Deliver A Stand Out Shopping Experience Through Loyalty

By Doug Smith, director, product marketing, retail and distribution, Epicor Software

In an increasingly transparent operating environment, independent retailers must find innovative ways to advance the consumer experience as a means of competitive differentiation. So, why is it important independent retailers stand out in their marketplace? I think it comes down to two things: being found and being remembered. When a business stands out in their market, their consumers can easily find them and — because they have differentiated their business — the consumer will remember them and return.

But, what can independent retailers do to offer a differentiated shopping experience? Today’s top retailers are leveraging loyalty programs to retain and gain consumers as the traditional differentiators of price, product, place, and promotion are losing their impact. Implementing or refreshing a personalized loyalty program specific to your retail business is a great place for you to start making your business stand out.

Use Loyalty To Standout

Without differentiation retailers face high consumer defection rates, eroded margins, and greater difficulty in maintaining — let alone increasing — their share of the consumer’s wallet. Loyalty programs provide some solutions to these challenges. Loyalty can mean:

• Reduced price-sensitivity — If your loyalty program has price credibility then consumers will tend to accept your “everyday low price” strategy and have less price-sensitivity to your pricing of blind items.
• Attain a greater share of the wallet — With loyalty programs, the consumer is incentivized to spend over and over again at the retailer’s location because of the advantages they can earn over time.
• Lower consumer defection rates — If a loyalty member purchases a product at another retailer, they do not gain benefits and status in your loyalty program. Thus, the consumer has to weigh the benefits of shopping at a competitor against the opportunity costs of shopping with you.
• A practical solution to managing privacy approvals — It’s to ask your consumer in your loyalty membership applications for their permission to be contacted by email or text. For all the differences in privacy legislation among various jurisdictions, this one fundamental tenet is common to all if the consumer provides their permission — they can be contacted and receive marketing messages.
• A reliable marketing tool — An often-forgotten component of a loyalty program is how it can be leveraged to drive additional sales, using special traffic-driving incentives such as “double points” programs and time-limited events. The most successful loyalty programs are the ones that don’t just sit in the background — they are actively marketed and their benefits are continually resold to the consumer.

Personalized For Each Consumer

Retailers are now increasingly realizing the benefits of consumer relationship management (CRM) technology applications and the power of being able to communicate directly with the consumer using data-driven direct marketing (3DM). Nearly all consumers now have e-mail addresses or cellphones to receive texts, and the cost to effectively market to the consumer via this method is within the reach of all retailers — large and small.

Imaging and delivery technologies have evolved at such a pace that e-mail promotions can be template-based, permitting images, copy, and offers to be mixed and matched to fit the profile of the individual consumer. In this way, personalization is increasingly giving way to mass customization. Retailers who continue to rely solely upon the traditional mass-marketing “shotgun” approaches of the past are ceding competitive advantage to those who embrace these new technologies and practices. 3DM makes this possible.

Ellis Home and Garden is a business centered on customers. As the company expands, maintaining a customer-centric focus is an important asset. “Within our first year of implementing a loyalty program, we had 30,000 loyalty members,” said Derek Ellis, CEO, Ellis Home and Garden. “Our loyalty program has given us the ability to reward repeat customers by offering coupons for dollars spent. Customers sign up for the loyalty program and easily redeem coupons directly at the point of sale (POS) terminal.

“We deployed this program not only to entice customers to return, but also to capture and update our email list on a weekly basis. This allows us to stay in touch through e-mail marketing with even our newest customers. This program is currently in its infancy, but we hope to build it out in the future to increase store traffic and increase profits.”

Loyalty Programs Don’t Just Happen

Implementing a loyalty program is not difficult, but it does take some strategy and ongoing attention. A loyalty program represents a significant investment in capital, manpower, and time. Since it is a consumer-facing program, if it is done in haste and is poorly planned or deployed, the cost to the retailer is not just financial. A failed loyalty program can end up being a consumer relations disaster with long-term repercussions.

Program Insight For Growth

Loyalty programs can be a powerful competitive asset and key business differentiator in today’s retail marketplace. When managed efficiently, loyalty programs can be highly profitable and beneficial. Retailers, however, should not rush the process since a failed implementation can often be very public and damaging to the retailer — both financially and in terms of consumer perception and satisfaction.

To drive business growth and to stand out from the competition, independent retailers must leverage insight from consumer loyalty programs and technology to better understand their consumer and deliver a unique retail experience consumers are demanding.

About The Author

Doug Smith is a director of product marketing at Epicor Software. He joined Epicor in 1999 and is currently responsible for product marketing of the retail and distribution solutions product lines.