What loyalty can learn from e-commerce
Your loyalty programme's online rewards catalogue is where you succeed or fail to convert passive points accumulators into engaged savers and spenders. Get it right and you're on your way to building a great long-term relationship with your members, according to James Berry of Collinson Latitude.
One element of success is selecting a range of rewards that offer great choice, attractiveness and price to all segments of your customer base. The other crucial element comes from building a catalogue that encourages your members to use your catalogue as a regular shopping destination. And that's where you can learn from the experience of the most successful e-commerce sites. For example:
- Make the user experience easy, friendly and personal Your members are familiar with all sorts of transactional websites. So make your website similarly easy to use. Let members build their own experience. Wish-lists, browsing history, preference setting, and recommendations ("people who bought this also looked at that") help your members find things they really want. And they give you the chance to offer promotions and bundles specific to each member rather than generically.
Make your catalogue technology-responsive, and device-neutral. Rather than having an app for their mobile device, ensure that your catalogue works on pcs, laptops, tablets and mobiles, whatever the operating system. And make sure that, wherever and whenever a member signs in, their preferences, history and current basket are always there.
Price in points, cash and both. When members see how they can add cash to the points they have earned it does two things. First, and obviously, they can buy the things they want more quickly. And second, it reinforces the value of their points.
Act local. Show cash prices in local currency. Use imagery and products that are culturally and geographically appropriate to where your member is based. You collect that information when they sign up, so use it.
- Look after your merchants, and they'll look after your members Learn from the success of eBay and Amazon, who use their merchants to hold stock for them. You get to work more closely with suppliers when they have responsibility for delivery to customers too. Use your service level agreements to ensure reliability on their part, and show trust on yours.
Use a mix of local-to-customer merchants, to reduce costs of shipping and fulfilment, and global suppliers, when you can get economies of scale from buying in bulk. Working with many suppliers, based in all the regions where you have customers, means you can make deliveries quicker and cheaper, and avoid warehouse and storage costs.
Choose merchants who will enable you to meet your members' expectations of speedy delivery (they're probably used to 7 days), and remove that potential hurdle to buying through you. And make sure they react equally fast to sort things out when there's a problem.
- Make it easy to choose Curate products into customer-relevant categories. Your members can easily find what they're looking for, and see complementary products. For airline rewards programmes we've seen the travel & luggage, electronics, health & beauty and luxury categories work well. Experiences, gift cards, entertainment (physical merchandise and downloads of films, books, music) and donations to charity are increasingly popular.
Limit choice within each category, and don't overwhelm browsers with hundreds of items. Lead with the big brands in each sector, and back them with products that have distinct benefits and differences, that have been selected as appropriate to your members. And keep your merchants happy because they're not being crowded out and have more chance of selling.
Keep your product range dynamic. Work with your merchants to refresh your ranges so they don't get stale or boring. As a guide, a core range of popular items that are always available accounts for about 50% of successful ranges, with the other 50% changing monthly, as new models or seasonally appropriate lines launch. When you have a close relationship with your suppliers you're far more likely to find them offering special launch offers for new lines.
Draw attention, and sales, to different product categories, with timely promotions, associated with relevant (and culturally-neutral) events such as Fashion Week or a major film premiere.
Keep pricing competitive on key brands versus other online retailers. It helps establish your catalogue as being good value, and may allow you to charge higher prices on other products in the same category.
- Keep it interesting with promotions, offers and bundles Borrow the big e-tailers' most successful mechanics to upsell and cross-sell to your members. Bundle complementary products (champagne and chocolates, his & hers luggage) together with an associated (small) discount. It encourages customers to spend more AND feel they've got a good deal.
Understand what commission or discount is available to you across each category (or work with consultants who have that insight). Then price so that you balance offering great value and occasional deals for your customers with contributing to the costs of your rewards scheme (or even generating revenue for your business).
Use your catalogue's home page and regular emails to highlight lead offers such as price deals and bundles. The more active members you have, the more likely that you can sell this promotional space to your merchants for cash or better prices.
- Drive traffic to your site, then convert it into sales Communicate with your members regularly, in different styles and formats, to encourage them to visit your catalogue. As well as regular points updates, announce new partnerships, new product categories, or seasonally relevant ranges. Keep your communications customer-focused, focusing on how your news is of benefit to them.
Use the information you collect to personalise and segment your communications. Use Wish-lists, Category preferences and Browsing history to send product-specific news and offers on complementary products. Offer related merchandise to the items on their list, especially if you have no-points-required offers that don't eat into points they are saving. Send personalised offers and product news for birthdays and landmark points achievements.
Direct your customers to the catalogue, using hyperlinks, immediately after they've earned points - if they are in the mood to spend then now's the time to redeem their points.
Use clear calls to action (e.g. Buy Now, Add To Your Basket) across emails, SMS messages and websites. Make it easy for members to redeem - when they want to buy, you need to make it as simple as possible, and as close to One Click ordering as you can.
Remind members of abandoned baskets. They may be shopping around or looking for a deal - so if you have an offer this is the time to use it.
Solicit feedback and reviews after every purchase. Then use these peer recommendations to demonstrate the quality of your products and service and give members another justification to visit, and to buy.
"There is so much to learn from successful online retailers. When you apply the lessons of e-commerce to your rewards programme, your programme becomes even more part of everyday life and your customers form stronger, longer-lasting relationships with your brand," concluded Berry.