August 12, 2024
©AndreyPopov via Canva.com
Are Customer Loyalty Programs the Best Method for Retention?
Customer loyalty programs are proving to be a decisive force in the retail industry, with varying amounts of data fueling the study and implementation of this retention strategy.
In 2023, loyalty card promotions emerged as a pivotal tool for customer retention because retailers with well-established loyalty programs saw their customer bases remain “relatively steady,” even in the face of competition from discount stores, according to Retail Express.
The outlet also speculated how more personalized offers, integrated cross-promotional sales, and customized voucher programs that target individuals based on their purchasing patterns would be key to enhancing these programs. With the rise of AI-driven data, this tactic will be empowered with the means to dive deeper into the behaviors of customers and gather more insight into their data.
According to Arrivia, a travel rewards and loyalty platform, “AI loyalty programs utilize machine learning algorithms and predictive analytics to understand customer preferences and behaviors. This AI integration allows programs to offer highly personalized rewards and experiences, making each customer interaction unique and relevant.”
Yet, conflicting views and a rapidly evolving retail industry make the situation volatile and worth further examination.
Previously discussed on RetailWire, Salesforce’s most recent Connected Shoppers Report revealed that many retailers struggle to fully leverage customer data in their loyalty programs. Key challenges include inadequate targeting insights, slow adaptation to market shifts, and fragmented management systems. However, loyalty programs remain appealing to consumers who prioritize earning points, discounts, and free shipping. As of June, when Salesforce released its survey data, 75% of retailers offered such programs, with another 22% planning to introduce them soon.
Another barrier was the notion of “zero consumers,” who exhibit no patience, boundaries, or loyalty. According to McKinsey, these shoppers are unpredictable, balancing concerns about health and sustainability with reluctance to pay extra. Traditional brand loyalty is diminishing, with 61% of U.K. consumers feeling less loyal in 2023 than in 2022, as they prioritized finding the best deals over remaining loyal to brands.
However, a recent survey from gifting company Snappy explained that “in today’s highly competitive business landscape, cultivating and maintaining customer loyalty is crucial.” With a staggering 5.5 million new business applications filed in the U.S. in 2023 alone, according to The Associated Press, even the most established legacy brands “cannot rely on brand legacy for survival.”
Snappy’s survey found that 70% of consumers consider loyalty program offerings crucial when choosing brands, and 72% join these programs before making their first purchase. Additionally, 76% of Americans spend more when enrolled in a loyalty program, and 73% view brands more favorably when they receive quality gifts or exclusive merchandise as part of a loyalty program.
The study also assessed what features are most attractive to shoppers when it comes to these programs, and it found that consumers value rewards points, exclusive discounts, and membership perks like free shipping the most. Personalization plays a critical role, with 91% of respondents preferring programs that allow them to choose their rewards.
To better judge the effectiveness of this retention strategy, here are 10 of the best retail loyalty programs, according to OptCulture:
- Amazon Prime: Offers free shipping, streaming services, and exclusive deals, setting the standard in e-commerce loyalty.
- Sephora Beauty Insider: Features a tiered rewards system with points redeemable for products and experiences.
- Starbucks Rewards: Integrates a mobile app with rewards for free food and beverages, enhancing convenience.
- The North Face XPLR Pass: Rewards adventurous customers with unique experiences and products.
- CVS ExtraCare: Provides savings through points and coupons, plus benefits for pharmacy needs.
- Walgreens Balance Rewards: Combines health-oriented rewards with retail benefits, including points for health activities.
- Best Buy Reward Zone: Offers points on purchases, vouchers, and exclusive sale access.
- DICK’S Sporting Goods ScoreCard: Gives rewards points on purchases with bonuses for spending thresholds.
- IKEA Family: Delivers discounts, free coffee, and extra perks for a more enjoyable shopping experience.
- Ulta Beauty Rewards: Gives points for every dollar spent, with additional perks like discounts and exclusive access.
Per OptCulture, “What sets these programs apart is their ability to evolve with consumer needs and leverage data to continuously improve the customer experience. As retailers continue to innovate and adapt, these programs serve as benchmarks for those looking to enhance their own loyalty strategies.”
BrainTrust
Oliver Guy
Global Industry Architect, Microsoft Retail
Nikki Baird
VP of Strategy, Aptos
Chuck Ehredt
CEO, Currency Alliance
Recent Discussions
Discussion Questions
As retail loyalty programs evolve, how should businesses adjust their strategies to attract new customers while ensuring long-term engagement and retention?
How can retailers balance AI-driven personalization with maintaining authenticity in their loyalty programs amidst rising demands for customized rewards?
Given the challenge of “zero consumers” who prioritize deals over loyalty, what innovative strategies can retailers employ to appeal to these unpredictable shoppers?
Poll
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By virtue of the fact most consumers are members of multiple loyalty schemes, these programs, in and of themselves, do not necessarily drive loyalty. True loyalty and retention come from consistently aligning the proposition to customer needs. What loyalty programs can do, however, is provide insight into consumer behaviors and preferences which, in turn, can be used to strengthen the proposition. Loyalty programs are also good at driving short-term mechanics of spending through tailored deals and promotions.
As first-party data becomes more and more important (I can’t say cookie-less since Google backed off of that but still will have to make it harder to track customers), retailers need loyalty programs now more than ever if they stand any hope of connecting customer behaviors across multiple touch points. However, I would argue that even consistency in identifying relevant items or offers is not enough to drive loyalty. If retailers want to build lifelong customers, what they need is delight. Delight is the combination of pleasing value and an unexpected element, a little surprise, a little bit of “I don’t know what” to paraphrase the French. You’re not going to get that out of optimization or AI, and that’s exactly why loyalty programs are so hard to get right.
The best retention program, of course, is to offer a great product at a good price. But, yes, in competitive markets where everyone does just that, a little extra might help. The goal, I think is to make sure the perks are an addition to that quality product, not a substitute for it.
Before Retailers get too creative with Ai advances they need to make sure they understand the basics that are working well and then build on them. Some simple benefits that bring loyalty include free shipping, discounts for using a Private Label Credit Card, Loyalty Points, Birthday rewards. Personalized coupons. Retailers will be able to use the existing foundation to use AI to augment offers on a personalized basis. Of equal importance will be the ability to ue AI tech to improve Customer experience at more global level. It is almost always less expensive to Keep a loyal customer than earn a new one who is loyal.
Is there anyone you know who belongs to only one customer loyalty program? I am not aware of any. Most consumers join loyalty programs wherever they shop, according to numerous soruces of behaviroal research. Consumers join multiple loyalty programs because they seek to maximize their rewards and savings across different retailers.
Each program offers unique benefits, such as discounts, exclusive deals, or points that can be redeemed for products and services. By participating in multiple programs, consumers can take advantage of the best offers available, ensuring they get the most value from their purchases.
Thus, I do not believe that loyalty programs are the most important factor in retaining customers. Studies have shown that factors such as product quality, customer service, and overall shopping experience play a more significant role in customer retention.
Additionally, many consumers are members of multiple loyalty programs, which diminishes the unique value of any single program. This indicates that while loyalty programs can be beneficial, they are not the primary driver of customer loyalty.
Retention is primarily driven by quality, value, inventory, and service. Quality plays a crucial role in customer retention because it directly affects customer satisfaction and trust. High-quality products or services meet or exceed customer expectations, leading to repeat purchases. When customers know they can rely on a brand for consistent quality, they are more likely to remain loyal over time. Db
Loyalty programs seek to encourage repeat buying based on incentives, deals, and other recognition. Personalized messaging and optimized pricing should be a given, yet many retailers are still working to figure out various pricing and promotions capabilities.
As David B notes, retention is primarily driven by quality, value, inventory, and service. I’d add convenience to this list, as for many shoppers with numerous loyalty memberships, if the prices and deals are generally on par, service and convenience quickly rise to the top of the list. Service and convenience are the home stretch in reducing friction for the consumer and getting the purchase across the line.
This is an important topic and my colleagues have made many good points below. As I have always said, points-based loyalty programs can boost perceived value, but if the customer’s experience with a brand across all touchpoints and the perceived value of the product or service are not good, then little loyalty can be built. Notice that I did not say ‘excellent’ value or experience. It needs to be consistently good – and then you can build all types of differentiating factors on top of that.
In such a competitive market, loyalty programs that are used to capture first-party and zero-party data to enhance customer profiles that ultimately lead to greater personalization are having a material impact on customer acquisition and retention. The problem is that most customers just cannot spend enough money with any one brand to get to interesting rewards. Therefore, brands should be collaborating with complementary brands that are also relevant to common customers – allowing customers to earn the points/miles they value the most, or enabling exchange of points, so customers can shift value collected across many retailers into the program where they perceive the greatest value in rewards. If customers can get to interesting rewards at least yearly, they will be far more motivated to collect the points in the first place.
But at the end of the day, points are just a tool. They key is figuring out what each customer segment values (and perhaps we AI, what each individual customer values) and then doubling down on making those benefits available. I will say my grocery store used to give me about 1 coupon out of 10 that I thought was interesting, but today I am probably getting 4-5 coupons for things I value. That is a significant improvement, and all types of other retailers can do the same if their data management house is in order and the team cares enough to do the hard work of creating incentives that are meaningful to a rapidly evolving customer base.
Loyalty programmes are only part of the story – loyalty in essence is the absence of a better alternative. Retailers could focus on
- Personalization: AI-driven data to offer highly personalized rewards and experiences, making each customer interaction unique and relevant.
- Consistency and Quality: Ensure that the core product or service consistently meets or exceeds customer expectations – thus driving NPS
- Customer Experience: Prioritize a seamless, consistent customer experience across all touchpoints.
Loyalty programs are so ubiquitous that they become almost meaningless. How do we choose where to shop? As BrainTrustee Oliver Guy notes…consistency, quality, and experience. Those elements trump loyalty programs at every turn.
If Starbucks did not have an app with points, offers and the ability to order ahead so that when I picked up my Green Tea it was actually drinkable, I would be spending a LOT less $ there.
If we move over to the stupidly long thermal paper printout of offers any time I go to CVS, well, that incentivizes me to shop at Walgreens.
It is not only the loyalty program’s existence, it is how it is presented. Do it right and you have a winner. Do it wrong and you have a loser.
The tree-killing CVS receipt has actually been shown to motivate behaviors, as shoppers feel that they are getting great values with that string of coupons. CVS tried to move everything to the app or scannable via kiosk in store, and sales went down. There’s something about the physicality of that endless stream of paper.
CVS hired an analytical firm several years ago to “inform” their receipt couponing “accuracy”. Understand that their merchandise partners love to push what is valuable to them in order to drive sales off the shelf. Too much paper, go paperless, place the offers on an app, all valid. I personally sort through the myriad of offers and find the $ off that is most compelling. Unfortunately, most times it is on full price goods and while paying a premium to shop CVS for both convenience and selection, not worth it – shop OTC, Personal Hygiene and more at Costco or Sam’s Club.
Consumers have become very adept at surfing offers to leverage the most opportunistic deals. The idea that a consumer who signs up for Retailer A’s loyalty program won’t shop at the competition just isn’t true. What’s really happening is retailers are “paying” consumers to share their personal data with them so they can track purchasing behaviors and fine-tune their marketing.
Many consumers belong to a variety of loyalty programs. Think grocery, airlines, credit cards, branded gas, coffee shop, each one offering similar benefits. As AI becomes more integrated into the overall data analytics fabric of these programs, personalization will improve. Will it improve to the point of ‘delighting’ a customer as defined in Nikki Baird’s commentary? Probably not today, but watch closely, because AI is a powerful technology that has rapidly advanced in a short period of time.
Loyalty programs are one of several ways to influence customer retention but not the only way. Customized rewards are, indeed, desirable, and why not? AI – in its true form – can better pinpoint the type of reward that each customer would appreciate receiving. As to the “unpredictable shopper”, retailers may get away with suggesting, recommending prodding a product that would definitely interest the customer while it may not represent a good value. In earlier days, it would have been called ‘impulse buying’ but the ‘impulse’ will have been generated by AI analyzing millions of data to come up with a ‘unique’ suggestion.
First, these aren’t loyalty programs. They are reward programs. They are incentive programs. Loyalty is a strong emotion that is supposed to survive most levels of bribery. “Shop here and you’ll get lots of free stuff, and points, and discounts, and…” is not a definition of loyalty. It’s pretty simple bribery. It’s pretty much table stakes. And of course everybody belongs to several programs. Why wouldn’t we? The vast array of bribes available just level the playing. Loyalty comes out of a brand with some level of distinction that consistently delivers on it’s brand promise. It’s a shopping a buying behavior that withstands external bribes. It’s a preference that is earned, not purchased with points, coupons and other goodies. Maybe AI has a role in there somewhere, but I think it boils down to product and performance.
At the end of the day, consumers will prioritize discounts. There’s a difference between aligning with a brand’s values and identity, and repeatedly purchasing a brand. The repeat purchase is often occurring because of cost savings.
Currently loyalty program drives repeated purchase, which is different than loyalty. Loyalty is when you stick with a retailer without reward points and after a bad experience. Companies that can deliver the product and experience without points for repeated purchase have true brand loyalty
Loyalty programs are important but not sufficient. My database of experiments proves that, in every case, existing buyers are hyperresponsive to paid advertising. That is over and above the fact that each of the marketers and retailers had some kind of loyalty program or at least CRM outreach.
Having been in the CRM/Loyalty and Direct Marketing space for 25 years I can attest that having a program is better than not having a commitment to customer retention which hopefully if done right leads to lifetime value. Over time, a basic component to these programs has been some form of currency to “track” value earned and a promise of getting more savings as a member. This framework continues to this day. The lack of imagination in the space is what is most troubling. The BRAND is king, the loyalty program should “follow”. Consumers, Guests, Customers, Frequent Fliers and more are not loyal to a program. Rather, they “get it”. If they don’t sign up, they will miss out on getting more from the relationship with the brand – so they “go along to get along”. It is up to the CMO, CFO and Program Ownership Staff who drive it to apply imagination to what they offer – every business day and do it with operational excellence. Data, insights and leveraging it to drive upward value migration plus building an efficient/effective MarTech stack with partners is essential. Lastly, hire an expert to do an expert’s job. You can’t do it alone and there are brilliant, experienced people who can help and they don’t work on Best Buy, Starbucks and Walgreens accounts. There are many programs who do not get the love/pub that are doing it MUCH better!
As I often say, the current concept of customer loyalty is backwards. People need to be loyal to their family, flag, church, etc., not to a retailer. Retailers need to be loyal to their customers. How? Deliver on their promises to their customers. Figure that out & you can generate the desired continuity of purchase.
Loyalty programs are part of a retailer’s toolbox for customer retention. They do not work if your stores are cluttered and your personnel are poorly trained. Ditto for your technology tools and customer engagement. Loyalty programs work hand in hand with other tools to keep customers satisfied and coming back. For most retail categories, consumers have multiple choices. Build brand trust, deliver value with every engagement, and give them reasons to keep you top of mind.
Loyalty programs have the primary goal of directing consumer behavior. It might not be the main driver, but in a scenario where context and storytelling hold significant influence, loyalty programs allow the creation of the necessary contexts to get closer to the customer, gather data, and offer rewards for repetition or behavior-based actions.
Retailers need to make loyalty programs more about genuine value than just points or discounts. AI-driven personalization is great, but it must feel authentic, not just another algorithmic push. To attract and keep customers, retailers should offer rewards that truly matter to them, like unique experiences or products they can’t find elsewhere.
As for the “zero consumers,” I think the key is flexibility—letting them switch up rewards or offers based on their changing preferences. Retailers should focus on building real relationships rather than just trying to outdo competitors with better deals.
The best loyalty is TIME. Respect my time, give me productivity tools so that I am in-and-out faster. Locking showcases, out of stocks, challenges locating customer assistance and driving customers to have longer in-store experiences (and this is not the whole increase dwell equal increased basket time thing…) which is driving down in-store shopping productivity and increase time on smartphone ordering items of friction through Amazon. Amazon called out this reality on their earnings call 2 weeks ago, extrapolating category sales increases attributing them to retailers locking up more products (detergent, oral care, baby, power tools, etc.).
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By virtue of the fact most consumers are members of multiple loyalty schemes, these programs, in and of themselves, do not necessarily drive loyalty. True loyalty and retention come from consistently aligning the proposition to customer needs. What loyalty programs can do, however, is provide insight into consumer behaviors and preferences which, in turn, can be used to strengthen the proposition. Loyalty programs are also good at driving short-term mechanics of spending through tailored deals and promotions.
As first-party data becomes more and more important (I can’t say cookie-less since Google backed off of that but still will have to make it harder to track customers), retailers need loyalty programs now more than ever if they stand any hope of connecting customer behaviors across multiple touch points. However, I would argue that even consistency in identifying relevant items or offers is not enough to drive loyalty. If retailers want to build lifelong customers, what they need is delight. Delight is the combination of pleasing value and an unexpected element, a little surprise, a little bit of “I don’t know what” to paraphrase the French. You’re not going to get that out of optimization or AI, and that’s exactly why loyalty programs are so hard to get right.
The best retention program, of course, is to offer a great product at a good price. But, yes, in competitive markets where everyone does just that, a little extra might help. The goal, I think is to make sure the perks are an addition to that quality product, not a substitute for it.
Before Retailers get too creative with Ai advances they need to make sure they understand the basics that are working well and then build on them. Some simple benefits that bring loyalty include free shipping, discounts for using a Private Label Credit Card, Loyalty Points, Birthday rewards. Personalized coupons. Retailers will be able to use the existing foundation to use AI to augment offers on a personalized basis. Of equal importance will be the ability to ue AI tech to improve Customer experience at more global level. It is almost always less expensive to Keep a loyal customer than earn a new one who is loyal.
Is there anyone you know who belongs to only one customer loyalty program? I am not aware of any. Most consumers join loyalty programs wherever they shop, according to numerous soruces of behaviroal research. Consumers join multiple loyalty programs because they seek to maximize their rewards and savings across different retailers.
Each program offers unique benefits, such as discounts, exclusive deals, or points that can be redeemed for products and services. By participating in multiple programs, consumers can take advantage of the best offers available, ensuring they get the most value from their purchases.
Thus, I do not believe that loyalty programs are the most important factor in retaining customers. Studies have shown that factors such as product quality, customer service, and overall shopping experience play a more significant role in customer retention.
Additionally, many consumers are members of multiple loyalty programs, which diminishes the unique value of any single program. This indicates that while loyalty programs can be beneficial, they are not the primary driver of customer loyalty.
Retention is primarily driven by quality, value, inventory, and service. Quality plays a crucial role in customer retention because it directly affects customer satisfaction and trust. High-quality products or services meet or exceed customer expectations, leading to repeat purchases. When customers know they can rely on a brand for consistent quality, they are more likely to remain loyal over time. Db
Loyalty programs seek to encourage repeat buying based on incentives, deals, and other recognition. Personalized messaging and optimized pricing should be a given, yet many retailers are still working to figure out various pricing and promotions capabilities.
As David B notes, retention is primarily driven by quality, value, inventory, and service. I’d add convenience to this list, as for many shoppers with numerous loyalty memberships, if the prices and deals are generally on par, service and convenience quickly rise to the top of the list. Service and convenience are the home stretch in reducing friction for the consumer and getting the purchase across the line.
This is an important topic and my colleagues have made many good points below. As I have always said, points-based loyalty programs can boost perceived value, but if the customer’s experience with a brand across all touchpoints and the perceived value of the product or service are not good, then little loyalty can be built. Notice that I did not say ‘excellent’ value or experience. It needs to be consistently good – and then you can build all types of differentiating factors on top of that.
In such a competitive market, loyalty programs that are used to capture first-party and zero-party data to enhance customer profiles that ultimately lead to greater personalization are having a material impact on customer acquisition and retention. The problem is that most customers just cannot spend enough money with any one brand to get to interesting rewards. Therefore, brands should be collaborating with complementary brands that are also relevant to common customers – allowing customers to earn the points/miles they value the most, or enabling exchange of points, so customers can shift value collected across many retailers into the program where they perceive the greatest value in rewards. If customers can get to interesting rewards at least yearly, they will be far more motivated to collect the points in the first place.
But at the end of the day, points are just a tool. They key is figuring out what each customer segment values (and perhaps we AI, what each individual customer values) and then doubling down on making those benefits available. I will say my grocery store used to give me about 1 coupon out of 10 that I thought was interesting, but today I am probably getting 4-5 coupons for things I value. That is a significant improvement, and all types of other retailers can do the same if their data management house is in order and the team cares enough to do the hard work of creating incentives that are meaningful to a rapidly evolving customer base.
Loyalty programmes are only part of the story – loyalty in essence is the absence of a better alternative. Retailers could focus on
Loyalty programs are so ubiquitous that they become almost meaningless. How do we choose where to shop? As BrainTrustee Oliver Guy notes…consistency, quality, and experience. Those elements trump loyalty programs at every turn.
If Starbucks did not have an app with points, offers and the ability to order ahead so that when I picked up my Green Tea it was actually drinkable, I would be spending a LOT less $ there.
If we move over to the stupidly long thermal paper printout of offers any time I go to CVS, well, that incentivizes me to shop at Walgreens.
It is not only the loyalty program’s existence, it is how it is presented. Do it right and you have a winner. Do it wrong and you have a loser.
The tree-killing CVS receipt has actually been shown to motivate behaviors, as shoppers feel that they are getting great values with that string of coupons. CVS tried to move everything to the app or scannable via kiosk in store, and sales went down. There’s something about the physicality of that endless stream of paper.
CVS hired an analytical firm several years ago to “inform” their receipt couponing “accuracy”. Understand that their merchandise partners love to push what is valuable to them in order to drive sales off the shelf. Too much paper, go paperless, place the offers on an app, all valid. I personally sort through the myriad of offers and find the $ off that is most compelling. Unfortunately, most times it is on full price goods and while paying a premium to shop CVS for both convenience and selection, not worth it – shop OTC, Personal Hygiene and more at Costco or Sam’s Club.
Consumers have become very adept at surfing offers to leverage the most opportunistic deals. The idea that a consumer who signs up for Retailer A’s loyalty program won’t shop at the competition just isn’t true. What’s really happening is retailers are “paying” consumers to share their personal data with them so they can track purchasing behaviors and fine-tune their marketing.
Many consumers belong to a variety of loyalty programs. Think grocery, airlines, credit cards, branded gas, coffee shop, each one offering similar benefits. As AI becomes more integrated into the overall data analytics fabric of these programs, personalization will improve. Will it improve to the point of ‘delighting’ a customer as defined in Nikki Baird’s commentary? Probably not today, but watch closely, because AI is a powerful technology that has rapidly advanced in a short period of time.
Loyalty programs are one of several ways to influence customer retention but not the only way. Customized rewards are, indeed, desirable, and why not? AI – in its true form – can better pinpoint the type of reward that each customer would appreciate receiving. As to the “unpredictable shopper”, retailers may get away with suggesting, recommending prodding a product that would definitely interest the customer while it may not represent a good value. In earlier days, it would have been called ‘impulse buying’ but the ‘impulse’ will have been generated by AI analyzing millions of data to come up with a ‘unique’ suggestion.
First, these aren’t loyalty programs. They are reward programs. They are incentive programs. Loyalty is a strong emotion that is supposed to survive most levels of bribery. “Shop here and you’ll get lots of free stuff, and points, and discounts, and…” is not a definition of loyalty. It’s pretty simple bribery. It’s pretty much table stakes. And of course everybody belongs to several programs. Why wouldn’t we? The vast array of bribes available just level the playing. Loyalty comes out of a brand with some level of distinction that consistently delivers on it’s brand promise. It’s a shopping a buying behavior that withstands external bribes. It’s a preference that is earned, not purchased with points, coupons and other goodies. Maybe AI has a role in there somewhere, but I think it boils down to product and performance.
At the end of the day, consumers will prioritize discounts. There’s a difference between aligning with a brand’s values and identity, and repeatedly purchasing a brand. The repeat purchase is often occurring because of cost savings.
Currently loyalty program drives repeated purchase, which is different than loyalty. Loyalty is when you stick with a retailer without reward points and after a bad experience. Companies that can deliver the product and experience without points for repeated purchase have true brand loyalty
Loyalty programs are important but not sufficient. My database of experiments proves that, in every case, existing buyers are hyperresponsive to paid advertising. That is over and above the fact that each of the marketers and retailers had some kind of loyalty program or at least CRM outreach.
Having been in the CRM/Loyalty and Direct Marketing space for 25 years I can attest that having a program is better than not having a commitment to customer retention which hopefully if done right leads to lifetime value. Over time, a basic component to these programs has been some form of currency to “track” value earned and a promise of getting more savings as a member. This framework continues to this day. The lack of imagination in the space is what is most troubling. The BRAND is king, the loyalty program should “follow”. Consumers, Guests, Customers, Frequent Fliers and more are not loyal to a program. Rather, they “get it”. If they don’t sign up, they will miss out on getting more from the relationship with the brand – so they “go along to get along”. It is up to the CMO, CFO and Program Ownership Staff who drive it to apply imagination to what they offer – every business day and do it with operational excellence. Data, insights and leveraging it to drive upward value migration plus building an efficient/effective MarTech stack with partners is essential. Lastly, hire an expert to do an expert’s job. You can’t do it alone and there are brilliant, experienced people who can help and they don’t work on Best Buy, Starbucks and Walgreens accounts. There are many programs who do not get the love/pub that are doing it MUCH better!
As I often say, the current concept of customer loyalty is backwards. People need to be loyal to their family, flag, church, etc., not to a retailer. Retailers need to be loyal to their customers. How? Deliver on their promises to their customers. Figure that out & you can generate the desired continuity of purchase.
Loyalty programs are part of a retailer’s toolbox for customer retention. They do not work if your stores are cluttered and your personnel are poorly trained. Ditto for your technology tools and customer engagement. Loyalty programs work hand in hand with other tools to keep customers satisfied and coming back. For most retail categories, consumers have multiple choices. Build brand trust, deliver value with every engagement, and give them reasons to keep you top of mind.
Loyalty programs have the primary goal of directing consumer behavior. It might not be the main driver, but in a scenario where context and storytelling hold significant influence, loyalty programs allow the creation of the necessary contexts to get closer to the customer, gather data, and offer rewards for repetition or behavior-based actions.
Retailers need to make loyalty programs more about genuine value than just points or discounts. AI-driven personalization is great, but it must feel authentic, not just another algorithmic push. To attract and keep customers, retailers should offer rewards that truly matter to them, like unique experiences or products they can’t find elsewhere.
As for the “zero consumers,” I think the key is flexibility—letting them switch up rewards or offers based on their changing preferences. Retailers should focus on building real relationships rather than just trying to outdo competitors with better deals.
The best loyalty is TIME. Respect my time, give me productivity tools so that I am in-and-out faster. Locking showcases, out of stocks, challenges locating customer assistance and driving customers to have longer in-store experiences (and this is not the whole increase dwell equal increased basket time thing…) which is driving down in-store shopping productivity and increase time on smartphone ordering items of friction through Amazon. Amazon called out this reality on their earnings call 2 weeks ago, extrapolating category sales increases attributing them to retailers locking up more products (detergent, oral care, baby, power tools, etc.).