By Samantha Murphy
Through a special arrangement, what follows is an excerpt of a current article from Chain Store Age Magazine, presented here for discussion.
As shoppers rely on the web to research merchandise and make purchases, they are also demanding that the medium support store-level services, including loyalty programs. But traditional point-based, or clipless coupon-style programs, just won't do. Instead, shoppers are demanding immediate, specific and individualized attention that fits their needs and behaviors. So retailers are looking beyond basic store-level methods as they shift their loyalty efforts online.
Some companies are unsure of where to start their online loyalty journeys. Others are already using new programs to collect shopper data, and learn how to attract and cater to each shopper.
"If you are interested in changing your loyalty program or starting a new one, take a step back. Avoid doing so just because the other guys are doing it," said Lisa Bradner, senior analyst for Cambridge, Mass.-based Forrester Research.
"Think about how you are differentiating yourself from competitors and what you're doing to drive loyalty, vs. the others," she said. "And once a program is in place, make sure you leverage it."
But the bigger challenge is getting started, according to Rick Fernandes, CEO, Webloyalty. Here are a few of his hints on where to begin:
1) Understand your goals: For example, some want to increase the margin of transactions; others want to drive new business. "Once you identify exactly what you want, it's easier to generate a goal-specific program," said Mr. Fernandes.
2) Try before you buy: Before embarking on a program, retailers should pretend they are customers to test the service. Said Mr. Fernandes, "If you run into any major issues or if it's not the way you envisioned it, re-think the process or switch services."
3) Check references: When picking a Web-based loyalty program, getting company references is key. Also, talk to competing companies as well.
4) Map back: Make sure the loyalty program links back to the company brand and retailing strategy. "Be sure to stress a strong link between your retail channels," said Mr. Fernandes.
5) Determine the cost of loyalty: Different goals may cost different prices. In the end, however, the benefits may outweigh the financial negatives.
6) Establish a marketing strategy: [Market] through a variety of customer touchpoints. These can include sending marketing messages via order confirmation and status e-mails, and on a variety of places within a retailer's Web site.
By homing in on the objective, and then complementing that point with the right marketing strategy, retailers can warrant strong results.
Discussion Questions: What would you recommend as criteria for setting up an online loyalty program? Should they differ in any way from store loyalty programs?