Remaking Retail Loyalty

Too many retail loyalty programs are expressions of merchant relationships and priorities. They are about the next transaction — often delivered by sterile emails. They have little to do with creating differentiated experiences on the customer’s terms. And the results show.

Retail loyalty programs are failing to capture customers’ imaginations and, ultimately, loyalty — eroding the economic power of loyalty.

Remake loyalty to be in service of the customer versus the next transaction.
Remake loyalty to be in service of the customer versus the next transaction.

Customer Modeling

Customers are savvy, minimally loyal, and dynamic. The key to customer modeling is moving from purchase-driven segments to human-level microsegments that can reveal motivations and attitudes and signal future behaviors, priorities, and expectations.

Loyalty Experiences

Coupon- and discount-oriented experiences are insufficient, not only because of the poor redemption value. The question is, what are the right experiences, for whom, when and where, and how best to make them a true expression of brand? Retailers need to solve loyalty — designing programs that delight and reward customers and build affinity and economic value.

Value Delivery

Do loyalty program members experience or feel differently than nonmembers? Does the instant reaction to a discount endure to build affinity or rapidly expire? This is the fundamental problem with value — it is in the eyes of the beholder and fragile in the noisy world of consumers. Tomorrow’s loyalty and membership investments need a clearer line between money spent, emotion, and economic return.

Remaking Loyalty

Loyalty is emotional. It is an earned outcome: a human’s belief that your firm is working in their interest, creating value, and worth their time and money. Decaying trust in institutions, experimental behaviors, and tribal influences make loyalty harder today. But you need to see and solve loyalty on your customers’ terms.

Ready to speak with Forrester?

Thanks, we will be in touch soon. In the meantime please subscribe to our insights or give us a call:
+44 (0) 2073 237741 (Europe)
+1 615-395-3401 (United States)
+65 6426 7006 (Asia)