What Will Your Customer Loyalty Program Look Like in 2020?

By Jason Miller, Chief Strategist of Commerce, Akamai — June 12, 2017

A standout customer service experience has always helped business of all sizes and across industries grow and maintain brand loyalty. No matter the size of the company, or the service/product available, a memorable (and positive) experience will go a long way. But before delving into what your loyalty program should look like over the next few years, it's important to first identify a few things that should not be part of your customer loyalty plans.

  • Complexity – Loyalty program should not require a 10-page booklet to describe how it works or an advanced degree in mathematics to see what each dollar spent will be worth.
  • Punch cards/Paper tracking – Technology is increasingly a part of our everyday lives and as we move further away from carrying physical cards or currency, your loyalty should reflect this change.
  • Financial-only programs – While these programs are simple, they can force retailers into a cycle of either reducing the value of programs or decreasing margins on these programs.
So, now that you know what your loyalty program shouldn't entail, let's look at some retailers' examples to see what makes for a successful loyalty program for the years ahead, including specific programs and what makes them resonate with consumers.

What loyalty program success looks like
Starbucks' customer loyalty plan has driven adoption of both its mobile app and mobile payment solution. Not only does Starbucks do away with common coffee loyalty friction points like punch cards, but it also integrates the entire customer experience into the app. By allowing customers to order ahead, pay with the app, and use and collect loyalty points all through one simple scan, the coffee chain has reduced the complexity of all these processes for its customers. The program is so successful that Starbucks now drives 27 percent of all its sales through the mobile app compared to 21 percent last year.

Best Buy's loyalty program provides a financial incentive for customers via in-store gift checks based on previous purchases.  However, they take this beyond just a financial incentive to increase loyalty through its elite and elite-plus levels, which add customer perks such as free two-day shipping, early sale access, dedicated support line 24/7 and an extended return and exchange window of up to 45 days.

Offering high-value customers unique shopping experiences is another way to enhance loyalty programs. Target stores recently selected 500 of its Redcard customers for invitations to prelaunch events at select stores, including for the launch of the Victoria Beckham for Target capsule collection. Additionally, Redcard members receive perks such as a 5 percent discount and free shipping.

The 800-pound gorilla in the room is that retailers continue to struggle with Amazon and its approach to customer loyalty via Prime memberships.  Beyond two-day shipping, one click shopping and easy returns, Amazon continues to add features to Prime membership such as Prime video, music, photos and reading to further enhance the service and create customer loyalty.

Taking your loyalty program to the next level
Looking ahead, successful loyalty programs will have to engage consumers through the most convenient channel: mobile. While the argument that a segment of consumers still want to receive paper receipts, punch cards or physical membership cards still exists, it's also important to point out this group is growing smaller each day as consumers become more comfortable with using their mobile device for payments, coupons, Uber or airline tickets.

Truly successful loyalty programs must go beyond making the process simple for consumers by integrating with mobile devices (through apps or mobile web). It's critical that the incentives offered resonate with consumers.  For consumers who purchase regularly, the status quo of offering benefits of coupons, gift checks and expedited shipping might be enough if the process is streamlined. However, for those purchasing less frequently, or purchasing larger-ticket items, loyalty is going to involve more experience-based benefits such as private sales, early access or the ability to use airline or hotel points to purchase exclusive event access to concerts, private chef tasting menus, or wine tastings with your own sommelier (as seen in the hospitality industry).

Go beyond simple push or geolocation features to take advantage of the data your loyalty system can capture to truly make the experience personalized on a one-to-one basis for your customer. By utilizing data, retailers can offer customers detailed product recommendations for items available in the customer's favorite brand, size or any of several other data points such as the item is available now in a store near you. By combining loyalty apps with IoT technologies such as beacons, an app can understand the context of your user journey and offer relevant product reviews, discounts or in-store navigation based on your physical location in store.

Once you have found the right mix of incentives to delight your customers, you'll need to optimize the delivery of your loyalty program for mobile. You could have the best loyalty program but if it's difficult to engage with on mobile, users will become frustrated and adoption will suffer. To optimize the mobile experience whether it's delivered via an app or the mobile web, there are three key areas that can have huge impacts on customer experience:

Performance matters
The Online Retail Performance report states that a 100-millisecond delay in website load time can hurt conversion rates by 7 percent, and 53 percent of mobile site visitors will leave a page that takes longer than three seconds to load. Consumers are not patient to begin with and industry leaders continue to drive rising consumer expectations for performance, such as Facebook using background downloading of articles to give users the impression that when they click on a link the article is loaded instantly.

Quality images
High-quality images are a core component of every retail web experience. Customers can't touch and feel things as they can in-store so providing engaging images is a large part of the customer experience. It can be complicated to deliver high-performance images to mobile devices if you're sending the same images to the mobile device that have been created for the desktop. The best way to address this is by using a digital asset management system that is capable of automatically creating the proper type and size images based on the type of device the consumer is using.

Security
A successful loyalty program will contain many different types of data to enhance the experience and enable technology such as personalization or mobile payments. Loyalty programs are a great way to gather useful data about your best customers and if the data is used in a way that improves the experience, customers are willing to share it — but they expect you to protect this data. Make sure you are following industry best practices for encrypting and storing this data in addition to securing all of your web and API endpoints.

Customers are fickle and brand loyalties can be fleeting.  Any successful program to drive customer loyalty will need to be easy, seamless and provide real value to the consumer.


Jason Miller is chief strategist of commerce for Akamai, a content delivery network and cloud services provider.
 

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