[Image of: RetailWire Logo and Tagline (for print)]

BUSINESS TIPS

ChannelAdvisor:
Online Selling Strategies
Offerpop:
Social Marketing Campaigns
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[13 comments]

Are Loyalty Programs More Important During the Holidays?

December 10, 2013

Through a special arrangement, presented here for discussion is a summary of a current article from the Hanifin Loyalty blog.

With the triumvirate of Black Friday/Small Business Saturday/Cyber Monday in the books, retailers are taking stock of their performance. Maybe if they would read the Maritz Loyalty Marketing 2013 Gift Buying Survey they could make some quick adjustments in their loyalty programs to prepare for the rest of the holiday season and spark additional sales.

The surveyed reinforced that loyalty programs continue to have influence over purchase decisions at holiday time. As Black Friday focuses on discounts and de-facto daily deals, Maritz found 41 percent of the 1,000 consumers surveyed have redeemed loyalty points as a contribution towards their gift-giving. Favorite currencies exchanged for gift giving were Amazon, Discover and MyPoints.

In addition, the report found that 69 percent of consumers would choose to shop with a retailer where they can earn loyalty points.

While so many retailers focus on the female shopper, it was interesting to see it reported that men plan to spend 38 percent of their gift budget on themselves versus only 28 percent for females. Men don't always know what women want, but this survey says they certainly know what they want.

Why not deliver some targeted promotions within your loyalty program for the guys? The report stated that Americans expect to spend an average of $510 on gifts for friends and family this holiday season as well as $257 on gifts for themselves, so there is a lot of money at stake.

Discussion Questions:

Are stores missing opportunities to use loyalty data to offer targeted deals rather than focusing solely on price-cutting during the holidays? How can stores do a better job balancing loyalty-engaging efforts with deals during the holiday shopping season?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Is it more or less important for retailers to leverage loyalty data or offer broad discounts during the holidays?

Comments:

Loyalty programs need not be complicated. In fact, the simpler the rewards for the consumer to understand, the more loyalty will ensue. Peak holiday shopping times only reinforce this. If a shopper can accomplish the vast majority of their gift shopping on one site or at one store or even at one online or physical mall that has a loyalty program, you can be certain that shoppers will stay with that one merchant or group of merchants to complete their shopping mission. The majority of shoppers do not want to crisscross the city for gift giving purchases if not totally necessary.

Bottom line: keep rewards specific, real and tangible. If price is a driver, offer an incentive that makes the overall receipt discounted from a non-loyalty member. Make it unique, make it something that the person behind them in line at the checkout would want to become a member because of.

[Image of: View Braintrust Panelist button]
Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

The suggestion to "deliver some targeted promotions within your loyalty program for the guys" is just scratching the surface.

Instead of diving the world into "guys" and, um, "not guys", you should deliver the *right* promotions to each subset of your shoppers, whatever their gender. Some guys will want to earn double loyalty points; others will want free shipping or complimentary gift-wrapping.

Mix and match messaging, offers, and product, and use people's purchase history to determine which specific communications should go to which shoppers. You'll get far better response if your customer feels like you are talking to them directly rather than to all guys at once.

[Image of: View Braintrust Panelist button]
Ben Sprecher, Business Development, Google

Retailers need to know what is important to high continuity of purchase, not necessarily loyal customers.

What else can be provided besides low/discounted prices? Perhaps it is complimentary gift wrapping or express delivery or gift suggestions by category of need (mom, wife, husband, child, co-worker, etc.). The key is not how good you are as retailer, but how good you make the customer.

[Image of: View Braintrust Panelist button]
Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

The expanded use of the loyalty/purchase data could help retailers hone their marketing efforts and direct them at the shoppers that are going to drive sales and make a difference to the bottom line, all the while enriching the relationship with the customer. Retailers should treat members differently, use the data, apply advanced analytics, and engage the valued customers via the mobile device throughout the year.

[Image of: View Braintrust Panelist button]
Larry Negrich, Vice President, Marketing, nGage Labs

I'm not a fan of loyalty programs in general. I am signed up for a few programs and do recognize that particularly in the food and health and beauty categories of stores, these can be very useful both to the consumer and retailer, and especially during the holidays when baskets are bigger and people have reduced time to run around. Loyalty programs are less useful or compelling for gift buying however, when the item one specifically wants to buy may be the only time one needs to patronize a particular store or shop in an entire year.

So please, heavily discount and advertise the down sports parka for my husband, the grandma necklace for my mom, the softball glove for my daughter, the beer making contraption and supplies for my young adult son, the martin house for our budding naturalist, and the shearling non-skid slippers for gramps.

'Liatt'

Yes, many retailers are missing a golden opportunity. The rich data sets found within loyalty programs should not only guide targeted deals, but also broad based pricing and promotion strategies.

The other big missed opportunity from not using the data is being able to curate a more meaningful and relevant experience throughout the holiday season. How will you connect with your best customers during these busy times to truly differentiate their experience and the value they receive? If all you want is sales, then does the mass application of sales and deals obscure the way your best customers perceive their branded experience - or are you applying your efforts in in a way that enhances their perception of your brand?

[Image of: View Braintrust Panelist button]
Bryan Pearson, President and CEO, LoyaltyOne

The data a retailer may have about their loyal customer can give them a huge advantage over competitors. Making suggestions for past purchases, a pattern of repeat purchases, etc., is an excellent way to remind the customer with whom they have done business what they have bought. The key is to know when to remind the customer, as well as how frequently (or infrequently) to connect with the customer.

At the end of the day, customers want to do business where they have had good experiences, and ideally trust who they have done business with this. A good loyalty program reminds them of that and much more.

[Image of: View Braintrust Panelist button]
Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Loyalty is not just for holidays!

The opportunity to create personalized and more relevant customer experiences and make better investments using customer data and tools may be heightened at peak trading periods, but "loyalty" won't work if you approach it as something that can be switched on or off at different times of the year.

Loyalty is an approach to doing business, not a tactical tool.

[Image of: View Braintrust Panelist button]
Matthew Keylock, Senior Vice President, New Business Development and Partnerships, dunnhumbyUSA

Many retailers struggle to effectively mine and understand the rich data afforded by loyalty programs. The best do it brilliantly (Amazon, etc.). Yes, male targeted promotions are a great start. The question is really this: Does your company have the data-mining expertise and the leadership who knows what to do with it?

[Image of: View Braintrust Panelist button]
Mike Osorio, Senior VP Organizational Change Management, DFS Group

There have been several recent articles on the "art of the deal" and the "art of the discount." This is a tactic that brands/retailers have used and will continue to use due to the irrational aspects of the human mind, YET the behavioral components of a truly effective loyalty program should be the focus of all marketers. Individuals want to be loyal to a select group of brands, yet the focus on discounts and the mindset it instills is the challenge.

Mark Johnson, President and CEO, Loyalty 360

Retailers with a well-structured loyalty program and robust database can pull back some of their mass discounts and reallocate that spending into measurable, targeted marketing programs. Spending against fewer customers leaves more money per customer, resulting in more compelling offers and higher up-take (and/or lower spend). And proper targeting means rewarding customers for incremental behavior, not for doing what they'd do anyways, resulting in greater ROI.

Yes, segmentation can go far deeper than "guys" and "not guys," but for many brands need to take baby steps before they can run. Even some very basic segmentation (gender, age, points balance, categories shopped) can go a very long way to enhancing the customers' experience and the marketer's bottom line.

Some ideas for the loyalty marketer's holiday season:

  • Use "Treat her/him, treat yourself" offers - bonuses, bundles, free wrap or gift-with-purchase offers targeted at men/women in multi-person households on male- and female-focused categories (or categories they've bought and categories they might be likely to buy).
  • Provide incentives to post and share a Wish List and for buying from a friend's list.
  • Hold a "points sale" for Christmas shopping in lieu of discounts for members with high balances (e.g. "Save 25% of your points when you redeem for ... by Dec. 24").
  • Show members how many points they can earn (with or without a seasonal points accelerator) when they spend $x on their holiday shopping with your store. Give targeted examples of what those points would buy THEM.

Happy (and prosperous!) holidays!

Stacia Rubinovich, Loyalty Consulting Director, Maritzz Loyalty Marketing

Stores may be missing an opportunity to use loyalty data to offer deals to customers, but these deals would likely have to be different than those offered during the rest of the year.

It is fair to say that the nature of gifts purchased during the holiday season are going to be somewhat different than the rest of the year. As such, retailers could potentially target specific kinds of products, and either offer more reward points, or amplified reward point application to the purchase.

With so much spending happening during the Holiday season, shoppers would definitely appreciate an opportunity to save a bit, or to earn extra points to use during the rest of the year.

[Image of: View Braintrust Panelist button]
Alexander Rink, CEO, 360pi

Every day is an important day for encouraging shopper loyalty. In some instances, and maybe in this discussion, "loyalty programs" refers simply to discount programs. What are retailers doing to measure recency, frequency, and monetary value of their shoppers and taking action to give their shoppers a reason to improve on any of those metrics?

Scott Sanders, Director of CPG Analytics, Pivotstream

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters