Kobie was in the house last week, at the National Retail Federation’s annual “BIG Show.” Held just two week’s into the New Year when resolutions to improve, update or reset are still being made by consumers and corporations alike, the industry was abuzz with talk of new technologies and possibilities. Keywords like big data, RFID and omnichannel were the catchphrases I heard across the exhibition floor. Did I travel back to 2005 or are we actually making progress?
From a loyalty perspective, conversations throughout the retail sector seem to be lacking several key “ingredients,” and that’s unfortunate, because retailers today need a robust loyalty vision that isn’t just a complementary piece to other strategies they have in place.
As retailers start rolling out new programs or updates to existing ones, I think it’s important to steer the conversation and thinking toward true loyalty marketing to introduce those essential “ingredients.”
Tactic or Strategy?
Is loyalty a marketing tactic, or is it more fundamental to the retail business model? Jack Dorsey, co-founder of Twitter and more recently founder of Square, spoke at NRF 2014 and challenged retailers to look beyond buzzwords to more basic questions. “We talk a lot about mobile, offline, online commerce. It’s just commerce,” he said. This is exactly the kind of message we need for loyalty.
There are many loyalty tactics (rewards, mobile apps, gamification, etc.). But when these tactics become ends in themselves, retailers risk losing their loyalty focus in a constant chase for flashy technologies. Gartner’s Robert Hetu, who also attended NRF 2014, summed up the problem that “retailers again seem to be making the mistake of looking for the next cool thing from IT vendors rather than coming prepared with a customer driven innovation strategy that can guide their search.”
Starbucks, which has a great loyalty program, also has a more fundamental loyalty vision that powers its program. “Starbucks built a great business because they asked baristas to ask the name of their customer,” Jack Dorsey told NRF attendees. “Just being human really works. It’s simple and it works and it inspires a sense of loyalty more than any points system or piece of technology.”
But of course, the technology that powers loyalty is absolutely essential. When we work with clients, our loyalty platform has to be implemented based on each company’s very specific marketing, business and operational goals—each its own complex, evolving ecosystem. We give them the tools and technology to manage their goals, but we also help them think through what loyalty means for them – and their customers. Only then do we build that thinking into our implementation. Retail can benefit from the holistic connection between tech and loyalty.
Granted, retailers are in a difficult position because it is hard to keep consumers’ loyalty when competitors lure them away with flashy tactics, or when economic conditions make short-term strategies a priority. NRF’s Chief Economist, noting that the boost in retail sales over the holidays may have come at the expense of margins, said that “As consumer confidence grows, there will be less need for retailers to heavily promote and discount their offerings.” Good luck getting your customers off the coupon needle.
But if retailers started to focus more on loyalty as part of their business model, and not just as a collection of tactics that follow the latest consumer trends, would consumers have more reason to spend and be brand loyal, even during economic downturns? Discounts as a form of incentive are inherently short-term. Loyalty as a business model provides retailers more long-term stability.
While the retail conversations I overheard mentioned a lot of buzzwords and these (very exciting; see: boring) trends have been used in many ways to improve the retail consumer experience, I feel like something is missing. Is loyalty just a byproduct that retailers can expect to produce if they improve the consumer experience, or does loyalty need its own creative soil to grow? How can retailers apply the same creativity to loyalty that they apply to discounts, store presentation and other aspects of the consumer experience?
In his opening remarks, NRF President and CEO Matthew Shay said, “We aren’t just trying to sell things to people. That’s a simplistic view of retail. We’re helping people discover new ways to look at the world, new ideas and new visions.” To do this, NRF created its “This Is Retail” campaign which puts a human face on the retail industry and communicates why retail matters. If someone were to create a “This Is Loyalty” campaign, it would take much the same approach, except this time, the consumers would have the human faces.
What’s your vision for retail loyalty in the year ahead? Feel free to reach me directly at bram.hechtkopf@kobie.com or share your views with us below.
