Driving loyalty has long been a challenge for retailers. And now that loyalty programs are becoming more ubiquitous, companies are once again innovating to stand out of the crowd. Here are some of the changes we’re seeing in customer loyalty programs in 2019:
Technology = Personalization
Advances in technology mean that rewards programs can be ever-more personal. With the advent of online shopping, app-based shopping, and even just a centralized electronic system for in-store shopping, stores have more data than ever on what individual customers buy, and what they want. This means that loyalty programs can be used to create a personalized shopping experience for customers that only gets more accurate the more the customer buys. A number of stores have done this with quizzes that determine a customer’s “personal style,” or even personal data sections where customers can list their size, skin tone, and other measurements to inform product suggestions. A personalized shopping experience, in turn, leads to greater ease of shopping and a sense of “belonging” that fosters loyalty.
More Rewards, More Often
Most customer loyalty programs are oriented around point-based spending incentives--spend money, earn points, get rewards. But with more rewards programs entering the market, and consumers losing interest in sale-based shopping incentives, businesses are turning towards revamping their points systems to reward loyal customers better and more often. The Kohl’s loyalty program now offers 10% Kohl’s Cash on every purchase when you pay with a Kohl’s card, and 5% Kohl’s Cash for non-members in order to encourage return customers. Meanwhile, the Starbucks rewards program has done away with its 300-point Gold Membership system in favor of a point system that allows customers to get rewards with every purchase, right away (albeit with some miscommunication to customers that caused pushback). It’s clear that when it comes to building loyalty, customers are more interested in special perks than in discounts.
Experience over Products
While perks like free samples and discounts are appealing, the way to really stand out in 2019 is to offer experiences over product-based rewards. This can mean private parties, consultations with professionals, even lessons with activity-based products. Sephora and Ulta lead the way with loyalty programs offering makeovers with in-store makeup artists, and clothing stores like Nordstrom are offering similar rewards with in-store stylists and personal shoppers. Meanwhile, companies are offering access to sales or special products--Footlocker announced a loyalty program that grants early access to sneaker releases, and Fenty Savage, Rihanna’s lingerie line, offers a loyalty program based in first-access to monthly product drops. In a marketplace where cheaper products are always available, discounts aren’t nearly as attractive to customers as exclusivity--and retailers should take note.