As the retail industry grows both online, offline, and amongst competition, the need for retailers to offer loyalty programs increases. This is especially true in a post-pandemic world in which the way brick-and-mortar retailers conduct their business has drastically changed.

"Consumers aren’t going back to their old ways […] If you’re to engage with customers, you need to continually adapt to the rapidly changing demands in the new normal." – Forbes

The evolution of loyalty programs

Transactional-based loyalty

There are several loyalty programs including the common points and rewards programs.With this program, the customer makes a purchase and receives an incentive towards their next buy. It is a non-emotional consumption, meaning it may drive more consumption, but not an attachment to the brand.

TheHarvard Business Review research helps explore the question:

“Do rewards really create loyalty?

In practice, reward programs are widely misunderstood and often misapplied. When it comes to design and implementation, too many companies treat rewards as short-term, promotional giveaways or specials of the month. Approached that way, rewards can create some value by motivating new or existing customers to try a product or service. However, until programs are designed to build loyalty, they will return at best a small fraction of their potential value.”

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Data-driven and value-based loyalty

This type of reward goes beyond traditional transactional-based programs to provide personalized value through data that is collected on each customer. Their history, likes, dislikes, and preferred channel of communication are all important when creating personalized value.

This data is then used to tailor engagement opportunities and offers per customer.Each time the customer has an interaction with the brand, they’ll receive some sort of targeted offer that aligns with the customer and the brand’s promise.

The immediate benefits of these programs include higher visit numbers, upgraded basket size, and stronger emotional connection to the brand.

The effectiveness of ‘personalized loyalty’ programs is inevitably high, and especially popular among generation Z.

Examples of such successes are organizations like Nike, Costco, Amazon, and Starbucks.They deliver on the brand’s promise, causing a positive ripple effect.

Brand loyalty and the pandemic

Over the past couple of years, in the midst of the pandemic, retailers have been trying to better understand their consumers. Topics such as their consumers’ wish lists, location preferences, and what would impact their brand loyalty are all key.

The fact is that the pandemic disrupted standard loyalty strategies. Examples of this include online grocery sales growing by 40% year-over-year and brands like Chipotle (US fast food restaurant chain) witnessing 134% year-over-year growth in digital orders and increased app-based engagement.
The changes appeal to the challenges of the pandemic – largely isolation and social distancing, resulting in an overwhelming increase in online purchases.

But, we are slowly starting to see that consumers are eager to spend in stores again.

This is the result of large vaccination rates, holidays that have been missed year after year, and the weather.

If this is the case, retailers certainly need more data-based loyalty programs to tailor communications and personalize offers.

Weezmo’s tips for the changing loyalty landscape

·     Supports digital efforts – Retailers can’t and shouldn't wish to escape the e-commerce revolution. Instead, retailers should connect the online arena with offline, in-store purchases. Customers visiting physical stores should also be targeted with appropriate social media ads. Weezmo enables retailers to do just this, allowing them to communicate with customers at every step of the customer journey.

·     Learn the consumers’ want – Use insights to understand the wants and needs of each customer to tailor engagements and offers on a personal level.

·     Provide immediate benefits – As mentioned earlier, customers are not looking to accumulate points (who knows what those air-miles will be good for). Value is the number one priority, and retailers should make sure it’s useful in the present, not just the future.

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