Retail TouchPoints: Retail Loyalty Programs Lag in Customer Metrics
Through a special arrangement, what follows is an excerpt of a current article from the Retail TouchPoints website, presented here for discussion.
A new survey of retailers showcases the sophistication and diverse multi-channel approach best in class companies are bringing to loyalty programs. At the same time, the report makes it all too obvious that many retailers are still checking "don't know" and "don't measure" when it comes to key metrics around loyalty programs like churn, retention, and customer satisfaction.
The results came from a new study from Retail TouchPoints and The Aberdeen Group titled: Responsive Customer Loyalty: Creating Customer Commitment in Retail.
Among the signs of multi-channel loyalty management is the spread of data in operationalizing member acquisition. Retailers submitted all applicable information to the questions asked in the report and it found that 45 percent of retailers register customers via sales associate in the store, 41 percent at the point of sale, and 41 percent online. Twenty-one percent currently use "cross channel loyalty tools that align with cross-channel customer demand," with 34 percent saying they plan to implement this capability within the next year.
"Retailers are using multi-channel tools for loyalty programs and that's good news," said Sahir Anand, senior research analyst, Retail and CPG Practice for Aberdeen Group. "In order for loyalty to work it has to be drawn to multi-channel tools. It must be utilized in store and online. It's the only way for the customer that gets a special offer at the POS to redeem it online or vice-versa. Multi-channel operations are the only way to operationalize loyalty."
Still, as Mr. Anand said, "There are gaps." Some key metrics in the report go unmeasured by retailers. For example, year-over-year same-store performance was unknown by 35 percent of respondents. Similar numbers were tracked for market basket size, customer retention and customer churn, all key data points for any loyalty program. Other unknowns are more dramatic. When asked "what percentage of your current customer base are promoters of your brand" only nine percent of the respondents said more than half of their customer base promoted their brand. Forty-six percent of respondents did not measure promotion among their customer base at all.
"Very concerning," said Mr. Anand. "Not enough retailers equate loyalty with data. It's an extremely fragmented industry in that regard. Retailers must understand the importance of managing their knowledge development. Only after you manage knowledge can you manage performance."
Discussion Questions: How essential is a multi-channel approach in driving loyalty programs? Which metric do you think is most revealing in evaluating the success of loyalty programs? Is the retail industry doing enough to understand the key metrics driving loyalty programs?