Loyalty programs: recognizing customers before they even purchase

May 22nd, 2014 by Azur Digital

Loyalty programs are structured social marketing efforts that reward, and therefore encourage, loyal visiting and buying behaviour. This targeted and incentivized behaviour should be beneficial to both customers and companies.

In terms of loyalty, understanding pre-purchase moments is more important than the purchase itself: customers want to be recognized and perceive their interactions with a brand are valued more than just for the purchase they make.

A cornerstone of retailer’s multichannel strategy

The increase in the number of different channels consumers use has made multichannel loyalty programs more and more important. Brands need to encourage customers in their more and more complex journey that ultimately leads to repeated purchases.

A loyalty program helps brands merge online and offline customer data: they can know who, where and how their customers engage and transact with them, especially in stores. Customers increasingly want to be recognized and valued across different touchpoints, for example by being recognized by sales associates upon entering a shop.

Tesco just launched a new Clubcard app which is currently available for 5 trial stores. It allows seeing tailored offers and shop quickly from a personalised list, amongst other capabilities.

In the UK, Tesco is cutting back its investment in opening stores and instead concentrating on expanding its multichannel capabilities, capitalizing on its successful Club Card loyalty program, with its 17 million-member base. Tesco, which has become a worldwide reference for loyalty programs, believes that if it can join the dots between online, in-store and digital it will reap “significant” commercial rewards.

Leveraging user data

Leveraging user-permitted data across all touchpoints is crucial to establish this. A good functional loyalty platform should aggregate consumer data across all channels (retail, online, social, mobile) and attribute purchases and as importantly interactions through these channels back to a unique customer. This should enable brands to create a singular view of individual customers and properly segment them across multiple characteristics.

If brands want to move forward, it’s crucial to break down internal silos and start using data across all channels and touchpoints. This will help them understand customer loyalty behaviour before the customer checks out and makes a purchase.

According to the Walker Sands’ 2014 Future of Retail study, 78% of consumers interact with social media channels like Facebook, Pinterest and Twitter to learn more about the brand, get discounts and special offers and read other customer reviews.

Starbucks even got further by using Twitter as a revenue channel, by allowing their loyalty members to send gift cards to their peers with @tweetacoffee. According to Keyhole, more than $180,000 was spent in the first month, with users buying almost 37,000 eGifts (of coffees if you will), of which 32% was bought on the first day. Added to this is the valuable data collected during this campaign.

Personalizing the experience

A strong example of multichannel customer loyalty where customers are recognized before placing an order is Amazon.com. Based on customer behaviour through different touchpoints (email, social, online), they manage to build customized pages with personalized recommendations, capitalizing on the fact that users are more likely to buy if relevance is made personal.

Their recommendation system is based on a number of simple, but ever so important elements: what a user has bought in the past; which items they have in their virtual shopping cart; items they have rated and liked and what other customers have viewed and purchased. These variables help create an algorithm to heavily customize the browsing experience for returning loyal customers.

Whether you are Amazon, Tesco, Starbucks or any other retailer: it’s all about getting to know your customers, understanding their needs and help them fulfil these needs… regardless of the channel or touchpoint they are using. And the sooner you recognize them, the earlier the appreciation kicks in.


Tesco looks to join the dots with multichannel strategy – just-food.com
Cisco Customer Experience Report for Retail Overview
Walker Sands’ 2014 Future of Retail study
Starbucks Twitter campaign – keyhole.co
Unata Canadian Grocery Whitepaper