The coronavirus pandemic has sparked many great shifts in how consumers shop and engage with retail brands. As demand for contactless shopping and payment experiences has increased, consumers’ interest in shopping in brick and mortar locations has fallen by the wayside during the COVID-19 pandemic. This ultimately has created new challenges for retailers of all stripes. After all, engagement strategies that once worked before are no longer deemed effective. However, one key offering that has proven to be critical during this time and continues to show promise well into 2021 is loyalty programs.
According to a recent Claurus Commerce survey of 300 marketing and loyalty professionals, 95 percent of retailers with traditional loyalty programs are interested in launching a premium loyalty program in 2021. Furthermore, 90 percent are enhancing and prioritizing their loyalty programs as part of their 2021 innovation agenda.
“Our data shows that more than half of retailers only offer a traditional loyalty program, but based on consumer feedback, it’s going to take more than that to stand out this year,” said Tom Caporaso, CEO of Clarus Commerce.
“Every retailer has something that makes them unique, whether it’s their products, services or brand experiences. Premium loyalty is about taking those unique offerings and building a program that is personalized to each unique individual. Consumers want instant benefits, amazing experiences and a lot of value and they are willing to pay a membership fee to access it. It’s time to go above and beyond the competition with both transactional and experiential rewards.”
While implementing a loyalty solution is at top of mind for retailers, deploying it is not without its challenges. In fact, 57 percent of surveyed professionals cite budget barriers and/or lack of internal resources or IT support as the main reasons for not launching loyalty programs.
That being said, retailers recognize the power a stellar loyalty program can bring. According to the Clarus Commerce research, 94 percent of surveyed professionals say consumers who are premium loyalty members shop with their retailer at least once a month, while 44 percent of retailers that offer premium loyalty programs say their members shop with them at least every few days.
It is worth noting that offering a loyalty solution is not out of the cards for retailers who find themselves questioning the viability of offering a loyalty program, especially if they sell products that are typically considered a one-time purchase.
Take it from the nation’s leading bridal and special occasion retailer David’s Bridal. The company has sought to engage its customers with the launch of a contactless loyalty program officially dubbed “Diamond, Loyalty Program by David’s.”
The retailer launched a loyalty solution powered by Popwallet, a mobile wallet customer experience platform, to deliver exclusive offers directly to its customers’ phones immediately after they sign up.
According to David’s Bridal’s Chief Marketing and IT Officer Kelly Cook, the idea behind the loyalty program is to enable a rewarding experience for brides and deliver it in a way that matches their digital-first shopping and payment preferences.
Then there’s Claire’s Stores Inc., a fashion jewelry and accessories retailer, who debuted its loyalty program called Claire’s Rewards. The program is free to join and allows customers to earn one point for every dollar spent, get free shipping twice per year, a birthday surprise, access to exclusive member events and special sales throughout the year, amongst other benefits.
Kohl’s also announced the launch of its new simplified loyalty program dubbed Kohl’s Rewards, which allows customers to earn 5 percent in Kohl’s Cash on all purchases and get personalized deals and perks such as a special birthday gift, regardless of how they pay.
All in all, those who invest in a premium loyalty program can expect a return. Clarus Commerce’s survey found that 84 percent of retailers that offer a premium loyalty program rate their program’s profitability at an 8 or above out of 10. Furthermore, 51 percent of premium loyalty retailers consider loyalty members to be at least 4x as valuable as regular customers.
Retailers that have looked to beef up their loyalty programs and deliver a rewarding loyalty experience are reaping the benefits. Case in point: Target’s free loyalty program dubbed Circle reported 80 million members strong just a year since its launch in October 2019.
Target reports that customers who have been participating in the program have collectively been able to save nearly $2 billion through Target Circle offers and have earned nearly $200 million as part of its 1 percent cashback offer.
And other players in the space are taking note.
Walgreens, for example, also revamped its existing Balanced Rewards loyalty program and dubbed the new program: myWalgreens. The revamped program allows consumers to place orders online or through the mobile application and pick up their purchases in-store, curbside, or via the retailer’s drive-thru in about 30 minutes.
As we head into a new year, offering such experiences is going to be increasingly critical when it comes to engaging customers and winning their loyalty. Retailers that fail to recognize this opportunity stand to lose ground to those that have their loyalty programs on top of their innovation agenda.