by Andy Althauser
Special to the eTail Blog
Retail loyalty programs have been around a long time. Consumers buy, earn points and redeem them for future discounts – we all know the drill. Such reward programs have remained largely unchanged since the 1970s, with providers sourcing preferred relationships with category vendors, static inventory and limited product selection.
But times are changing, and the way those programs are being delivered is changing too. Consumers have gotten smarter, more discerning and more demanding when it comes to their limited time and hard-earned money.
According to recent studies from Colloquy, almost one-third of consumers find retail loyalty programs “more important” when battling tough economic times. All told, participation in loyalty programs is up 19 percent since 2007 (Colloquy). In order to keep pace with consumers’ buying intelligence, retailers need to take a new, holistic look at loyalty programs.
There is a growing trend in the loyalty rewards space of using reward points as currency, creating a more streamlined approach. New technologies in in-store pick up and electronic fulfillment are reversing trends and driving engagement and satisfaction as well as significant financial benefits for loyalty programs. In other words, loyalty currency has evolved beyond its single program utility to a viable and relevant form of tender incorporated into consumers’ everyday spending behaviors. Consumers have amassed billions in rewards currency across many types of programs but will no longer accept static, analogous rewards for their spending behavior. Careful spending and reward benefits are critical in today’s economy.
There are three key points in creating “relevant currency” for today’s consumer:
1. Selection (i.e., what consumers expect)
2. Price (i.e., connected into the retail world, real time pricing, participating in sales, etc.)
3. Convenience (i.e., we want things now)
Rewards initiatives need to begin developing direct merchant relationships. These partnerships allow loyalty program participants to convert their loyalty points on-site at the merchant partner for discounts, merchandise and/or services and allow retailers to offer a) unmatched product selection, b) the convenience of mobile redemption c) in-store pickup, d) ability to utilize leading-edge technology for real-time pricing, and e) customized retail promotions.
This paradigm-shifting model puts retailers in a situation where they can deploy consumer based marketing opportunities, making consumers more likely to use them and come back frequently. The result: revenue grows, consumer loyalty grows and everyone wins.
This new model standard opens up innovative new user experience opportunities such as:
• In-store pickup (i.e., instant availability)
• Mobile research and redemption
• Unlimited access to the latest and greatest products
• Ability to promote retail offers (e.g., BOGO’s, coupons, discounts, etc.)
• Real-time pricing
• Electronic Fulfillment (digital downloads, daily deals, and more)
And when a rewards program gives the consumer what they want, when they want it, the retailer can achieve greater engagement with the consumer, innovative marketing delivery, volume leverage for banking relationships and lower cost of fulfillment. Through this methodology, “real time” and relevant value is created for the consumer, the retailer and the financial partner, creating a winning trifecta.
Andy Althauser is the Executive Vice President at Bridge2 Solutions, Inc., a marketing solutions platform that provides marketing and fulfillment solutions to Fortune 500 companies.