Can loyalty programs ease supply chain blues this holiday season?

Source: Best Buy
Nov 23, 2021

Through a special arrangement, presented here for discussion is a summary of a current article from The Wise Marketer, a website and newsletter serving the global loyalty industry.

What’s the hottest gift on American wish lists this holiday? Fulfillment. And while companies won’t be able to resolve all the product shortages, retailers can tap their loyalty programs and their data insights to help members avoid out-of-stocks.

Well run loyalty programs include three features that can help them beat the IOU holidays blues:

  • Collecting the right data to understand member preferences. 
  • Deriving insights from members’ online browser activity. 
  • Supporting one-to-one, real-time engagement via text and email.

Here are how these features can help save the holidays:

  • Play Santa with the wish list: Invite active members to share their holiday lists and, in return, send notifications when the desired products are in stock. Shoppers might then have a window of time (say, 24 hours) to snap up what they want. Such “live lists” would present real-time, “saved my butt” benefits to members, which they will likely remember, while providing loyalty marketers pinpoint data via opt-in engagement.
  • “If you like that, you’ll love this”: Based on shared member gift lists, or purchase and behavioral data collected via a rewards program, merchants can send suggestions of products that are similar to hard-to-get items. This ensures members have several options with that merchant so they can get their mitts on something close to what they want.
  • Improve customer odds with lottery-like events: This is a build on list sharing. Merchants can send “get in the game” notifications to members about drawings for hot products when they are in stock. Those who enter have a chance to get dibs on items when they are in stock — or even win them.
  • Let members know the clock’s ticking: Shoppers have said they plan to start shopping early, yet 16 percent of loyalty members say they could not find information about product availability online, according to a recent report by The Verde Group. Loyalty apps can send gentle reminders that estimate how much time it will take for goods to arrive to the member or, even better, provide loyalty members exclusive shipping timelines that are faster than those of non-members.

DISCUSSION QUESTIONS: Should and can out-of-stocks be positioned as a loyalty perk? Which of the suggestions offered in the article around the use of loyalty data appear most beneficial and are there any you would add?

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"These are great suggestions, injecting transparency into a known problem. "

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11 Comments on "Can loyalty programs ease supply chain blues this holiday season?"

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Michael La Kier

Retailers have long leveraged scarcity to drive holiday sales, but now scarcity is being thrust upon us all. It’s not so much loyalty programs that can be a perk, but retailers can leverage the current situation to up their value proposition for all types of shopper communication. Supply chain issues beg for better communication between the retailer and shopper, loyalty program or not.

Bob Amster

It is an interesting concept. It does not solve the out-of-stock problem but it can add value to a retailer’s loyalty program. The lottery option, once implemented, is not going to go away.

Melissa Minkow

Live lists where shoppers share their wishlists in advance and are alerted when items are in stock is a great idea. Most of these suggestions highlight the need for a flexible, real-time demand forecasting model. The better retailers get at understanding the timing of consumer needs, the less of a problem these stockout issues will be.

Leveraging loyalty programs as a way into shopping patterns and rewarding those members with reliable inventory levels is smart.

I would also like to see shoppers opt in to receiving items in certain longer term windows. Letting shoppers know in advance that they could be waiting a long time is a transparent way to manage expectations and avoid disappointment.

Jeff Sward

These are great suggestions, injecting transparency into a known problem. Acknowledging the problem and communicating with with the customer is absolutely a trust building vehicle.

Shep Hyken

A nice perk for being a member of a loyalty program is to have your name on the “top of the list” for when an item is in-stock. While most loyalty memberships are free, it is a win/win for the retailer and the consumer. The retailer gets their customer’s info and the customer gets on the “preferred” list. However an out-of-stock item is still out of stock. Expectations must be managed properly.

Kathleen Fischer

In today’s environment, it definitely seems to be a perk. Although it may not add enough value if customers still can’t get the items they want.

Chuck Ehredt

These types of suggestions are precisely why customers should be motivated to join loyalty programs in the first place. For most brands, the vast majority of their customers are not active in their loyalty program, so using this benefit could be a way to extend membership and drive more activity. Of course for out-of-stock items, good communications with program members and priority allocation of inventory can be a way to reduce tensions around scarce goods. Thanks Jenn for sharing.

Rich Kizer

I certainly like the notion of cultivating your customer’s wish lists. That is gold information. And I do like the wish list, but what scares me is if I still get nothing off that list, will I feel abandoned and left out? If I were world king of retail, I would be “all in” on any loyalty effort that we could make work for most customers.

Kai Clarke

Price, price, price! Anyone who seriously thinks that they can drive loyalty through availability (or lack thereof) is forgetting the top rule in retailing. OOS impact the customer experience, as do returns, and customer service on the whole. However, none of these will impact the issues that we are having with our supply chain. Logistics are a key issue that need full management on their own, separate from loyalty programs.

John Hennessy
John Hennessy
Retail and Brand Technology Tailor
1 year 10 days ago

I have too often found loyalty programs to be about customer loyalty to the store. The loyalty from store to retailer is often the missing link. Many of these suggestion offer ways the retailer can demonstrate it’s loyalty to shoppers. It’s not about points and general rewards, it’s about filling out Christmas lists. That’s pretty powerful. Just don’t make any promises you can’t keep. You don’t want to say something is available and then not have it be there when the shopper comes up. A sure way to go from nice to naughty.

Anil Patel

A brand’s loyal customers are those that align with their assortment choices and are more than satisfied with the brand’s shopping experience. Through effective use of customer data, retailers can also identify customers who are more likely to shop with them over competitors.

When faced with resource constraints, it makes sense for retailers to prioritize loyal customers above others based on this interest-based customer-retailer relationship.

While I believe the above-mentioned strategies are a good way to deal with supply chain shortages, a good pre-orders strategy will be more effective during this crisis.

Customers who pre-order are willing to wait on their purchases. So only those customers who are actually interested in your product will choose pre-orders.

For example, one of our clients, Steve Madden offers an option to pre-order out-of-stock items to their customers. This method has shown to be an excellent way for them to increase profits. So much that, in order to meet the expectations of their loyal customers, they are willing to use alternate and more expensive shipping methods.

"These are great suggestions, injecting transparency into a known problem. "

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