How important is customer loyalty to a brand or retailer?
Consider the 80/20 rule, which states that 80% of a company’s revenue comes from the top 20% of customers (i.e., the loyal base). That’s because loyal customers spend 67% more on average than other shoppers.
There’s an endless array of stats that support the case for building and nurturing loyalty programs. Plain and simple, it’s a given. What’s more relevant for businesses is how to execute loyalty strategies through a multipronged approach of customer engagement.
Whether via promotions, discounts, recommendations, or other methods, engagement is executed best when personalization is placed front and center of the customer experience. And while it’s true you can’t have great engagement without personalization, you can’t have personalization without strong data.
For 67% of retailers, however, their greatest challenge with personalization is the gathering, integration, and synthesis of customer data. Perhaps the most vital of such is the first-party data handed right back to consumers after purchase, in the form of receipts.
With that said, here’s three ways to turn the purchase data from physical and digital receipts into successful customer loyalty strategies.
Knowing your customer, even when running a small-to-mid-sized business and selling a niche product offering, is challenging. Having to do so with a large-scale customer base and broad range of products can feel nearly impossible.
Meanwhile, all targeted offers are not created equal. A credit card company may recommend rewards programs (e.g. travel, dining, gas or streaming offers) based on a user’s demographics, but that’s generally all they are doing — targeting a broad demographic.
For personalization to really stand out, it needs to exist in a direct business-to-customer relationship — at scale. That’s where purchase data comes in. By automating the collection of purchase data across all receipt types and down to a granular product level, brands and retailers can understand their shoppers like never before and provide hyper-specific product recommendations and offers based on past purchases — or even what they’re currently browsing.
Of course, not all loyalty strategies need to be customer-specific in order to be successful. Marketing promotions that target a broad customer base (i.e., the loyal base) require time and money, as well as strong purchase data.
Doing so is highly advantageous, promotions that target loyal customers yield a return-on-investment three times higher than that of mass promotions. With software to extract purchase data from its most loyal customers, no matter where or how they shop, a company can spot purchasing trends to ignite the inspiration for a highly effective promotion campaign.
With many challenges in modern retail, from price pressure to market disruption (e.g., e-commerce), companies that deliver curated promotions directed at their most loyal customers will not only gain immediate ROI, but will also deepen those relationships for greater lifetime value. Take Starbucks, for example, an early adopter of loyalty programs, which has leveraged its star rewards to amass 25 million members — accounting for 50% of U.S. transactions.
An important consideration when establishing and maintaining customer loyalty is finding out how and where shoppers pledge their allegiance. Some may prefer a company’s in-store experience, while others have only made digital purchases throughout their journey.
Ideally, a brand or retailer wants to obtain omnichannel loyalty from a customer. While many throw the term around, there is an important distinction between multichannel, where a customer may shop a company through its physical store, website, or app, and omnichannel, where all those shopping channels are linked by data to create a seamless experience from one touchpoint to the next.
By having access to first-party receipt data, companies can discover when and where consumers are making purchases to better provide relevant rewards. For example, if a consumer is buying orange juice at a store, but there’s a sale for the same item through the company’s website, delivering a cross-channel offer can result in higher basket sizes, happier customers, and greater loyalty in the long run, while opening up a new purchase channel that may have otherwise gone neglected.
Purchase data is the foundation of knowing your customers and opens the door to endless, personalized methods of consumer engagement, thus creating and strengthening loyalty. There are still important factors to consider when culling data, however, especially when it comes to the great debate of quality vs. quantity.
For brands and retailers, it’s important to collect as many diverse data points as possible. By doing so, a company can weed out purchase outliers, while also uncovering missed opportunities to promote new or different items based on spending habits.
- Consumer data sourced from this survey