Can brands really afford to nix their loyalty card programs? Dr. Gary Edwards provides his top four loyalty tips for retailers.
Loyalty cards are a staple of the retail marketplace. So when the Midwest grocery chain Jewel-Osco recently announced its intention to discontinue its loyalty card program, the brand ignited a debate over whether or not the loyalty card concept is still a viable strategy for boosting loyalty in certain retail sectors.
Jewel-Osco defended its decision by saying that the brand would instead focus on delivering everyday low prices to all of its customers—a strategy that, on the surface, sounds appealing to price-conscious grocery shoppers.
With more and more retailers recognizing the importance of repeat business and the delivery of first-rate customer experiences, can brands really afford to nix their loyalty card programs? And if so, are there other strategies retailers can use to incentivize customers to make repeat visits and purchases?
The Perks and Pains of Loyalty Cards
Loyalty cards, used effectively, can create behavioral loyalty. But can they make customers attitudinally loyal and true advocates? Loyalty card programs are familiar to most consumers. In exchange for using their cards to identify themselves and their purchases, customers receive discounts on products that have been targeted for loyalty discounts. With rewards accruing, behavioral loyalty is enhanced. However, there is a potential for customers feeling “trapped” by their rewards and this having a negative attitudinal outcome. Not every “gold level” airline mile customer says good things about their airline publicly!
For retailers, cards offer a convenient resource for rewarding customer loyalty and increasing the frequency of store visits. When used strategically, loyalty cards can also increase awareness about new products and serve as a mechanism for distributing information about product recalls or to promote brand events.
Additionally, loyalty card programs often drive retailers’ targeted marketing initiatives. By tracking customer preferences and shopping behaviors, brands gain insights that enable them to shift product selections or even generate tailored promotions to individual consumers.
The downside of loyalty card programs is that they can be expensive to implement and maintain. When used improperly, loyalty cards can sabotage the brand’s other marketing efforts by de-incentivizing customers to purchase products that aren’t attached to a loyalty discount. Other drawbacks include the potential for data inaccuracies and the perceived privacy risk concerns around the disclosure of consumer data.
Top 4 Customer Loyalty Tips for Retailers
There are many different factors to consider when deciding whether or not to get rid of a loyalty card program. But cards or no cards, there are several strategies that all retailers can use to improve loyalty and encourage repeat visits.
1. Focus on the customer first
In the current retail climate, the customer has to be at the core of your business which means winning their hearts not just trapping their wallets. Customer experience management programs can help drive consistent and positive customer experiences by highlighting areas for improvement.
2. Deliver products and services at a reasonable price
One of the things that can get lost in loyalty card conversations is that consumers want it all… value for their money on the original purchase plus the accruing of future reward benefits. By offering a product or service that continuously outperforms customer expectations, you can increase the frequency of visits, cart size and brand advocacy.
3. Promote product awareness and special offers
If you decide to discontinue your loyalty card program, it’s critical to identify an alternative method for collecting customer email addresses and establishing this channel of communication with your customers so you can both gather their preferences and distribute special offers, discounts and seasonal promotions. You can also leverage customer emails to promote product awareness, drawing attention to specific items and offerings.
4. Improve employee engagement
Loyalty is won one transaction at a time. Highly engaged employees can play a key role in connecting with customers. The brand necessity of nurturing a positive environment with job training and growth opportunities to help associates feel confident about their roles in the company is critical.
Loyalty card programs will continue to be a hot topic in grocery and other retail sectors. But ultimately, the issue isn’t about cards—it’s about the urgent need for retailers to understand their customers’ needs and to find new ways to create value including the kinds of memorable experiences that keep customers coming back time and time again.
About the Author
Gary Edwards is chief customer officer at Empathica, a Mindshare Technologies Company, a leading global provider of social Customer Experience Management (CEM) solutions to the world’s most respected multi-unit enterprises. Gary is involved in solving business challenges with research and technology solutions. He has served a key leadership role during program design, implementation, and ongoing development with clients for the past nine years at Empathica.