through a wider product selection. For example, the company’s e-commerce site features a “Communities to Support” section featuring products from black-owned brands, halal beauty brands, LGBTQ+ brands, and more.
Building an engaging, personalized loyalty program
Here are key best practices for building an experience that drives loyalty.
1. Identify the optimal metrics.
As the loyalty model changes, so should the metrics used to measure success. Once aligned solely to sales-related indicators such as conversion rates and store revenue, the modern program places equal emphasis on customer satisfaction and engagement, as measured through such key performance indicators (KPIs) as net promoter score, customer satisfaction score and customer health score. Another metric that is increasing in importance is the customer effort score, which measures how effective the retailer is across all aspects of the experience, from product placement to education of staff, to purchasing and delivery.
2. Embed metrics within store and staff performance evaluations.
With the right metrics in place, retailers then need to adapt how these KPIs are embedded within the sales teams across all channels. Loyalty is no longer solely sales-focused; retailers must communicate this change to staff and evolve how employees work with customers to drive the metrics that are important. These changes should be part of how staff is measured and evaluated on an individual basis, helping brands reinforce the new model of loyalty and how it is calculated.
3. Prioritize data security, privacy and transparency.
For many consumers, data security and privacy are real concerns. When they sign up for a loyalty program, they want to understand how their data will be used, who will have access to it, and how it will be protected. Brands need to build and maintain robust security and privacy controls and actively communicate any potential issues to the customer.
4. Follow through with a hyper-personalized experience.
As brands and retailers redefine the terms of their loyalty program and collect more data, the value should become apparent to customers over time. This value can take many forms: personalized offers and communications; value-added services in stores; new or refined products to meet buying patterns; and exclusive events or special access. The common thread here is personalization. Brands and retailers should leverage customer-centric data to better understand who their target customer is and drive repeat purchases through both the rational and emotional elements of loyalty.
As retailers face new levels of volatility and disruption in a post-pandemic world, loyalty becomes even more important to ensuring the company’s long-term viability and market position. For many, the success of the modern loyalty program hinges not just on the products and services they offer, but the experience they deliver.
With that in mind, as companies reconsider how they engage and serve the modern customer, the question to consider is not how to reinvent the loyalty program, but how to create an experience that builds loyalty naturally.
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This article was written by Scott Headington, VP, Industry Solutions Group, and Robert Johns, Senior Director of Merchandising, Planning and Store Towers, Industry Solutions Group in Cognizant’s Retail, Consumer Goods, Travel & Hospitality practice.