Old-fashioned loyalty programmes are no longer fit for purpose, says Patrick Mareuil, managing director EMEA at Airship…
Retail brands have faced titanic struggles over the past two years, from national lockdowns, through supply chain disruption, to the emergence of new virus variants that threaten economic recovery. Throughout this turbulent period, customer loyalty has been key. Whether consumers have returned to the high street or stayed at home and switched to online shopping, brands have needed to maintain a direct connection to customers to survive.
Solving the customer loyalty challenge is vital to creating long-term value, because it is five to eight times more expensive to acquire a new customer than to retain a current one, and existing customers have a much higher probability of repurchasing. Customers that are truly connected to a loyalty programme are measurably more valuable – Ulta Beauty, a leading retailer of beauty products in the US, disclosed that its omnichannel members spend three times more per year than its store-only guests.
But the pandemic has made it tougher to build customer loyalty. Consumer behaviour is changing, and the explosion of e-commerce means it is easier and more convenient for customers to shop with competitors who are mere clicks or taps away.
Plus, old-fashioned loyalty programmes are likely no longer fit for purpose, because while a large proportion of consumers have joined some form of loyalty scheme, more than half of memberships are inactive, according to research by Mintel. Back in 2016, Airship found consumers weren’t using loyalty programmes in-store most commonly due to not bringing the loyalty card (43 percent) or forgetting they were a loyalty member (40 percent).
Fortunately, brands are realising they can no longer rely solely on the mere existence of loyalty programmes. Mobile wallets offer a simple mobile-ready version of loyalty cards to overcome these common in-store setbacks, but many brands are going much further by putting mobile apps at the centre of their loyalty schemes to engage and retain customers wherever they are.
According to Airship’s recent survey, 70 percent of UK respondents on average are using apps across all industries more or about the same since the pandemic began. Apps offer several advantages by creating the highest levels of value for both brands and consumers alike. For example, Hagebau, one of the largest DIY retailers in Germany, allows its customers to monitor product availability and make reservations for store pick-up via the app. Research shows app users produce three-and-a-half times more revenue than other shoppers and are three times more likely to make a repeat purchase.
Not only do mobile apps make being a loyalty member more convenient by proactively stimulating, managing and communicating rewards earned, they can offer customers more redemption choices, personalise engagement and even gamify the experience. The continual care and feeding of loyalty programmes that mobile apps enable can help sustain engagement, improve customer experiences and drive critical business results going forward.
The power of data
For retailers, mobile apps offer better opportunities to truly understand their customers and form stronger direct relationships, as it’s much easier to tie together their digital and physical activities and engage them more personally throughout their journey with the brand. For instance, apps can gather real-time behavioural data, which enable brands to deliver personalised offers and rewards, as well as tailor the customer experience to the individual user.
A recent survey of 9000 global consumers found that “interests relevant to a brand” and “what they’ve browsed on a brand’s app or website” are among the top five items consumers are willing to share with brands for personalised interactions and special incentives – ahead of more traditional information like postal addresses or demographics.
As a result, brands can leverage the trusted exchange that mobile apps create to directly collect ‘zero-party data’ (ie: data users wilfully share through forms or questions), such as communication preferences, gender, family composition and interests, to enhance user experience and messaging relevancy.
Good app onboarding strategies typically enable brands to set micro-goals around the important information they are looking to get from customers and ask for it in separate, progressive steps across messages, app & feature tours, and surveys triggered at just the right time.
Behavioural data can also help brands to pinpoint app users or loyalty members who are inactive or at risk of churn. Once identified, brands can send personalised offers and incentives to re-engage the customer.
The next steps
There are many more ways mobile apps can engage with customers too. The more options a brand has for interacting with its customers, the better it can orchestrate the customer experiences and the more valuable those shoppers become through increased use and interaction. Telecom company Orange, for instance, has used in-app messages to cross-promote other products, including informing customers about another one of its apps that identifies anonymous callers, resulting in a 21 percent greater clickthrough rate than banner adverts promoting it.
Of course, brands must remember not to irritate app users by sending excessive push notifications, as, according to Airship’s recent survey, the #1 reason consumers opt out of smartphone communications is too-frequent messaging. The second most common opt-out reason was “information not relevant/personalised to my needs”, which goes to show how tailored and targeted brands’ efforts must be. Additionally, by moving away from a purely transactional loyalty relationship with consumers and towards programmes that use richer customer data and more experiential benefits, brands can offer far more personalised shopping experiences and individualised rewards that will reach much deeper into the hearts, minds and wallets of customers.
The pandemic has accelerated the shift towards online shopping and mobile app adoption. Brands must act on this trend by optimising the customer journey and reducing friction, which will offer customers a better experience and drive loyalty. Plus, mobile is the only screen customers are never without, so forward-thinking brands should certainly consider adopting a mobile app-first strategy to remain relevant.
By Patrick Mareuil
Managing Director EMEA