Adam Croxen, managing director of Future Platforms, offers his insight on the growing role of tech in customer loyalty and how tech startups can tap into it.
On average, it is five times more expensive to gain a new customer than to keep an existing one.
When you’re a cash-strapped startup, increasing customer loyalty, then, is a no brainer. Luckily, there’s a range of technology that can be used to improve customer experience and increase loyalty.
While loyalty schemes work well when it comes to keeping customers coming back, there is no longer a need for a physical ‘loyalty card’. In fact, 40% of customers forget to bring physical loyalty cards and vouchers when they shop.
Card-based customer loyalty schemes simply create a disjointed and clunky experience for the consumer. They end up with hoards of cards and the instructions for redeeming their ‘loyalty’ – whether through points or vouchers – is often unclear. Lose your card and you’re often left with nothing.
Brands are increasingly offering loyalty card programmes that pair with an app. Cut out the middleman: if your app is right, you don’t need a physical card.
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Initially, an app seems like the perfect loyalty solution for a public suffering ‘card fatigue’. However, getting customers to download an app is not that simple. In our experience, most retailers do not have a compelling app strategy, so consumers don’t understand why they need to download the app from their favourite high street stores.
To combat this, consider your app a ‘Trojan horse’. While a customer might not download a loyalty app, they will probably download an app if they can use it to make purchases, store records of purchases and be a hub for all the retailer’s services and information.
By integrating loyalty or other in-store benefits to an app the customer already has, they’re more likely to keep using it. The app can then become the primary channel for customer loyalty, and you can even start playing around with more advanced elements like beacons.
In our opinion, the worst customer loyalty schemes are those that require a physical card, and those that require separate apps for different functions (online store, customer service, loyalty, etc.). Loyal customers will always favour a smooth and simple experience.
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Having separate apps is not only a pain for the consumer, but brands suffer too. It can be difficult to marry customer profiles across the apps, so there’s the potential for customer data to fall through the gaps. That’s a missed opportunity to learn more about your consumers and improve your offering.
Of course, app downloads are only half the battle: 90% of downloaded apps are deleted in the first six months. Consider adding elements of gamification to help maintain use of your loyalty app. If a startup’s offering is an app or online platform in its own right, gamification could be especially valuable to you.
For context, gamification is the ‘application of game design elements and game principles in non-game contexts’. In terms of loyalty, that means challenging your users to keep coming back, and rewarding them when they do so. These ‘rewards’ don’t even need to be tangible: rewarding users with a digital trophy, or allowing them to ‘unlock’ extra features, creates enough of a buzz to encourage users to repeat the experience.
Gamification is not appropriate for all offerings: it is inherently light-hearted, so you have to be confident it will be well received by your consumers.
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As I mentioned above, beacons work best when they’re integrated within a customer app. Using beacons opens up the possibility of offering many location-based services, but for many brands, their first instinct is to use this for marketing.
When a brand’s mobile presence is being led by its marketing department, there can be a knee-jerk reaction to use beacons to send customers offers as soon as they enter the store. In our opinion, beacons should be integrated with consumer apps to help improve customer experience.
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There is no ‘one way’ to use tech to increase customer loyalty. Best practice is to use all the tools available to you to improve the experience for your customers – both in-store and online. This approach should, of course, be fully integrated.
For example, use app and beacon integration to track customer flow around the store and what purchases they ultimately make. You can then use this data to position staff around the store where they will best serve your customers. Additionally, the data can also be used to inform merchandising and store layouts to drive conversion.
This data collection should also ensure that your loyalty rewards are highly personalised, targeted to the way they shop and their purchase history.
While loyalty cards, points, and rewards can increase customer experience, a brand’s primary concern should always be creating the best possible experience for its customers.
Remove obstacles, and create a smooth customer experience wherever possible. That means removing unnecessary cards, and creating one app to serve as your primary channel.
Done right, this should be an ongoing process, and not something that can be attempted once and then forgotten.
It’s a big commitment, but reaping the rewards of genuinely loyal customers will be worth it.