Covid-19 has revealed a very concerning blindspot for many companies; too many rely on unknown customers visiting their physical stores to transact, exposing them to severe financial impacts during economic disruptions.
Every company on the planet should now be challenging themselves to address the following questions:
- How can we identify our most valuable customers and learn more about them?
- How can we build a better relationship with our most valuable customers?
- What do we need to do to ensure our customers can continue to transact with us if they can’t physically visit our stores?
A loyalty program can play a core role in addressing these gaps by capturing the personal details and transaction data for repeat customers. Rewarding and recognising members can improve the relationship, and the member base can be used to expand online sales via effective digital marketing efforts.
The two biggest challenges in growing a loyalty program are:
- enticing customers to join
- encouraging them to keep engaging
Often this is a question of value; customers will join a program if they believe they will access value, and they’ll continue to engage with a program if they perceive they are accessing value.
Consumers are busy and distracted, so they often need to be reminded that a loyalty program exists. This may be via different marketing channels (website, eDM, social, etc), via word of mouth (or a more formal referral program) or at the time of transaction.
Transaction reminders can be especially powerful, whether online or in-store. The customer is in the process of spending money, therefore informing them that joining or engaging with the loyalty program will provide a return on their pending investment is an effective stimulant.
This isn’t always the case. Everyone has had the experience of being asked to join a program when they just aren’t interested. ‘Are you a member? Would you like to join? Are you sure?’
Just like any sales process, rejection shouldn’t dissuade retail companies from ensuring their staff keep trying. This is because this approach is very effective in gaining new members. It’s also equally effective in ensuring existing members are rewarded for each shop, increasing the likelihood they’ll continue to prioritise the brand over competitors.
Ensuring staff consistently ask every customer if they’re a member every time they process a transaction can be challenging. It requires training, monitoring, reminders, more monitoring and potentially even incentivisation.
One brand which is patchy in this area is Dymocks.
As a Dad, I often take my kids shopping for books. I love everything about books. Walking into a bookstore and smelling that new-book scent makes my skin tingle.
I joined the program several years ago after being prompted by a staff member at the city store. Knowing that I had years of buying kid’s books ahead of me, I signed up. If I wasn’t asked, I probably wouldn’t have joined.
Registering was as easy as providing some basic contact details, which were entered into their system on the spot.
Now, each time I transact, I simply need to quote my mobile number or flash my member card stored in Stocard, and I earn reward credit. If I’ve accumulated sufficient reward credit, the staff member will invite me to use the credit to reduce my purchase costs.
What I’ve observed over the years is a clear distinction between the behaviour of the staff at the city store and Broadway store.
The city store staff always, without fail, ask me if I’m a member.
The Broadway store staff never, without fail, ask me if I’m a member.
When I transact at the Broadway store, they tell me the cost of my transaction. I then tell them I’m a member, so they can record my transaction to ensure I don’t miss out on earning my credit. Mostly, they show surprise, as though they know they should have asked, but they forgot.
Why would the approach be so different between the two stores? Likely it is a result of store culture, management priorities, a lack of reporting and poor accountability.
Some simple reporting would allow Dymocks to identify that their Broadway store staff aren’t signing up as many new members per transaction as the city store. It would also show them that the number of member transactions as a percentage of total transactions is lower at their Broadway store. Senior management conducting mystery shopping at the store will also reveal the problem.
If they dig a little further, they’ll see there’s a clear process gap, which impacts Dymocks (lower member numbers = less opportunity to influence customers to remain loyal) and their customers (a less rewarding experience = less inclination to remain loyal).
It will be easy for Dymocks to fix. They simply need to apply the same process which clearly worked so well at their Sydney store. Soon, Broadway will be humming, and Dymocks will be even more robust the next time an unexpected disruption forces society to close down for a period.
Loyalty never sleeps.
Philip Shelper, CEO of Loyalty & Reward Co, has many experience within the loyalty industry, including roles at Qantas Frequent Flyer and Vodafone. Loyalty & Reward have consulted to over 50 major brands in the past seven years.
Phil is a member of several hundred loyalty programs, and a researcher of loyalty psychology and loyalty history, all of which he uses to understand the essential dynamics of what makes a successful loyalty program.
Phil’s favourite book is Infinite Jest, but he also likes War and Peace and The Catcher In The Rye.