Tag Archive for loyalty

The Importance of Loyalty Programs to Retail Omnichannel

Retailers are playing catch up to consumers with omnichannel.  Many shoppers are already behaving in a seamless manner across channels either through webrooming (research online and buy in store), showrooming (research in store and buy online) or using their mobile device to do both while in store.  In other words, consumers are already embracing omnichannel.

Loyalty Programs Role in Omnichannel

For retailers, data limitations and technology complexities have slowed their ability to execute omnichannel.  The single biggest challenge to implementation is building a customer centric view that associates all activities of a shopper (e.g., transactions, web searches, store visits, mobile app usage).

The data simply doesn't exist for most retailers to build this customer centric view and the challenge remains how to "mark" the shopper as he or she interacts with them.  This goes beyond a customer just leaving a footprint.  It requires identifying the shopper while he or she is interacting with the retailer in real time in order to achieve optimal impact of omnichannel.

Although there is hype about potential new technology innovations, for the foreseeable future, the best answer to build this customer centric view is through a loyalty program.  The loyalty program provides the unique identifier to link customer activity to a shopper.

Design of Loyalty Programs for Omnichannel

In order to best deliver omnichannel, a new way of thinking about loyalty program design is required.  Traditionally, loyalty programs reward shoppers for transactions - e.g., "buy 5 and get 1 free".  The reward motivates shoppers to purchase more than he or she would have done otherwise.  This is the traditional "value of loyalty" business case for loyalty programs.

With omnichannel, loyalty program design must reward shoppers for identifying themselves while interacting with the retailer (e.g., "checking in" when entering a store, saving online research to your cart).   Essentially, the retailer puts the burden of data capture on the shopper but if the loyalty rewards are designed appropriately, he or she will do so willingly.

The business case for the omnichannel loyalty program design is built upon optimizing customer engagement in real time.  Because the retailer knows who the shopper is and his or her prior interactions, the retailer will improve closing sales leads (e.g., webrooming, showrooming), more effectively cross / upsell and entice new transactions.

It's worth noting that traditional loyalty program design can work synergistically with an omnichannel focused program.  In fact, if a traditional loyalty program exists, it accelerates implementation of the omnichannel component because core loyalty infrastructure already exists.

However, in either case, new capabilities, especially technology related, are needed to enable an omnichannel focused loyalty program (e.g., rewarding geo-location).  As an alternative to building proprietary technology, companies like Bckstgr provide these capabilities in a turn key fashion for retailers.

Once the loyalty program in place, the retailer has the platform to effectively execute omnichannel.  This coupled with real time customer engagement capabilities provides the retailer the ability to achieve the full benefits associated with omnichannel - that is, improve closing sales leads, more effectively cross / upsell and entice new transactions.

How Loyalty Programs Should Leverage Big Data

With so much buzz around Big Data, it seems like virtually every industry is scrambling to figure out what to do with it.  I had the honor of speaking at the Loyalty Americas 2013 conference this week to experts in the Travel and Loyalty industries about that very topic, namely "how should Loyalty programs leverage Big Data".

Since the topic generated so much interest and a lot of great questions, I thought I would share the highlights of what was discussed.

First, loyalty programs may not have the Volume part of Big Data's three Vs (volume, variation, velocity) but it definitely has Variation and Velocity.  As such, Big Data technology solutions still have relevance.

However, processing Big Data is not an objective unto itself.  It's a means to an end.  For Loyalty, Big Data capabilities open up new sources of data that are fast moving and sometimes unstructured (e.g., social data).  The real question is what do the new sources of data help enable.

Regardless of Big Data, Loyalty's key levers to motivate, engage and reward their members are:

  • Points accrual offers and opportunities
  • Points redemption offers and opportunities
  • Cross / up sell offers of merchant's core products
  • Customer service - either 'surprise and delight' or recovery actions.

The Loyalty industry should think of Big Data as an exciting new input to better execute against one of the aforementioned levers.  I stress the word 'input' because Big Data is just that.  Predictive analytics / decision frameworks that leverage Big Data are the true enabler of value.  

Yes, processing Big Data into a usable format is critical and foundational.  However, you must still extract 'intelligence' out of the data in order to take action.  That's where predictive analytics / decision frameworks like complex event processing, machine learning algorithms, optimization algorithms, rules engines, etc. come in.  To capture value (i.e., improved execution against one of the value levers), the output of the enablers must be plugged into business processes in order to take action.

For Loyalty, the goal must be to take action based on the input in real time.  Loyalty is all about engagement with members to gain and retain stickiness.  There is a huge opportunity to engage with your membership in real time based on actions they are taking on web, mobile and social channels and experiences in your operation.  It's the loyalty program of the future and it's here now.

With that said, there is also tremendous value to be gained from using Big Data to build a deeper understanding of their members over time.  In parallel, loyalty programs should be enhancing their CRM to capture these data insights but this effort should not be in replace of real time decisions and actions.

What do you think about Loyalty and Big Data?  We'd love to hear your thoughts.