Message to Retailers: Don’t Cannibalize Your Loyalty Program With Most of the Holiday Season Left

Dec 5, 2012

Message to RetailersNews flash: despite the craziness and crowds of the just concluded Black Friday and Cyber Monday hoopla, there’s still nearly three weeks until Christmas – plenty of time for consumers to shop ‘till they drop and just as much time for retailers to secure long term, loyalty-driven relationships.

But loyalty, like retail sales, could fast run out of steam if retailers overwhelm potential shoppers with too many offers, too many deals, too many promotions, and too much noise, failing to focus on experience first.

Think of loyalty and holiday season sales a little like a marathon and less like a sprint. For instance, early reports show Thanksgiving weekend sales were robust. Cyber Monday revenue grew 30% compared to 2011 and Black Friday hit $1 billion in online sales, a record. But reporters are quick to point out that none of this encouraging data means much until the season has ended – not on “Cyber-less Tuesday” or any other day in the post Thanksgiving weeks, but only after New Years will it really count. Then and only then can retailers gauge if pre-season and early season sales cannibalized sales closer to Christmas. At the moment all we have is a horse running strongly out of the gate, not a distance runner.

The same holds true with loyalty. Presumably now is the time when loyalty membership spikes. Online and in-store foot traffic are high, meaning there’s a greater chance a consumer will enjoy direct brand interaction. But if it spikes now only to peter out in the weeks ahead, the net gain in loyalty membership will be nil and early season success will have cannibalized later sign ups.

Considering that the average US household already belongs to 18 loyalty programs and that $48 billion in points are left unredeemed, marketers don’t want to face a post-holiday season backlash, where droves of Americans let their loyalty memberships idle like pesky gym sign-ups once seasonal shopping perks are no longer sought, their buying lists “satiated.” According to Gallup, January is consistently the year’s weakest month for consumer spending. Why? Pick your poison: that’s when the bills are due; the post-holiday dead of winter has a literal chilling effect on spending; and it’s simply the time of year when consumers feel utterly shopped out.

So here are some tips to consider when keeping loyalty front and center of consumers’ minds:

  • Aim for one loyalty program with multiple tiers, not multiple loyalty programs with a single tier: While Macy’s has gotten much positive press these past few weeks, especially at it relates to apps and experience-driven loyalty promotions (an interactive Thanksgiving Day parade app and a revamped in-store Black Friday deal finder), however it’s never our advice to overwhelm supporters with too many disjointed offerings. Keep it simple.
  • Make certain your mobile messaging makes sense: Nearly two-thirds of consumers say they’ll back out of a marketing promotion if the SMS and mobile messages they receive aren’t tailored to their specific wants and desires.
  • Part of improving that message requires an omnichannel approach: by better integrating all channels, a more accurate consumer picture emerges.
  • Understand the technology working under the digital hood: Know when to outsource your loyalty engine and know when you have the capability to work in-house
  • Engage, engage, and engage: Every consumer knows that retailers are slashing prices this time of year. What’ll really make the difference, though, is to the extent consumers are engaged beyond deep discounts. These are the types of interactions that carry weight long after the season has ended.

So don’t let January be the month where customer loyalty is written off too, cannibalized by early season hype. Joining a loyalty program is often free with zero interest. But if done right, the experience members gain can be the real gift.