standing out from the crowd when loyalty is everywhere

Salesforce just released a new report about loyalty, finding that two-thirds of retailers offer some kind of loyalty program. They also found that nearly every company that doesn’t have a loyalty program plans to roll one out in the next year or two. 

75% of customers belong to at least one loyalty program, and a typical shopper belongs to four. Shoppers tend to shop at more than four stores in a given year. Considering grocery, convenience, gas, restaurants, coffee, clothing, garden and home goods, gifts, kids, pets, hobbies, health and beauty – people could easily frequent more than twenty and occasionally visit as many as a hundred. That’s some heavy competition.

A competitive loyalty program today requires extraordinary value. Most companies don’t have the cash to offer huge discounts or gifts, so they need to compete in other ways, such as convenience, access, and targeted savings.

Adding a loyalty program that focuses on discounts is expensive for many companies. Amazon focused on scaling out inventory and making it so incredibly easy to purchase (one-click) that they created a moat between them and the retailers that sold many of the same goods. They grew fast enough to afford to cut prices and offer free shipping. That’s a bar many other big retailers work to meet, and it can be difficult. Target has gotten burned online for promising discounts in their Circle program and not honoring them for obscure reasons in an alleged attempt to save money. 

Sephora took a similar strategic leap into loyalty, forcing Ulta to invest more in a robust loyalty program to stay competitive.

Some companies hope to avoid the discounting race to the bottom and drive loyalty by building brand love. Rather than becoming the “Amazon of pet supplies,” Chewy provides a highly personalized loyalty program with hand-written notes and birthday discounts. Many smaller retailers and D2C brands do the same, with creative loyalty focusing on personalization, extra attention, and special extras like VIP experiences. As a CPG company, M&M’s doesn’t usually transact directly with customers. That said, it created a new loyalty program built around experiences, including the opportunity to take part in a sleepover in its Times Square flagship store. 

Finding the right vendor to deliver that special loyalty experience requires some soul-searching. Brands must have a clear vision for their goals and execution to find the right fit. Just because a vendor works with similar brands or huge names doesn’t mean they are equipped to bring a brand’s unique loyalty vision to life.

Here’s what brands have to say:

“So what we're doing is trying to figure out what an equitable membership loyalty rewards program looks like for us... that is not predicated specifically on commerce but on engagement as well as opportunity areas. However, we acknowledge and recognize that there are people within our audience who are part of being a pop culture icon that would like to participate in our membership rewards program but don't spend in the way that some others do. And so we have to figure out what equitable, trackable pathways to incentivize them to continue to engage and promote the brand.”

DIRECTOR, PRODUCT
$10B-100B GLOBAL SPORTSWEAR BRAND

“Everything we want to do from a roadmap perspective is out of the box with Kobie. They ticked off every point and also allowed us some significant savings in cost. So, from a capabilities perspective and data segmentation and profiling perspective, they offer both traditional loyalty features and services, but they also do something called ELS scoring, which is an emotional loyalty score. This basically originates from a similar gamification module in which they have to collect third-party data and feedback, which then puts them into a different profile that has a lot of different things that we can combine with our own segmentation.”

DIRECTOR, MARKETING
$1B-10B NUTRITION & SUPPLEMENTS COMPANY

“I think surprise and delight is something that's always fun and just brings that personal one-to-one brand to user experience together. So, for example, we saw something on social the other day that team brought to me and said, "This would be a really good opportunity." We've also noticed they're a loyalty user, and they're one of our high frequency bands, if you will, for you're looking at frequency bands within loyalty, and so sending them a box of swag, or commenting back and sending a gift card, or just trying to find those kind of, and that's a little more time-consuming and kind of those one-off opportunities. But we’re trying to create that guest experience that makes you feel special.”

DIRECTOR, MARKETING
$500M-1B QSR CHAIN