Consumers are changing their definition and expectations of loyalty
By Nadir Hirji
Loyalty programs have been entrenched in the Canadian retail landscape ever since the introduction of Canadian Tire money in 1958. Since then, we’ve seen an explosion of loyalty programs, with a recent study finding that Canadians nowadays have almost 130 million memberships. That’s an average of more than four per person — or more than eight per household.
Because of the proliferation of loyalty programs in Canada, consumers are changing their definition and expectations of loyalty. These days, it’s hard for consumers to understand the real value of their points, so there’s a commoditization of loyalty programs. To combat this effect, traditional points programs need to be tied into consumers’ overall experience. Modern brand loyalty goes hand in hand with consumer expectations of personalized, seamless experiences that are tailored to their unique tastes and preferences.
Take Amazon. It doesn’t have a “traditional” loyalty program; instead, it drives loyalty by providing a seamless customer experience that integrates convenience, personalization, product assortment and price. According to our survey, 83 per cent of Canadians are Amazon shoppers. In fact, 24 per cent of Canadian Amazon users said they shop less often at retail stores, 18 per cent shop less often at other retail websites and three per cent have stopped shopping at retail stores and other retail websites altogether. In the United States, almost half of households are Amazon Prime customers. These loyal customers shop less at both physical and digital stores.
The complete package
Retailers need to integrate loyalty into their overall experience, and food and beverage providers need to follow suit. By combining benefits that go beyond points (exclusive events, personalized deals, real-time promotions and digital offerings) with a holistic loyalty approach, customers enjoy a more engaging shopping experience which boosts their overall loyalty.
An example of this is the loyalty experience at Starbucks. Closely tied to its mobile app, the program doesn’t just offer free food and drink to loyal customers, though that is important. It also provides customers with the ability to pre-order and receive recommendations based on past orders. In turn, these customers spend more money (tracked by order size) more often (tracked by average transaction). They can also customize mobile orders in advance and then pick them up at a nearby location without waiting in line. Starbucks makes it easy for customers to linger with its expanded menu offerings, easily accessible WiFi and warm ambience, becoming a customer’s “third place” — home, work, Starbucks.
A strong connection
When it comes to loyalty, creating a strong customer bond is the Holy Grail, and this means more than just points. Canadians are loyal to their brands, so it’s important for retailers to maintain that loyalty by staying in constant connection with their customers — it’s not only about what companies stand for or the products they have, but also the way they build relationships and make customers feel about the brand.
When a customer is able to relate to their favourite brand, the overall experience becomes much more engaging and meaningful, and that’s when brand loyalty takes off. If a shopping experience doesn’t connect with the character or values of a consumer, it fails to build the foundation for a loyal, long-term customer relationship.
The pursuit of loyalty
Brand loyalty runs deep in Canada. So bolstering brand loyalty today — through clearly defined customer experiences, personalized deals, real-time promotions and seamless digital offerings — will pay off tomorrow.
Nadir Hirji is a PwC partner and leader of PwC’s Digital Services practice. Contact him at [email protected]
This article appeared in the print issue:June 2017 edition, Ask the Expert section