How Technology is Changing Customer Loyalty Programs

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Approx. 4 min. read
Last updated: October 31, 2016

Giving recognition and offering rewards to regular customers isn’t only a courteous thing to do for customers today— it’s necessary.


It costs a business 5 to 10 times more to acquire a new customer than get a repeat customer to purchase a product or service. Current customers, on average, spend 67% more than new customers. Given these statistics, having an outstanding customer loyalty program is essential for any business.

More than getting customers to repeat purchase, a loyalty program also helps businesses understand their customers to better cater to them in the future. The core of loyalty programs is, after all, to help a business identify their customers, unearth their needs, and address them.

Customers want rewards. But the benefits of such a program don’t stop at getting customers in the door. By leveraging technology, a rewards program can help your business provide detailed customer data, without having to pay market-research firms thousands of dollars.

 

The Evolution of the Customer Loyalty Program

Loyalty programs date back a hundred years, and due to technology, they have greatly evolved and changed the way customers interact with companies.

An early effort that won the heart of customers was the S&H Green Stamp program in 1986. Consumers were given tiny stamps when they made purchases from participating merchants, glued them onto pages of booklets—“alternative currency” as they called it—and redeemed them for products when the accumulated stamps had attained a certain value.

The program was such a success that at some point, S&H Green Stamps was issuing three times as many stamps as the US Post Office. By the 1960s, S&H had become the largest purchaser of consumer products in the world.

The increased competition after the 1978 Airline Deregulation Act also encouraged airline marketers to create ways to reward repeat customers and drive brand loyalty.

American Airlines’ “loyalty fare” was expanded to offer free first class tickets, first class upgrades for companions, or discounted coach tickets. In a week, United Airlines launched its Mileage Plus program, and in months, other airlines followed.

Loyalty programs have developed beyond airlines, expanding into all areas of business-to-business and business-to-consumer marketing. Even mass marketers have adopted the loyalty concept because it has greatly proven its value in caring for a loyal customer.

 

The Impact of Technology on Customer Loyalty Programs

Retailers use technology and big data by extending it in meaningful ways to their staff to impact customers’ experiences.

In the past, centrally controlled call centers were the only means to level up customer engagement. Today, cloud computing and mobile devices enable the same type of data to be delivered to empower staff on the shop floor.

Although the ubiquitous card remains functional, carrying a wallet full of cards to prove frequent shopper status is set to be a thing of the past. Soon, customers will demand easier options to engage with retailers by integrating their existing habits into the experience.

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Moreover, sales assistants equipped with iPads that have records of customers’ purchasing choices choices can better inform personal shopping in department stores. Data shared across multichannel retailers will allow staff in the store to know about recent online experiences, both positive and negative, and shape their service accordingly.

Ultimately, technology enables different kinds of shopping experiences to take place and brings out the contextual relevance of what retailers and brands know about their customers. It puts it in the hands of people who will use it to make customer experience better and take away pain points and frustrations of shopping.

 

Unifying the customer experience

Inevitably, there will be significant changes to loyalty programs in the coming years. With technology opening up more ways of identifying customers, what and where they buy, marketers seek to make identifying a customer a seamless part of the shopping experience.

Because of new engagement technologies, consumers can extract more value out of their programs than ever before. Everything from the advent of social media (Facebook likes and company-specific tweets), check-in services, mobile proximity, and targeted communications to online statements and deal of the day offers continue to change the loyalty landscape.

Loyalty programs no longer solely focus on points. Data-centric marketing communications lead to changes in customer behavior that can be measured. This new breed of loyalty initiatives will continue to make access, interest, and reward levels more tailored and engaging to any individual consumer.

 

Apple Pineda works as Content Marketing Specialist at Avail.at, which specializes in digitalizing rewards programs for employees and customers.

Apple Pineda
August 04, 2016