Omnichannel Loyalty & The Retail Downturn
Summary: Retail outlets nationally have been downsizing at a record pace. While some are crying “the demise of brick and mortar”, this shift is more evolution than revolution. Learn what these changes means for your retail business and how to leverage the latest omnichannel marketing tools to thrive in an uncertain environment.
“BRICK AND MORTAR IS DOOMED!” It’s a headline you’ve probably heard one too many times over the course of the last six months. Scary to be sure and a bit hyperbolic, but an attention grabber that does retain some important grains of truth, none the less.
What’s the bottom line? In short, we know more today about a trend that’s been on our radar for several years now: Consumer behavior is changing. Shoppers are continuing their migration towards the online environment, affecting pretty drastic reductions in traffic to the type of outlets that commerce has centered around for hundreds of years, namely brick and mortar retailers. This same pattern is found in verticals ranging from CPG to apparel to grocery.
This won’t (and shouldn’t) come as a shock to anyone operating in the space. The question for legacy retailers, some of which have operated in the brick and mortar ecosystem for over a century, is what that transition means and how best to adapt their existing infrastructure to the new digital paradigm.
Moreover, how can marketers use this downturn as a toe hold to reevaluate how they interact with potential customers; how can they streamline and optimize their entire shopping experience for the next generation?
While we probably don’t have to convince you that’s it’s important to have an online presence in 2017, simply on-boarding a new eCommerce solution and “calling it a day” is akin to buying a sports car and never taking it out of first gear. Thriving in this new digital paradigm is going to mean optimizing your online experience for today’s world – starting with one very important question: Where are our customers spending their time and how can we reach them there?
Your website is an important place to get started, but it’s just that – a start. Your digital footprint is a much larger matter, encompassing ecommerce and web-stores, CRMs, inventory management, and last, but certainly not least, your customer retention programs.
In order to deliver on your brand’s promise, it’s important not just that your loyalty program is able to engage customers across platforms and channels, but that it becomes an extension of your brand. Customers don’t simply want a want a website or a loyalty program. They want a dynamic shopping experience that fits their on-the-go lifestyle, and not the other way around.
Getting there is going to mean building an interconnected network of services that speak to each other across devices and in real time – in a word, Omnichannel.
What is Omnichannel Loyalty?
You’ve probably heard the phrase once or twice, but what does “omnichannel” mean and how does it apply to my customer retention strategy? Overall, it’s the ability to collect, distribute, and analyze loyalty program data over any or all channels, simultaneously. It’s important because it’s one of the primary components retailers who have survived the retail downturn have used, not only to keep ahead of the game, but in many cases, to thrive.
On its face, omnichannel loyalty applies to a wide range of features within the customer retention ecosystem, from how we onboard new customers to business intelligence and how we translate loyalty data into actionable insights. At its heart however, omnichannel is about meeting your customers where they spend their time and bringing your brand in line with their lifestyle.
Why is omnichannel loyalty so important and how does it play out in the daily course of business?
Imagine taking your spouse and kids for a family outing to an amusement park. You arrive at the gates excited for a day of fun, only to be told that the park sells tickets exclusively in a foreign currency. In this case, the business has just committed the cardinal retail sin of inconvenience. While this may work for the park, it’s just not the way you, the shopper, purchase goods. It’s complex, it doesn’t fit into your everyday routine. And like almost all shoppers, the likelihood is that you’re going to walk away and take your family to another attraction down the street before seeking out a currency exchange.
Thus, is the experience of many loyalty and rewards program members who try to shop with merchants which haven’t yet instituted omnichannel tools as part of their loyalty marketing programs. It’s a matter of ease. When shoppers can’t engage with your brand in a way that is convenient for them, they will walk away from it.
Here’s a breakdown of how omnichannel loyalty programs work in each stage of your customer’s life-cycle:
Think of your onboarding process as the opening salvo in a long-term relationship – a sort of first date with your brand. The experience is either smooth and effortless or difficult and cumbersome. You may have known this shopper for a while or just met them. Either way, this engagement sets the tone for a deeper relationship and you want to make it as easy and fun as possible.
Join from Any Device
It’s a fact, there are as many ways of engaging a brand as there are brands, themselves. This isn’t limited to shopping though. Each of us interacts with our friends, family, and co-workers in different ways and forcing someone into a method of communication they’re not comfortable with can be an instant non-starter to growing your program.
We want to provide the widest possible web of ways to join. Omnichannel loyalty provides us with a way to do that by offering new members the ability to signup via your:
- Brick and mortar locations
- On your website
- Through social media
- Over email or text
- On the phone with customer service
Don’t Wait for the Purchase
It’s easy to forget that onboarding a new member into your loyalty program is a valuable transaction in and of itself. The quid pro quo is clear. You are gaining access to a virtual trove of purchase data, including your shopper’s behavior across devices, locations, and products. In return, they expect to be treated as an insider – to get valuable discounts, early access to new products, personalized marketing, and more.
What does this have to do with omnichannel? As more and more customers begin utilizing traditional brick and mortar storefronts in the way they would, say, a showroom, rather than a point of purchase, retailers that wait until the back end of a transaction to offer access are missing out on potential members who prefer purchasing online.
Waiting until the point of sale to engage your customer with information about, and opportunities to, join your loyalty program results in dramatically reduced signups – meaning that you’re likely opting out of the ability to engage with customers, who while not making a purchase today, are likely to return at a later date – given the right incentive.
Great ways to let customer know about your loyalty program before the point of purchase, include:
- Competitive loyalty program pricing, on your website, application, or throughout your physical location
- In-store calls-to-action that lets customers signup with mobile devices before reaching the point-of-sale
- Social media ads connected to a loyalty signup landing pages
Do it in Real-Time
In most cases, the omnichannel loyalty experience means real-time. That is customer data, rewards, and analytics are synced across all devices, instantly. This offers a couple of key advantages:
There are very few points during any loyalty campaign when you will see quite as much lift as you do when you begin to offer instant signup rewards. A study of bLoyal client programs recently revealed that providing instant rewards in the form of added points or dollar values at the point of signup increased total program acquisition by over 40% and twelve-month stickiness by over 25%
Omnichannel loyalty offers program managers the added benefit of putting order to the chaos of managing duplicate customer records. Because these systems sync data across platforms uniformly, it becomes easy for your software to recognize existing members as they’re signing up, and where appropriate, prevent multiple profiles.
It follows that being able to reach new and existing program members with various offers and promotions over all of the channels where they spend the time is mission critical.
We all have that one friend or co-worker who seems to take pride in an overwhelming number of unread emails sitting in their account. They are not unique. Methods for communicating your brand’s message and promotions should be diversified. Pushing content over one channel and assuming that your customers are seeing it, is a critical error.
Don’t mistake effective omnichannel marketing for the practice of bombarding your customers over every channel at once, however. For retailers trying to manage the recent downturn, the goal is to use omnichannel as a scalpel rather than a sledge hammer. We want to combine omnichannel marketing with tools like SKU level segmentation to connect with shoppers over the platforms and mediums where they spend time and want to engage your brand.
This is about reaching the right customers, at the right time, with the right message using tools like SMS, push notifications (including geo-fencing and caching), email, phone, and social media retargeting, customer service, and more.
That sweet spot can vary widely among customers here: For instance: Bobby, a 20 year old millennial is more likely to respond to remarketing / targeting efforts over social media, while Jenny, a mother of three dislikes the impersonal nature of engaging online, prefers talking to a human on the phone. Omnichannel is about having the option to reach each customer where they spend their time.
Here are a couple of unique omnichannel loyalty campaigns ideas you could try to get started:
- Send geo-fenced push notifications with special offers when a member is close to one of your locations.
- Provide point multipliers when customers shop from your app to launch a new product.
- Offer discounts when customers make bulk purchases from your online store
A well-constructed loyalty and rewards program allows merchants to build, execute, and monitor campaigns across one or any combination of channels. As retailers searching for new ways to bring customers back with loyalty however, we need to understand that there is no aspect of customer retention strategy that can be more useful or infuriating to your shoppers as taking the time to join a new loyalty program, receiving an offer, only to be limited in how you can use it.
Retailers who already have an existing eCommerce platform like WooCommerce or Magento might throw their hands up and say, “but people can shop online…Isn’t that far enough?” As we mentioned in the opening paragraphs of this post, getting online is a good start. That said, your retail sales funnel is only as strong as its weakest link.
In this case, that link is your consumer retention strategy.
Customers shopping with a brand who has a functioning ecommerce presence through a website or application, but are not integrated to omnichannel loyalty might experience the following:
- Customer is notified that they have met an accrual threshold and are now eligible for a free or discounted item, only to be told that they must redeem that discount in-store or through a customer service agent, over the phone.
- Customer sees a loyalty program offer over social media, but cannot get instant gratification, by simply clicking on your ad and making an immediate purchase.
- Customer comes to your store to see a product after viewing it online, but cannot get the same pricing because their new membership has not been processed in real-time.
How does this differ from the omnichannel experience? Most importantly it untethers your customers from a single location and lets them check out at the point of sale that best fits their most convenient shopping experience. This includes your website, mobile applications, and more.
When speaking about the omnichannel shopping experience, it would be impossible not to note that retailers are, with increasing frequency, moving to a virtual or “extended shelf” method of managing large inventories.
Whereas many businesses have, in the past, housed their inventory in a web of larger brick and mortar showrooms, the model no longer fits how customers shop. If you want to see a common thread, you don’t need to look much further than big box retailers like JC Penny, Nordstrom, and Kmart, shuttering hundreds of locations in the last five years alone.
The “extended shelf” concept has allowed successful multi-location retailers to eschew huge physical retail footprints for much smaller showroom style sales floors. Each store holds a vastly reduced amount of stock, but is connected along with its various eCommerce checkout solutions to a single large warehouse from which products can be sent either to the store for pickup at a later date, or directly to the customer.
As merchants reevaluate their retail strategy, many are finding that in the age of information, brick and mortar locations are acting as much the part of showroom, as sales floor – with customers frequently browsing in-store and buying online or vs. This trend has decreased the need for the type of square footage these businesses used to require when housing large inventories of product.
Advanced omnichannel order processing drives your ability to manage your entire inventory from a single virtual shelf. In other words, program members can shop, transact, and receive your products anywhere.
Order online > Pick up at home
Order in-store > Pick up at home
Order in store > Pick up at another store
Order at home > Pick up at store
Order through customer service > Pick up at store or receive delivery to home
Understanding how new loyalty program members are discovering your business, what channels they’re signing up on and which of those channels is driving the most downstream revenue is one of the most important factors in managing loyalty program investment and growth.
Here are some of the most important data points you may be missing out on when not segmenting customers by shopping behavior:
- Do you know how your customer retention programs are driving the path-to-purchase across varying channels?
- Do you know which loyalty marketing efforts are driving the highest ROI vs net revenue by offer and channel?
- Do you know which channels are the most successful in driving program signup for various buyer personas?
- Do you know if there’s a difference between how non-loyalty and loyalty program members engage your campaigns across channels?
- Do you know which types of display and PPC advertising are driving loyalty program signup?
In short, omnichannel analytics help you close the loop on understanding how customer retention programs effect the bottom line. Your ability to make sense of your customer’s purchasing behavior and connect the dots between the places they shop, the items they buy, and way they buy is going to be a critical factor in the long-term success of your customer retention strategies.
By the Numbers
Not convinced yet? Here’s some hard facts from bLoyal retailers who have survived the brick and mortar retail slump with omnichannel loyalty:
- bLoyal merchants offering omnichannel loyalty programs have up to a 60% higher velocity on new memberships and higher program retention than those who don’t.
- Merchants who allow their customers to redeem coupons at every point of checkout have a 40% higher use rate.
- Merchants who use data driven loyalty analytics to guide programs strategy see a 27% increase in program participation, across the board.
When you zoom out, loyalty and customer retention is part of a much broader set of pain points that modern retailers face which includes our customer’s transition towards mobile environment, the integration of social media into the shopping experience, and the demand for dynamic and highly personal marketing automation.
Surviving the downturn in brick and mortar retail requires rethinking how customers engage your brand and fine tuning your infrastructure to match today’s shopper. If you’re like many other retail businesses, it’s almost certain that that engagement is taking place more and more, through multiple devices and platforms.
Because of that, It’s more important than ever that brands have an online presence, but equally as important that omnichannel loyalty solutions are a big part of their marketing roadmap for the next several years.
If you’d like to know more about how you can build omnichannel loyalty solutions into your customer experience please request a demo at the top of this page.