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Trend Watch: Crowdsourcing And Loyalty Programs Converge

Crowdsourcing and loyalty programs have become common tools in retailers’ marketing arsenals. These two engagement touch points are now converging into an intruiging opportunity for retailers to potentially kill two birds with one stone: engage a highly social customer base, while also collecting data and ideas that can help to continue innovating a brand.

Both crowdsourcing and loyalty programs have their fair share of issues, and marketers have to prepare accordingly when integrating both concepts. According to Leslie Hand, Research Director for IDC Retail Insights, crowdsourcing “attaches customers to the outcome” which can amplify negative feedback if wishes are not fulfilled.

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“I’ve talked to people who have backed a lot of Kickstarter programs, and they contribute money to particular products — not to invest and make a lot of money off of them — but to obtain the product in the end,” Hand said in an interview with Retail TouchPoints. “And I think more and more that we’re going to see Millennials attach themselves to retailers in this way only for the outcome.”

Kickstarter is a funding platform where people can submit ideas and projects in order to receive funding from supporters. Since the site launched in 2009, more than $850 million has been pledged, funding 50,000-plus projects.

There is always the possibility that a retailer cannot fulfill an idea crowdsourced from the community. But when done correctly, the loyalty program aspect can help retailers turn these negative customer experiences into more memorable and positive encounters. Offering incentives often is a suitable tactic for alleviating a disappointing interaction.

“The merchant always has the opportunity to offer incentives and promotions, and I think that they can do that to attract customers or do it in lieu of instant gratification,” said Ann Grackin, CEO of ChainLink Research, in an interview with Retail TouchPoints. “So if they were expecting 10 customers, but instead got 20, there’s nothing like a rain-check or a discount that can make the customer say: ‘Oh, okay. You made it up to me.’ Instead of saying ‘sorry’, retailers can take the next step and turn that negative into a positive.”

SMBs Benefit From Crowdsourced Loyalty

Although it may be difficult to measure the incremental value or ROI of the customer’s behavior, Hechtkopf noted that small businesses can leverage crowdsourced loyalty programs to support and promote growth and innovation. Because these initiatives thrive on customer feedback, smaller merchants can have instant access to a community that they were previously unable to reach.

“If such a program becomes a platform for local businesses to crowdsource ideas from, then I think that could be very interesting,” said Bram Hechtkopf, VP of Business Development and Marketing at Kobie Marketing, in an interview with Retail TouchPoints. “For example, if an ice cream chain from Maine wants to create a new flavor for the summertime and they want to reach out to specific fans in their community, a crowdsourced loyalty program could offer them a customer base that they wouldn’t normally be able to afford or reach — which would be an effective way to use crowdsourcing.”

Unlike big-name brands and retailers, small- and medium-sized businesses have a lot more to gain — as well as lose — when striving to fulfill customer expectations. Crowdsourced loyalty programs allow customers to feel like they play a role in a company’s success. However, any negative customer experience can diminish a small business’ credibility before it even gets off the ground.

“Before taking the leap and implementing such a program, you need to be prepared,” Grackin said. “Most big companies have been at this for years and can afford to experiment, but small businesses really cannot afford to leave promises unfulfilled. This type of program gives small businesses a better opportunity for customer intimacy, and they can take advantage of this to help grow their customer base.”

New Crowdsourcing/Loyalty Solutions Emerge

New solutions are emerging to help brands and retailers converge their loyalty and crowdsourcing initiatives. For example, a new solution called MoPals, which recently launched in beta, is a self-proclaimed “crowdsourced loyalty program” that acts as an online community. Members can refer local businesses in order to earn a digital currency redeemable at participating retailers, as well as participate in surveys or mention partnering businesses via social networks in exchange for rewards.

The ability for companies to collect feedback and advice from customers via social media seems to be where crowdsourcing and loyalty programs potentially can merge together, according to Hechtkopf.

“I think you can define crowdsourced loyalty however you’d like,” Hechtkopf said. “But as brands continue to integrate loyalty with social, which is really where crowdsourcing and its community-based aspects come into play, brands will start to get some powerful feedback, build brand advocacy and listen to consumers in a way that will allow them to come up with creative ideas and evolve the brand.”

Separately, crowdsourcing and loyalty reward programs can offer retailers a slew of benefits. Although integrating both tactics into a single platform may present some challenges, the opportunities to boost overall engagement, loyalty and growth may be worth the potential risk and investment.

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