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Loyalty programs may protect brands from competition with Amazon

Posted on June 28, 2018 by Rewards


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As major retail giants like Amazon make use of their size to create private-label products that put price pressure on their competitors, brands run the risk of losing customers who aren’t willing to pay their prices when Amazon offers the same products for less, The New York Times reports.


Chris Keane/Getty Images

One tool brands can use to protect themselves from big box retailers, however, is loyalty programs. Forty-three percent of consumers say that they would consider buying more from a brand to earn loyalty rewards in categories they care about, according to an Iconoculture study cited by Gartner L2. Even in light of that, 44% of consumers in a loyalty program believe that brands could be doing more to improve their programs.

Here are some important characteristics that give loyalty programs a better chance at success:

  • High accessibility. The first step to attracting members to a loyalty program is removing roadblocks to joining, according to Gartner L2. If a company adds a blurb about the program to its homepage, and mentions how to sign up for the program, it makes it much easier for customers to get involved, for example. Once the user is interested, a quick and simple signup process further encourages new members. Macy’s, for example, recently removed a significant hurdle to joining its Star Rewards program when it restructured its loyalty program to allow customers to join whether they have a Macy’s credit card or not.
  • Benefits that members care about. While monetary benefits like discounts and free shipping are strong incentives, diversifying to experiential rewards, like early access to products or exclusive services, in order to offer a variety of benefits is also important. This is especially true considering that two-thirds of customers still believe that their loyalty program rewards aren’t completely meeting their needs, according to Gartner L2. One example of a brand that has diversified its benefit offering is Nike. This year, it began offering a variety of perks to members who bought gear on its app, such as credits from ClassPass, free music from Apple, and access to meditation services from the app Headspace.
  • Mobile optimization. Another strong way to keep members involved with a loyalty program is to seamlessly build the loyalty experience into the brand’s app. This can be done via several methods, such as offering a rewards tracker on the home screen, allowing users to change their preferences and interests settings for a more personalized app experience, or developing an in-store payment service that’s compatible with the app’s loyalty program. Starbucks, for example, has a payment system that allows customers to both pay and apply discounts in one step via its mobile app.

With these practices outlined, simplifying the onboarding process may be the best first step for brands. The best way for brands to start gaining more loyalty members may be to focus on accessibility and mobile optimization. For example, if a brand’s app can give users a streamlined way to sign up for its loyalty program through their mobile device, the brand could increase its chances of gaining new members.

Another method could be to incentivize downloading an app and joining a loyalty program together, similar to the way Chick-fil-A offered a free sandwich as a reward to customers who downloaded its app and joined its loyalty program.

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