Is the Loyalty Club Dying a Necessary Death?

We’ve come a long way since loyal customers in the 18th century¹ received copper tokens that could be exchanged for gifts at a later date. What we had here was the makings of a loyalty club, just in a more physical (and metal-based) form.

Fast forward a couple of centuries and a hallmark of the local store was that each owner knew their customers’ names as well as their unique preferences. They used this information to power their conversations with the customer, with the occasional reward to keep the relationship going strong.

When some of those stores turned into chains, part of the ability to cater to customer preferences at scale was lost. Suddenly, it was no longer possible to know every person that entered their various locations.

Then came the onset of e-commerce businesses, armed with advanced promotional tools and the technology to offer personalized product recommendations and customer experiences. They place less emphasis on having a designated loyalty club to collect data, as by associating each visitor with an account, they have the ability to target all repeat buyers.

Related: Why Personalization is Key to Customer Loyalty and 3 Steps to Foster Both

What we’ve seen is the natural evolution of rewarding loyalty. As modern-day businesses have the tools to collect data analytics on every customer that passes through their websites and stores, the idea of having a specific “club” is becoming less and less relevant.

New Ways of Rewarding Customers

The modern approach to customer loyalty is built on a foundation of data, which can be easily obtained from customers that log into an account they have with the business. That information is used to build a view of the customer and inform the offers and communications that keep them engaged.

Removing the Need for Loyalty Clubs

What’s happening is that data is removing the need for a loyalty club, which happens to come with certain flaws. These schemes mainly attract the top 20% of customers, who would probably buy from the business anyway, but fail to engage some of the more infrequent purchasers. By only focusing on the top-tier of customers, the business is missing out on a new source of revenue from the rest of their customer base.

Let’s use the example of the e-commerce business and how they engage customers one-to-one. It’s a model that largely requires the customer to log-In to make a purchase, which enables them to collect data on their purchasing and behavior. That information is then used to drive incremental revenue through tailored promotions, communications, and experiences. 

The truth is, every brick-and-mortar business is sitting on a goldmine of data from their customers. However, only the market leaders are using it to power offers and communications that are tailored to the very people receiving them.

If you’d like to learn more about how brick-and-mortar businesses can adopt a logged-in approach to effectively target all their customers, check out the full post on QSR Magazine.

Building a loyalty program helps your business get to know all customers, Unlike an exclusive loyalty club. Como Sense provide retailers and restaurants with the data-driven customer engagement tools they need inside their POS to know their customers, personalize their experience, and grow visits and spend.

Request a demo to learn the benefits of building a seamless loyalty program with Como Sense.


Sources:

1. http://resource-center.crowdtwist.com/i/776442-the-loyalty-evolution-research-report/3?

Posted by Yair Holtzer

Yair Holtzer drives Como’s growth in the Americas by expanding our partner network, building strategic alliances, and managing our local partners, sales, and account management teams.