Loyalty Rules: Personalization Drives Retail Connection

The connected consumer wants to feel more connected. That’s one of the conclusions drawn from a new report on customer loyalty from Merkle, and it holds some clues for retailers looking to improve the recency and frequency of customer visits and purchases.

“To truly stand out from the crowd, brands must go beyond the transaction and create enhanced experiences and engagement opportunities across the entire customer journey,” the report states. “On their own, traditional ‘do/get’ loyalty program structures can feel uninteresting and too transactional. And perhaps most importantly, it’s critical to understand that loyalty is not just a program — it’s the outcome of all the experiences a consumer has with a brand. While a loyalty or rewards program is one tool to drive that experience, the program must be combined with other compelling brand touchpoints to create a truly effective overarching loyalty strategy. These touchpoints must fuel an omnichannel, connected consumer journey — one that doesn’t just persuade customers to buy, but earns their trust and continued business.”

That connection has a lot to do with personalization. Consumers want to personalize everything from earning to redeeming rewards, benefits and how they earn points in loyalty programs. Eighty-five percent would like to select the benefits and rewards they receive. According to the report, members count on their loyalty program experience to be personalized based on purchases and preferences. However, the extent of that personalization is debatable. Consumers are wary of excessive data collection and prefer that brands use information specific to the program.

The Merkle report’s concerns are consistent with another recent report, released by Episerver in late February. Recognizing the paradox between the desire among consumers for both personalization and privacy, the report recommended a balance. With 64 percent of retailers using personalization and 79 percent of consumers demanding it, the report said, the practice needs to be secure for privacy and compelling for personalization. In fact the Episerver report draws the conclusion that the relationship between personalization and privacy can be positive even for practices like retargeting. Twenty-five percent of respondents said they returned to a website to make a purchase after being retargeted with ads because they were personalized.

The report is also consistent with the PYMNTS Connected Consumer Report, which found that “favored merchant” status is conferred upon companies who invest in the things shoppers deem as important. That means selling items through their virtual and physical stores at a fair price. Sales may draw some shoppers in, particularly younger shoppers, but they aren’t what makes a favorite merchant a favorite merchant.

What Consumers Want

“Technology that makes it easier for consumers to find what they want to buy, then purchase it from the same merchant, does, though,” the PYMNTS report says. “What keeps a consumer loyal isn’t a loyalty program or even a store-branded card offering goodies or rewards. It’s providing a more personalized, more efficient and more convenient way to shop and pay. That means embracing the tools and platforms that consumers, particularly the Bridge Millennials, use on their paths to purchase.”

The Merkle report found consumers are concerned about allowing brands to use their location data, but 59 percent were comfortable with using their purchase history. Forty-two percent were OK with self-selected profile preferences, and 30 percent blessed browsing history. The report also shows that consumers will engage with a brand if they can earn points faster. The top six ways to accomplish that include participating in surveys at 71 percent, answering polls and questions at 65 percent, online reviews at 43 percent, downloading an app at 42 percent, and viewing brand content like videos and articles at 37 percent.

Fifty-nine percent of consumers said the most important way a brand can interact with them is by surprising and thanking them for being loyal customers.

“The most impactful ways a brand can interact with them is by surprising them and thanking them for being loyal customers,” the report states. “Customers want to be acknowledged and feel appreciated for their loyalty; weaving a well-planned and well-executed surprise into the rewards experience is an effective way to achieve that. These appreciative gestures go a long way in developing emotional connections that evolve the brand-customer relationship into something a little bit more human, and they elevate the experience beyond a standard discount.”