How to adapt your loyalty program to boost retention

As commerce continues to evolve and the lines are blurred between card-present and card-not-present commerce, how can merchants implement an effective, omni-channel-friendly loyalty program to boost retention and profits?
According to a 2015 loyalty census by COLLOQUY, U.S. consumers hold 3.3 billion memberships in customer loyalty programs, up 26% from a study done in 2013. The majority of these memberships are held through credit card rewards programs, closely followed by specialty stores (think Best Buy, Container Store, etc.), which account for 434 million memberships. Part of the reason behind the success of specialty store loyalty programs is that these merchants provide niche goods and services with deep selections. One might argue that personalization is inherent with merchants like these because of the nature of their business model, which may signal why the loyalty programs they offer are so popular. Customization – specifically as it relates to loyalty – is a growing trend that will continue in commerce as consumers hone their preferences and make them known with their pocketbooks.
This month, we searched for insight from the experts on how merchants can use their loyalty program to boost retention, maximize consumer engagement and boost profits.
Here is what several sources are saying:
6Points-for-purchase is obsolete. Rewarding consumers with points for making a purchase is no longer good enough. Loyalty will expand beyond that concept and force merchants to find ways to enrich the shopping experience and make it memorable. Points do not intrigue or engage the customer the way that they used to and merchants must find other ways to incentivize shoppers, which may include customized perks, fun ways to engage with the brand or earn rewards (other than purchasing), and personalized offers.
4Using data to optimize and promote a subscription-commerce model. With advancing technology and access to more data than ever, merchants have the opportunity to make fairly accurate predictions about their consumer base that may help solidify loyalty. Retailers that have deep insights into consumer preferences can leverage that information to make predictions on what a customer will purchase and promote monthly delivery based on past shopping habits. We’ve seen it through a number of once-a-month delivery services that have sprung up and the trend is likely to continue as merchants get wiser about their customers’ wants and needs.
6Social networks leveraged as shopping platforms. Social media has been largely tapped for marketing purposes, engaging with customers and aiding consumers in purchase decisions. In 2015, it’s predicted that social media will also be leveraged as a selling platform. We’ve already seen some of this come to fruition with Facebook and Twitter’s “buy” buttons and this trend will likely expand to other sites throughout the remainder of this year and into next.
Picture1Smartphone & mobile wallet penetration will be critical to the omni-channel movement. The prevalence of smartphones and the increasing popularity in mobile wallets is bolstering the omni-channel movement: about 5% of smartphones will be used to make an in-store purchase at least once per month globally this year (a 1,000% increase over last year).[1] Mobile solidified its place in commerce in Q4 of last year with 25.8% of global online transactions occurring on a mobile device (an 11% increase over the previous quarter).[2] Given this traction, NFC and other contactless technologies are forecasted to account for US$64 billion in transaction value in 2017.[3]
Want to re-invent your loyalty program to boost retention but don’t know where to start? Verifi can help you stabilize and streamline your payment processing operation so that you can attract new customers while retaining your happy, loyal customers. Our “Super” Gateway is processor-agnostic and plugs in easily with our best-in-breed payments protection tools to provide a streamlined, end-to-end experience. The Gateway works seamlessly with Intelligence® Suite, Cardholder Dispute Resolution Network™ (CDRN) and Chargeback Representment (CBR) to protect your payments across the entire transaction lifecycle. The Gateway also integrates easily with Decline Salvage to ensure that you don’t lose your loyal customers to unnecessary declines. The “Super Gateway” provides omni-channel, end-to-end payments protection with customizable fraud tools, Total Chargeback Management and the ability to improve authorizations by up to 20%.
Contact us to find out how to secure your payments from end-to-end while maintaining a superior customer experience. What are your thoughts? Ping us on twitter (@verifi) with #paymentstips and let us know what you think.