For retailers, the balancing act between being relevant and being too “big brother” is becoming ever more precarious. Customers’ expectations are a moving target and companies’ capabilities are advancing at unprecedented rates.
Amid the proliferation of personalization and CRM technologies, customers have come to expect retailers to know who they are, what they purchased, and their preferences for interaction, but to not go so far as to invade their privacy and sense of security. Retailers are implementing customer-focused, omnichannel capabilities to meet these evolving expectations, but the transition has revealed a lack of foundational capabilities, siloed data, and complex legacy ecosystems.
Rising Bar Of Shopper Expectations
As new customer experiences continue to rise, there is a significant increase in demand for omnichannel services. Customers not only expect to connect with retailers seamlessly across channels, but also expect personalized communications and targeted offers. The 2013 Cognizant Shopper Study revealed the top three personalization factors that influence purchase behavior.
- Special treatment based on loyalty: The top personalization action rated by consumers in a store is receiving special treatment based on loyalty. This includes exclusive shopping events, pre-sales, and additional discounts.
- Acknowledgement of status: This can be expressed by dedicated customer service, customer appreciation letters and personalized communication.
- Personalized offers: Customers are most likely to offer retailers personal information in exchange for loyalty rewards, allowing retailers to deliver offers based on purchase history.
A successful omnichannel loyalty program has the ability to deliver on all these expectations by breaking down silos across the enterprise. A true omnichannel loyalty program will engage the customer at the right time, at the right place, through the right channel, with the right message.
The Imperatives Of Omnichannel Loyalty
When executed correctly, an omnichannel loyalty program can help identify customers, connect online and offline data to better understand indicators of purchase, deliver timely and relevant experiences, and motivate and reward customers for key behaviors that drive sales. Investing in omnichannel loyalty is crucial for retailers for a variety of reasons.
Firstly, traditional loyalty programs do not reward loyal behaviors. Most traditional programs reward “spend” rather than “engagement”, and do not reward behaviors that lead to purchase or influence others to purchase. Secondly, cross-channel engagement leads to sales. Engaged customers are 23% more profitable while actively disengaged consumers cost 13%, according to Gallus research. Thirdly, customers are loyal to omnichannel retailers. ECommerce agency Corra’s research in 2013 found around 80% of Americans indicate they are more likely to become loyal to retailers who provide a seamless shopping experience across devices. And lastly, omnichannel loyalty programs drive preference. Many demographic segments indicate that they are more likely to choose a brand because of a robust loyalty program.
Improving customer experience is at the top of mind for most major retailers. However, in a Forrester study, only 37% of companies listed customer engagement as one of the top business objectives for loyalty campaigns. Moreover, only 42% of the companies polled reported that their loyalty programs offered an experience-based campaign versus strictly discount-based.
Omnichannel loyalty remedies this problem by placing customer engagement much higher on the priority list. With the current trends in place, this will undoubtedly continue as a response to customer expectations and buying behavior. Omnichannel loyalty is indeed all about delivering the right message at the right time in the right way across the channels the customer chooses.
Building Blocks Of An Omnichannel Loyalty Program
Although it may seem overwhelming to transition a program to the omnichannel paradigm, building an omnichannel loyalty program does not require a complete reboot of an existing program. Incremental adjustments to an existing loyalty program have the potential to generate substantial gains. In order to enable an omnichannel loyalty program, retailers should:
- Enable loyalty functionality such as enrollment, accrual and redemption across all channels
- Reward customers for shopper activity that go beyond purchase alone (such as social interactions)
- Stay connected with customers through social media, local and mobile technologies
- Ensure a seamless experience and consistency across all loyalty interactions
- Make loyalty offers and communication relevant and compelling through sophisticated use of data
Throughout the entire process, it is critical to focus on a few factors:
- Start slow: There is no need to do everything at once. Make incremental changes and build on success.
- Take advantage of existing data: Use customer data to create relevant experiences and strategies. Track everything and measure all results.
- Use campaigns to test: Individual omnichannel loyalty campaigns can serve as a testing ground for larger strategies.
The Omnichannel View Of The Customer
Retailers must ensure they are focusing on strategic goals when implementing an omnichannel loyalty program. Although new technology and tactics are required, especially when it comes to the collection and use of data, the fundamental goals and resulting benefits of effective loyalty programs are unchanged. Through a unified view of the customer, retailers can deliver differentiated messaging in the most cost-effective way, improving profitability and competitiveness.
Shannon Warner is an Assistant Vice President within Cognizant Business Consulting, providing digital transformation business advice to retail, consumer goods, manufacturing, travel, hospitality and utilities/energy companies seeking to provide cohesive, relevant, value-added customer experiences across bricks-and-mortar, Web, mobile, social media and call center touch points. Shannon’s areas of expertise include digital commerce, digital information strategy and management, customer experience management, digital marketing and loyalty, and program management.