Sue Azari, eCommerce Industry Lead at mobile attribution and marketing analytics platform, AppsFlyer, discusses the integration of loyalty programmes as a cornerstone strategy within today’s retail landscape.
LOYALTY IS EVERYTHING
How people shop has fundamentally changed. Whilst we saw an acceleration of online shopping during the COVID-19 pandemic, since restrictions were lifted, shoppers have fallen back in love with in-store shopping.
Online-only e-commerce players have struggled to grapple with this shift. Many have faced logistical challenges, competition from ultra-cheap rivals, and soaring costs.
The change in sentiment has been reflected on the stock market too. Asos shares peaked at over £57 in 2021 but now change hands for less than £4, whilst Boohoo shares are less than a tenth what they were at their peak.
ELIMINIATING FRICTION
Conversely, retailers that are predominantly store-based have generally bounced back. Marks & Spencer (M&S) is one example that has capitalised on the shift back to in-store shopping. It has grown its click-and-collect offering and is developing its app to work seamlessly within the in-store environment.
Today, brands want to be seen as being available at all times online but also have a physical presence that they can use to garner a greater consumer experience. Technology is transforming what is possible and eliminating friction. Through its app, Zara customers can book changing rooms, see where something from their wish list resides on the shop floor, or order items for click-and-collect in-store. Others are using geolocational push notifications or augmented reality to create experiences.
BAGGING A BARGAIN
Price is now the number one factor in brand consideration. Increased choice, and a consumer more price-sensitive than ever before, have made customers far more likely to shop around for the best deals. In an effort to bag a bargain, loyalty programmes have become increasingly popular with consumers, with nine out of 10 in the UK alone now signed up for at least one.
In fact, during the recent Black Friday, loyalty apps were amongst the top 10 downloads in most territories. Consumers today expect to be rewarded for their loyalty and retailers are generally happy to oblige.
The amount of loyalty apps downloaded during Black Friday was unsurprising. After all, their use has now become ubiquitous, and for good reason – they are highly intuitive and convenient to use.
Loyalty apps are helping bring in a new era of retail by encouraging multi-channel shopping. Whilst the grocery sector is leading the way, with 82 percent of consumers now signed up for a supermarket loyalty scheme, other sectors such as food and drink (i.e. restaurants, cafes, and bars) and beauty brands are gathering momentum.
A CORNERSTONE STRATEGY
Loyalty programmes should be a cornerstone strategy for any business seeking to foster brand allegiance. Businesses should think of apps as the bridge between the in-store and online environment.
Sephora is one such brand that is doing it right. Whether in Dubai, London, or Paris, a shop assistant is trained to always ask a customer whether they are part of its loyalty scheme. This has led to 80 percent of all transactions now being made by users enrolled in it.
Yet, for a loyalty app to be successful, it is important to offer the right incentives. Concentrate on offering special pricing and monetary rewards as these are most likely to impact brand consideration, especially amongst younger demographics. Subscription fees and irrelevant rewards, however, can become barriers that send consumers elsewhere.
VIRTUAL WORLDS AND GAMIFICATION
A good way of garnering loyalty is gamification. In many ways, it is the new frontier for branding and monetisation. In the past couple of years, we have seen brands increasingly capitalise on the immersive nature of mobile gaming.
They are integrating their products directly into the gaming experience through seamless in-game advertising and virtual pop-up shops. Plus, they are gamifying the shopping experience itself and exploring strategic collaborations.
Central to this phenomenon is the exploration of platforms such as Roblox. Its pioneering use of user-generated content (UGC) provides an excellent starting point for brands wanting to connect with their audience within a game.
Through seamlessly embedding their stores within virtual worlds, brands can offer users new and exciting experiences whilst organically promoting their products.
Already, we have seen Walmart launch its own, very successful games through the platform. There have also been virtual worlds built for luxury brands such as Hugo Boss and Gucci.
A HYBRID FUTURE
A loyalty scheme is now so ubiquitous that a brand can actually lose market share if it does not have one. There is a danger, though, that consumers could suffer loyalty fatigue. Because of this, I expect to see more elements like gamification coming to the fore within apps to help maintain interest.
What is clear is that the retail landscape throughout Europe and the Middle East is morphing towards a hybrid future with technology at its core. Because of this, brands are rightly focusing more on ambassadors than influencers. Today, loyalty is everything.
