Creating a successful loyalty program is often hugely challenging for retailers. Insights from the EY Future Consumer Index show that consumers have three core demands: make life easier, better, and more fulfilling. However, in a rapidly evolving sector, the approach to loyalty is constantly changing, and retailers must adapt their strategies to maintain and win loyalty from existing and new customers. So, what are retailers doing to create loyalty programmes that are intelligent, sophisticated, and more profitable than ever?  

At our recent GDS Group retail summit, our panellists Markus Naewie, Head of Retail EMEA at Victorinox, Hugo Larricq, VP of Commercial & Trading at Cdiscount, and Elena Golubeva, Director of Commercialization Isoxa Adeo France discussed all of this and more at our recent GDS Group Retail Summit and we’ll share some of the key takeaways here. 

In Brief: 

• Make it fun with emotional rewards to keep customers engaged and loyal. 
• Make it easy and fast to register to drive numbers of customers signed up. 
• Make sure your offerings make customers feel special and valued. 

Loyalty programs have evolved into an essential tool for retailers looking to increase customer engagement, retention, and revenue growth. With consumers becoming increasingly savvy and demanding, retailers are turning to innovative loyalty programs to stay ahead of the competition. But what does loyalty mean? Well as Markus puts it “Loyal customers come back, and they tell other customers about the brand. But the most important thing, which I think many forget, if we fail a loyal customer they complain, they tell us where we did wrong, whereas non-loyal customers, they just change the product or the service provider.” 

So why is having a loyalty programme so essential?  

“It’s 4x cheaper to invest in your loyalty program than to acquire and get new customers.” 
Hugo Larricq, VP of Commercial & Trading at Cdiscount 

Hugo goes on to say, “We tend to believe that 80% of our forthcoming business will come from our 20% most loyal customers.” It is also the best way to gather data on your customers, the panel agreed there is no better way. 

So, what are the challenges?

Often the biggest challenge retailers face is identifying the right incentives to offer customers. Rewards need to be attractive enough to encourage customers to join and engage with the program, while also remaining profitable. They should be easy to access and where possible, create a positive emotional feeling.  

As Elena so perfectly puts it “everybody knows that the loyalty program should be fun. Of course, the points help, but it still has to be fun.” 

Marcus adds “I think the most important thing is to have emotional rewards for our customers. In the end, the only relevant person in every company is the customer. If you don’t have a customer, you have no business, and if they’re not emotionally invested in you, they will leave.” 

Creating emotion

So how do we create this emotional feeling? Firstly, create a sense of exclusivity. Customers want to feel special and valued. By creating a loyalty program that offers exclusive rewards, such as access to limited-edition products or VIP events, retailers can make customers feel like they are part of a select club. 

The panel agreed it’s also important to foster a sense of community among customers. By facilitating interactions between customers, such as through online forums or in-store events, retailers can create a sense of belonging and connection.  

Hugo shares a great example of bringing community and gamification together. He says “Let’s say a customer asks a question about a product. If another customer answers, they’re to gain some points. If they ask a question, they gain points. We have pages where customers can play games, and they gain points. If they open the app every day for ten days in a row, they’re going to get some points. So, we are starting to shift from free delivery and discounting experience to an overall experience within the website and the brand to maintain that basis of loyal customers.”  

Another method is by linking in and supporting customers’ values and aspirations. By creating a loyalty program that supports causes or provides opportunities for customers to make a difference, retailers can tap into these emotions and build stronger connections with customers. 

You should also recognize and reward customers for their loyalty. Acknowledging their loyalty and thanking them for their business is a powerful way to make them feel appreciated, and retailers can build deeper connections with customers. 

And of course, most importantly, by providing exceptional service at every touchpoint, retailers can create emotional benefits that make customers feel valued and respected. 

So, when it comes to creating emotional rewards, how can we measure that? We’re not sure what the answer is yet, but as Marcus says “maybe we need to use more intelligence or be more innovative and creative in finding ways to measure this emotional response. It’s very difficult to capture.” 

Data and Personalisation 

The key benefit of loyalty programs is the rich data they generate, and Elena agrees.  

“We all know that the loyalty program is the best way of collecting client’s data and to analyse in the future.” 
Elena Golubeva, Director of Commercialization Isoxa Adeo France 

And by tracking customer purchases, preferences, and behaviours, retailers can gain valuable insights into their customers’ needs and preferences. By using that data correctly to create personalised experiences, such as customised product recommendations, coupons, and other offers, retailers can create emotional benefits that make customers feel understood and appreciated. But don’t get bogged down in constantly messaging customers to repurchase the product. How often do we repurchase the same thing? Unless it’s our favourite meal, not very often. Be considerate in how regularly you are sending personalised offers and make them as easily accessible as possible. 

Make it easy

And lastly, speaking of making things easy, loyalty programmes should be very easy for customers to join! Elena explains “It should be super-fast. You shouldn’t need to fill in any forms. The most important thing is we can really connect you and have permission to contact you via your telephone number. We really don’t need a lot of information about you at this point. Later, we can ask you for more information, but in the starting point, make it easy. 

To learn more about the future of retail, and why we should take pride in it, listen to our podcast with Ron Thurston here. Or if you read this blog and think you can share some insights, email podcast@gdsgroup.com to apply to be a guest. 

Continue the debate at GDS’ retail digital summits where we bring together senior retail executives who are actively seeking to share, learn, engage, and find the best solutions. Apply to attend.   

Our Summits are tailored, 3-day virtual event conferences that bring together business leaders and solution providers to accelerate sales cycles, industry conversations, and outcomes.  

For more, click here to hear from attendees on how GDS has helped them to achieve their business outcomes.