Not every company can be Apple – pulling in droves of consumers with a cult-like adoration of its products without offering the slightest hint of a loyalty or rewards program. But as Chris Brundage, EVP Sage Payment Solutions - EFT Division, explained to MPD CEO Karen Webster, the key to successful loyalty and rewards really starts with the customer experience.
There’s no doubt that consumers love and embrace loyalty programs. According to Brundage, nearly 90 percent of customers are enrolled in some type of rewards-based program — and the average household is signed up for nearly 29.
However, the typical household will only actively use 12 of the loyalty programs it's registered for.
"The real question is, how can that small business be one of those 12 that the consumer is active in?” Brundage said.
[bctt tweet="Roughly 90% of customers are enrolled in a loyalty and rewards program, but are they using them?"]
While there are many factors to contribute to what will keep a consumer coming back for more – including the perception of a company’s pricing, product offerings and quality of service – the biggest piece of the puzzle is the customer experience.
As Brundage put it, customers remember an experience, not a logo. But if a meaningful and valued customer experience isn’t there, no loyalty program on Earth can make up for that.
And, the expectations of the omnichannel consumer is just making that harder. Not only does any merchant have to work harder to keep the attention of consumers, they need to adapt their businesses to integrate new technologies to continue to deliver the experience their customers now demand.
“What you've seen is a shift away from that traditional paper coupon, loyalty punch card and plastic gift card. Where that's going now is towards a kind of merging with the electronic and virtual platforms,” Brundage explained.
[bctt tweet="Merchants have to stay up-to-date with the ever-evolving loyalty and gifts landscape "]
What’s a small business to do?
Get help, Brundage said, and from a provider that can help merchants keep up.
“It’s impossible for small businesses – any business for that matter – to stay up-to-date with the changing loyalty and gifts landscape - that’s tough enough,” Brundage remarked. “Then it’s doing that on all of the consumer’s devices across all of the environments that a consumer would interact in.”
And making it seamless, while using technology to help retain and gain customers, addressing all of the consumers’ interaction points – merchant’s website, social media, email, mobile devices, in-store – and reinventing loyalty programs to fit into those touch points smoothly.
One of the biggest opportunities for small businesses – and perhaps even the great equalizer – lies in mobile, with Brundage confirming nearly 73 percent of smartphone owners said they want loyalty on their mobile devices, he said, but roughly 76 percent of merchants don’t have it available.
"It’s not so much competing with a bigger brand as it is trying to compete with the customer experience that that larger brand delivers," Brundage said. "If we [Sage Payments Solutions] can empower that small coffee shop owner with the same ability to provide their customers with a Starbucks-type experience, I think that's the goal and I think that goes a long way in competing with larger brands," he added.
Brundage emphasized that technology has opened the door for a great deal of innovation when it comes to loyalty and gifts, including the ability for merchants to offer e-gifting, push out mobile coupons, team up with other businesses to promote offers and even channel their inner Amazon and charge an upfront fee for consumers to join exclusive loyalty membership programs.
One of the more popular innovations gaining traction on both the consumer and retail/service side of the business is the gifts industry, which is valued at roughly $90 billion today, Brundage noted, saying that the average person receives about four gift cards a year.
“A gift is an incredible vehicle for the merchant, especially as it relates to increasing cash flow for them,” he stated.
[bctt tweet="Gifts comprise a nearly $90 billion industry, which can be a powerful tool for merchants "]
More often than not, gift recipients will spend more in a store than the face value of the gift card, providing merchants with an opportunity to significantly increase revenue when these programs are implemented.
Brundage explained that Sage Payment's view is that building and sustaining loyalty among consumers takes creativity and innovation, especially when looking toward the future of increased mobile device and wallet utilization.
But above all else, he noted that loyalty and rewards programs can no longer be treated as an afterthought. Merchants need to take a critical look at what’s working and what isn’t when it comes to trying out new solutions.
“Gifts and loyalty both have to be part of the overall plan and not be treated and managed as a separate standalone piece,” he said.