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Rethinking Consumer Engagement

Posted September 13, 2019 by

More and more, retailers are learning that the key to powerful loyalty programs lies in payments.

Technology has evolved beyond comprehension over the years, and so customer behavior is changing. The consumer is ever-more demanding, and no more so than in the services industry. It’s getting harder to retain customers, grab their attention, and keep them loyal to your brand.

When we look at loyalty from a business perspective, we know that acquiring a new customer can be anywhere from five to 25 times more costly than retaining an existing one. In addition, increasing retention rates by as little as 5% can increase company profits by anywhere from 25% to 95%.

That’s not including the fact that members of loyalty programs tend to spend on average between 12% and 18% more annually than non-program members. And in some industries, loyalty schemes can make up as much as 20% of a company’s profits.

A new way to start engaging consumers is by changing the emphasis from just tactics to supporting technology. However, most of the IT infrastructure that manages loyalty programs has been around for decades. These aged platforms are unlikely to be able to support the customer-centric, highly personalized loyalty schemes that today’s consumers demand.

In retail, there has been a clear shift from traditional services to more customer-focused “experiential” models, which explains why consumer loyalty has moved to the forefront of strategic business roadmaps. However, market feedback has indicated that the majority of “catch-all” schemes do not meet the expectations that come with the current digital age.

Imperfect Data Storm

This is caused by several factors. Customer data is fragmented because the different parts of the business that provide data are unable to “talk” to each other. So the wealth of the data is largely inaccessible to merchants and can’t be used to develop a loyalty strategy across the entire business.

In addition, the customer experience is splintered by using multiple channels and applications that are often run by different teams—not to mention different companies—with differing priorities.

These factors have created an imperfect data storm, which arguably makes it even harder, if not impossible, for loyalty to deliver consistent positive interactions.

Current loyalty platforms still rely heavily on triggers, which add a layer of friction for the consumer and can result in poor redemption rates. A customer’s desire to engage rapidly disappears when she is asked repeatedly to prove who she is, or needs to remember a membership card number every time she interacts with a business.

Token Benefits

To start attracting today’s customers, loyalty models need to be re-engineered to include payment-linked identification engines, which can help deliver the convenient and personalized experience that consumers want and, importantly, expect.

Various token options also exist, so merchants have a choice to provide the right solution for every conceivable payment scenario. For example, transactional tokens can be created for application programming interfaces (APIs), with APIs also being an option to update expired card data. Bulk token files can now be created for over a million accounts.

Analytical tokens also have the benefit of added transactional security, so when it comes to processing card data, you can allow for a hierarchical method of access and usage. That means that sensitive payment information is only accessible to certain members of staff.

Here are some areas of specific focus:

  1. Personalized benefits: Loyalty has to deliver real value that resonates with the customer’s habits and lifestyle. People are increasingly willing to share their data to get genuinely personalized experiences, so companies need to start using the “exchange” ethos to their advantage. This will allow them to deliver more relevant promotions and upsell and cross-sell relevant products and services.
  2. Emotional connection: Customer emotion and retention are directly linked, which is why the top five reasons customers give for feeling a connection with a brand are associated with caring. The established benefits of emotionally connected customers include reduced price sensitivity, more frequent visits to retailers, and spending that is almost 50% more than what consumers without an emotional bond spend.
  3. “Follow-me” rewards: Flexibility of payment can be a driving factor in delivering customer loyalty. Consumers want to be able to earn, transport, and redeem rewards across different outlets and access loyalty through their mobile devices. If a company can offer this, they are likely to more deeply resonate with consumers, particularly millennials.
  4. Omnichannel experience:

Consumers want speed and ease when accessing their loyalty schemes. A quarter of Americans (26%) abandon a loyalty program if it isn’t supported by a smart-phone app.

Retail organizations need to harness the latest technology to connect all customer-facing functions supported by an agnostic and powerful engine to deliver next-generation, real-time connected commerce and loyalty.

From a technical and marketing perspective, payment infrastructure is fast becoming a technology issue and the natural doorway to develop an enriched loyalty program. Payment platforms that are omnichannel and formed of global transaction networks enable businesses to capture and record transactional data rich in insight, including what, when, how, and where consumers buy.

It is not only a point solution but an engine that can turn simple transactions into powerful and profitable relationships. With the right technological architecture, loyalty can be undertaken as part of ongoing business operations, which can be used by organizations to deliver truly seamless customer-centric and profitable loyalty programs.

—Christopher Kronenthal is president and chief technology officer at FreedomPay, Philadelphia.

To read the original news article, click here.

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JOIN OUR NEWSLETTER
FreedomPay will use your details to send you information on our products/services and events via email. By confirming, you are agreeing to our privacy policy. You can unsubscribe at any time.
Stay in the know with FreedomPay and subscribe to our new monthly newsletter: The FreedomPay Forum! Here, you will find the latest and greatest at FreedomPay, newsworthy announcements and the top trending topics in the payments industry today.
To unsubscribe or submit a data request per the General Data Protection Regulation (GDPR), please visit: https://corporate.freedompay.com/gdpr/.

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