Insiders Talk: A Devoted Look At Loyalty

I had the chance to host a Mobile Insiders Series discussion on loyalty and payments on Friday, and the conversation was really fascinating. My discussion partner was Stephanie Swain, who is now VP of Retail for Aimia but who previously was in charge of financial services at Best Buy. I thought that getting her perspectives as a merchant about loyalty and now as a third party trying to help merchants improve their loyalty initiatives would shed some interesting light on the topic.

And it did. Now, only Insiders get access to the entire conversation and the juicer nuggets that were shared, but let me tease you with what I have been thinking about since the discussion.

Stephanie and I started off with a vocabulary lesson: what is loyalty? I thought that Stephanie’s definition of loyalty was perhaps the best I’ve heard – a devotion to a product or brand or a merchant. Simple, to the point, and right on the money.

And easier said than done.

That launched a freewheeling conversation about the $64 trillion dollar question – so how does a product or a brand or a merchant go about inspiring such devotion and engaging consumers? We talked about the three ways to trigger loyalty: by behavioral triggers, by emotional triggers and by transactional triggers. We talked about how tactics can be developed for each trigger to inspire devotion to a brand. But we also agreed that today we have an opportunity to uniquely “blend” all three triggers using technology, mobile devices and apps to motivate behavior that delivers the “devotion” that all products, brands and merchants seek.

Back in “the old days” before payment cards and points and phones and email offers and maybe even coupons, the tactics available to merchants and consumers to incent behavior and create “devotion” were quite limited. Products and brands had to deliver something of great value and quality for the money, then spend lots of money on print advertising to make people want to buy. The goal of that advertising was to establish an emotional connection with a consumer and motivate them to go to a store and buy that particular product. They used intermediaries like newspapers to deliver those messages to consumers.

A merchant’s options were even more limited. They had to deliver outstanding customer service and make sure that they had the right products at the right time to satisfy the demands of their customers. There were few transactional triggers, setting programs like S&H Green Stamps to one side, other than to leave the store with the product in hand.

Service in these “old days” was more personal, and the relationship between the store clerk and the customer was king. If a regular customer came into her favorite store looking for a product that she was drawn to by an advertisement, and that product was unavailable, she would more than likely have faith in the trusty store clerk’s offer of a suitable substitute. That trusty store clerk probably also made sure that when stock was replenished, that an extra item was set aside.

Price was important, but the service and the relationship and the personal service delivered trumped that. In many ways, one could say that the merchant became the “platform” for enabling the emotional and behavioral attachment to a brand or product. Incenting those behaviors was done by delivering a great experience.

Fast forward a couple of decades.

A new intermediary was inserted into the relationship between merchant and consumer and product and brand – the credit card. To encourage credit card use, issuers gave rewards. Those rewards were funded by merchants on transactions that happened in their stores regardless of any emotional devotion to them or the products or brands being purchased.

Instead of the merchant being the enabling platform for incenting emotional/behavioral/transactional loyalty, they became the enabling platform for loyalty to a transactional trigger – a card – an outcome that consumers could achieve anywhere that their card was accepted. This new intermediary actually disintermediated the role of the merchant in incenting the emotional and behavioral loyalty once enjoyed by merchants.

Now fast forward a few more decades. Daily deals cracked that schism open even further, and a new deal-based intermediary emerged. Transactional loyalty trumped all, given the consumers penchant for following a deal and loyalty accrued to the intermediary offering the “deal” and merchants were valued only for the redemption transaction. Emotional loyalty, if there was any, and behavioral loyalty both accrued to the deal intermediary since so few deal seekers became repeat merchant customers. The behavior that was encouraged was loyalty to the deal and not necessarily the merchant offering the deal, as it turned out.

So here we are today. Mobile phones and connected devices and digital coupons and location-based technologies and soon-to-be-in-store beacons and more. These could actually give merchants the tools to incent behavioral – emotional and transactional behaviors.

Technology makes it possible for consumers to be served offers to purchase relevant products or to view consumer reviews on them while in store and ready to buy. In this new world, transactions or transaction intermediaries alone don’t drive devotion to a brand. If new research is to be believed, the “wisdom of the crowds” now outweighs brand loyalty and price, and it sets up a completely new buying paradigm.

Ironically, products and brands may now have the most work to do to preserve the loyalty that they once enjoyed with their consumers, given the access that consumers have to product reviews and recommendations when they are standing in front of the products they want to buy. And the intermediary that can help encourage that behavioral and emotional connection could, in fact, be the merchant with a captive consumer ready to make a purchase and salespeople capable of providing personal service and support.

New intermediaries have to and will emerge that will help merchants play a new and powerful role in creating a new loyalty trifecta – devotion to a product or brand – and themselves. Instead of a card and a swipe and a reward, or a deal and a redemption, it will be an app and a loyalty program that wraps emotional and behavioral triggers around transacting within that merchant environment, potentially influencing the emotional and behavioral loyalty that consumers have to brands and products, certainly facilitating the transaction by making it easy to complete and perhaps being compensated in different ways for the role that they could play.



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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