Put punch cards in the past: how to create 21st century loyalty

By ShiSh Shridhar, Global Industry Solutions Director, Retail, Microsoft

May 23, 2017

Brand loyalty remains the holy grail for many retailers. From clothing to electronics, devotedly loyal customers are the driving force behind some of the world’s top brands. With increasing competition from e-commerce, the value of a loyal customer is higher than ever, especially when you consider that customer acquisition costs at least six times as much as customer retention. One tool that companies have traditionally used to drive up customer retention is the loyalty program. The problem is, loyalty programs are not working like they used to.

That’s because most loyalty programs look more or less the same. We’ve come a long way since paper punch cards. But most retailers still use swipe cards and phone numbers to distribute discounts, giving customers a similar deal and a similar experience as the store up the street. Just giving out price promotions alone doesn’t inspire loyalty—especially when everyone is doing it. The proof? Most customers don’t even use their loyalty programs. The average American household is enrolled in 29 loyalty programs, but they are only active in 12. Customers might forget they are enrolled or block bulk emails when they get tired of mass marketing.

21^st century loyalty

Modern loyalty programs that really make customers stick require some creativity. It’s not enough to provide price incentives—it’s about providing the right incentives, at the right time, in the right way. If you play your cards right, your loyalty program can cultivate customer relationships and build your brand in innovative ways. Let’s take a look at some key differentiators of stand-out loyalty programs.

Engaging customers on their phones

Americans spend an average of 4.7 hours on their phones every day. Why work on getting loyalty cards into more customers’ wallets when you can utilize the smartphone that’s already in their hands? Fun browsing interfaces and interactive games are creative ways to engage customers and stand out from the crowd—which is more than can be said for a basic loyalty card. Plus, mobile chat bots can make shopping quicker and easier—making it easy to place an order for in-store pickup for example. Getting in the game with a mobile presence gives you more chances to engage customers, collect valuable data on trends, and gather customer feedback.

Offering personalized deals

The insights gleaned from mobile touchpoints fuel another vital tool for building loyalty— personalization. Surveys show that 78 percent of consumers are more likely to be repeat customers if they receive relevant, personalized offers. That’s because giving a customer bargains on things they really want instead of blanket discounts makes them much more inclined to come back for more. Using data from digital channels and stores, you can offer promotions based on what a customer prefers instead of how often they purchase. When you give a fishing buff a great deal on waders instead of running shorts, he’ll be more likely to recommend you to his friends.

Adapting to changing conditions in real-time

Historical data can help you personalize offers to customer preferences. But external conditions like weather, traffic, events, and location also affect purchasing patterns. By harnessing this real-time data, you can make sure the right offers not only go to the right people, but they go out at the right time. For example, think of a restaurant that targets some customer groups with deals for sundaes and others with deals for cheeseburgers, based on past preferences. But if a heat wave comes, past preferences aren’t as relevant—when it’s hot, sundaes bring in the most business. Tracking weather data allows the restaurant to understand the change in demand and adapt the offer, maximizing revenue and customer satisfaction.

Retail Personalization from Microsoft and Plexure

Looking for the right tools to take your loyalty program to the next level? Look no further than Plexure, a Microsoft partner and long-time retail innovator. Plexure’s Retail Personalization solution delivers granular personalization that adapts to real-time conditions using multi-world testing (MWT) technology. It not only optimizes customer engagement on mobile devices, but reaches customers with personalized content online and in-store as well. As a true omni-channel solution, it converges mobile data with data from all other sources to give you cross-channel insights.

Retail Personalization has a proven track record of boosting loyalty and revenue for leading brands. Using Plexure’s platform, a global quick-service restaurant upgraded its mobile loyalty program to deliver highly targeted offers and rewards based on historical and live data. By recommending premium meal options to people that usually purchased everyday value items, and encouraging customers to visit at times of the day they didn’t usually visit, the program increased average check for loyal customers by 38 percent and average frequency of visits by 16 percent. Ultimately, the number of loyal customers that visited at least three times a month increased 10 percent year over year, leading to more than $5 million in incremental revenue for the company.

Finally, Plexure makes it easy to manage your loyalty program internally. Plexure’s loyalty module gives you one tool to manage loyalty rewards, points, and incentives across multiple programs in multiple channels. Plexure also provides intuitive dashboards for tracking data and ROI, so you can continually refine your processes.