Digital Loyalty Programs for Retail Brands: The Ultimate Guide

Written by

Brad

July 11, 2020

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For retail brands, retaining customers and boosting brand loyalty isn’t as straightforward as it is for customer-facing businesses like cafes, restaurants, beauty salons and so on.With no direct contact between the brand and the consumer, retail brands must find alternative ways to incentivize behaviour like:

Repeat Transactions
Larger Basket-size
Increased Engagement

If you represent a retail brand that is looking to expand its customer base, secure it, engage it more directly or perhaps all of the above, you’ll find everything you need right here. Let’s get started!

The Ultimate Guide to Customer Loyalty Programs

Learn how to create a successful loyalty program that retains customers and boosts sales.

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Why is Customer Loyalty Important for Retail Brands?

There are three key reasons why customer loyalty is so crucial for retail brands.

1. Repeat Business

Naturally, any customer who is loyal to your brand is going to purchase your products again and again. Stronger loyalty results in longer customer lifetime value.A 2019 Deloitte study revealed that more than 60% of consumers feel emot-ionally connected with at least one brand. Of this 60+%, more than three-quarters said they’d shopped with a brand for 4+ years because they trusted it.

2. Higher Spending

In addition to repeat transactions, studies have shown that loyal customers actually spend 67% moreper transaction as well. This explains why increasing customer retention by 5% can expand profits by as much as 125%.Consumers who know your brand are more likely to buy bigger quantities of your products, because there’s an element of trust that has developed over time.

3. More Referrals

Brand loyalty initiatives can be just as effective in acquiring new customers as they can be for retaining existing ones. The reason for this is that loyal customers tend to become brand advocates.Customers are more likely to make a purchase when they are referred by a trusted peer. Pair this with the fact that referred customers are also much more likely to become loyal customers themselves, and the advantages of growing your loyal customer base should be clear.

What are the Benefits of a Digital Loyalty Program for Retail Brands?

These days, digital loyalty programs are far more effective than traditional reward methods such as paper punch cards. Here are just a few reasons why.

Direct Connection to End-Customers

Intermediaries like supermarkets, retail stores and wholesalers prevent retail brands from having a direct line of communication to the end-consumer. With a digital loyalty program, however, retail brands can bridge this gap and directly engage their customers.

Customer Data & Analytics

The customer data that a digital loyalty program offers is invaluable for gaining insight into consumer behaviour.The more data that a digital rewards platform collects on each customer’s shopping habits, the more the retail brand can tailor and personalize each customer’s shopping experience.

Stamp Me’s award-winning platforms have these algorithms built into them, so that your loyalty program constantly works to engage your customers and foster a deeper emotional connection with your brand.

Versatility & Convenience

Not only are digital loyalty programs remarkably easy and convenient for the brand to operate and for the customer to participate in, but they can also be rolled out across multiple locations or distribution channels without any involvement from intermediaries.

Common Retail Brand Challenges, with Solutions

Store staff are not an ambassador for your brand
No direct communication or relationship with your end-customer
No key customer information (who they are, what else they buy, how often they buy, etc.)
Limited capability for in-store marketing and promotion of your products
Limited or no say where your product is placed
No capability to upsell or cross-sell

Bypass the reliance on staff and champion your own brand directly with customers
Communicate through customer's mobile phone via digital loyalty app
Use a receipt scanning solution to access valuable customer insights and analytics
Market to your customers digitally through email, SMS and push notifications
Make your products stand out with scan-nable QR code for rewards, on packaging
Use customer data to create targeted and personalised campaigns

How Can Retail Brands Retain Customers and Foster Brand Loyalty?

All the above solutions have one thing in common - a digital loyalty program. Retail brands can now jump over many of their most frequent hurdles.The modern day loyalty program extends far beyond the original “Buy 6 and Get Your 7th Free” structure, which really only served to motivate repeat purchases.

These days, a loyalty program constantly works behind the scenes to:

Increase frequency of visit (FOV)
Upsize average transaction value (ATV)
Boost engagement between the brand and the customer

With digitization, the sky's the limit to how retail brands can use a loyalty program to achieve these three goals.

Go digital!

By taking an existing loyalty program to the digital level (or going digital from scratch), brands can celebrate milestones in each customer’s loyalty journey for a more personalized experience.It also allows businesses to engage customers directly via SMS, email, push notifications and social media. These communications can be tailored and personalised to accommodate each customer’s specific preferences.When utilised well, a digital loyalty program creates a far more convenient, cohesive and personal experience between a retail brand and its customer than what a non-digital approach could ever hope to achieve.This is true for cafes, restaurants, hair salons, hotels, pet food suppliers, pharmaceutical companies… and retail brands!How do we know this? Because Stamp Me Loyalty Solutions has created a number of custom-branded digital rewards programs for retail brands.

How to Set Up an Effective Digital Loyalty Program for Your Retail Brand

There are two digital loyalty program solutions that are perfectly suited to the business model of retail brands - Receipt Scanning or QR Codes on Products.

1. Receipt Scanning

Receipt scanning is an easy validation method for your customers. For your brand, it is easy to implement and the resulting data provides absolutely invaluable customer insights.

How Does Receipt Scanning Work?

The great thing about our receipt scanning technology is that it can be programmed to read any receipt, so if you distribute your products through hundreds or even thousands of outlets, you can be confident that all end-customers will be able to participate in the program. This overcomes a huge hurdle for many brands!Optical Character Recognition (OCR) technology is programmed to simply pick out the required data from the photo of a receipt the customer uploads. This automatically extracted receipt data will be collated and stored against the customer’s profile and we provide your brand access to this information through reporting or through a custom-build web dashboard.That means you can not only reward the customer for their purchase or spend, but you have access to extremely valuable customer purchase insight, such as…

How much the customer has spent
Where products are purchased
What else is in the customer’s basket
Times of purchases
Who the customer is

The additional purchase data is especially invaluable for creating new loyalty opportunities through targeted marketing campaigns.For example, let’s say a customer regularly purchases corn chips from your brand, but purchases salsa sauce from one of your competitors.The data gained from the customer’s receipts will reveal this, and now you can target your own salsa sauce product marketing towards them in an attempt to convert them to purchase it from you, instead of your competitors.

Why is Receipt Scanning Good for Retail Brands?

No costly redesign and printing of packaging required
Gain customer insights such as other store purchases, total spend amount and so on
Bypasses the intermediary (i.e. the supermarket) to reach the end-customer
No reliance on the intermediary staff to manage the loyalty program on your behalf
No complicated assigning and distributing of unique codes
Quick, easy and fairly inexpensive to implement
Changing terms and conditions or limited-time promotions can be quickly added and subtracted from the program

Case in Point: Huggies Rewards

Aside from purchases made through the Huggies online store, Huggies rarely sells directly to the end-customer. This is because the brand distributes its products through many retailers around the world.Huggies resolved this issue with its Huggies Rewards app, which rewards customers for repeat Huggies purchases and brand engagement.The customer purchases a Huggies product, and then uploads their receipt through the Huggies Rewards app. The receipt is scanned, the data is extracted and the points are automatically awarded to the customer’s account.By using receipt scanning technology to its full potential, Huggies is able to incentivize various desirable consumer behaviours, as well as engage customers with enticing promotions.You can read more about the Huggies Rewards program in our full case study.

2. Product Scanning (QR Codes)

Another approach to validating loyalty points and engaging customers is with product scanning. Like receipt scanning, it is an easy solution for directly engaging the end-customer.

How does product scanning work?

A unique QR code is generated which, when scanned by a customer on the digital loyalty app, awards them a loyalty ‘stamp’. This stamp data is then collected and sent to the brand.This method requires having the ability to include the codes on packaging during the production process.

Why is Product Scanning Good for Retail Brands?

Specifically track where your high-volume distributions end up
Flexibility of where you place the QR product code (i.e. ‘peel and reveal’ sticker, inside a lid, etc.)
Highly secure, as each QR code expires once scanned, and cannot be used again
More likely to encourage engagement as the codes are always on the product (whereas receipts can be lost soon after purchase)
Bypasses the intermediary (i.e. the supermarket or retailer) to reach the end-customer
No reliance on the intermediary staff to manage the loyalty program on your behalf

Case in Point: Spanish Winemaker

A renowned winemaker in Spain uses the product scanning method for retaining customers, with great success.Unique QR codes are placed inside each bottle cap, which customers can scan once they’ve opened the bottle of wine. Not only does this protect from fraud, but it’s also a very straightforward way for the winemaker to engage customers, regardless of where they purchase the wine from.

Tips & Tricks for Getting the Most out of your Data-Driven Digital Loyalty Program

1. Gamification

At Stamp Me, we’re big believers in gamifying loyalty initiatives to keep customers engaged and build some hype around your loyalty program.Clearly, we are not alone – over 90% of North American retailers have plans to gamify their customer engagement strategies in the next five years.Luckily, Scratch & Win is a standard feature of Stamp Me, allowing brands to directly engage customers with spontaneous instant prizes.

2. Innovative Rewards

Another way to jump-start your loyalty program sign-ups and ensure that interest doesn’t fizzle out over time, is to get creative with your rewards. As a retail brand, you might consider partnering up with other brands that share a portion of your customer base.We see this all the time with confectionery producers and toy manufacturers, often in conjunction with a new movie release, for example. Have a think about potential loyalty program partnerships that would mutually benefit both parties, and create a more enticing rewards offering for your shared customers.

3. Strategic Promotion

Some standard promotional strategies are difficult for retail brands, as they require cooperation from the intermediaries that sell their products. In-store signage and staff promotion, for instance, are practically out of the question.This is where digital comes to the rescue, again. Schedule regular social media posts to ensure that all followers are informed. If you have an online store, create a pop-up notification at the checkout for online shoppers:“Hey there, thanks for shopping with us! Want to save 25% on today’s purchase? Why not take two seconds to join our loyalty program?”Find more tips on how to promote your loyalty program without spending a cent here.

4. Tailored Communications to Upsell/Cross-sell

Any digital rewards platform worth its weight in gold will automatically segment each customer into specific groups based on their previous transactions and interactions with the brand.From there, you can send each segment targeted communications. These offers are far likelier to gain traction among customers than your standard mass promotions.Targeted algorithms can be extremely effective in cross-selling, matching accurately to the customer’s needs.

5. Referral & Feedback Incentives

Why not offer loyalty members rewards in exchange for referring their friends? This allows brands to rapidly grow their customer base, without breaking the bank.Businesses that acquire customers through referrals see a 37% higher retention rate among those newly acquired customers. These customers are also four times more likely to refer others to the brand.Some businesses even take it a step further and encourage customers to create their own content around the product. As a retail brand, you could use loyalty points to incentivize customers to share pictures of themselves using your products, for example.

6. Corporate Social Responsibility

Four in every five millennials expect the brands they shop with to exercise good corporate citizenship. This isn’t an empty threat, either: two-thirds of them are more than happy to jump ship to a more expensive brand that demonstrates better corporate social responsibility.Consider mind-mapping some ways in which you can weave your retail brand’s socially responsible initiatives into the fabric of your rewards program.There are many ways to do this, and you can find some tips on how to incorporate CSR into your loyalty marketing strategies here.

Interested in a digital loyalty solution?

At Stamp Me Loyalty Solutions, we build own-branded digital loyalty and rewards solutions according to the needs of your brand.Our loyalty technology helps brands connect with and segment their end-customers, which helps with tailoring personalised marketing campaigns and maximising sales opportunities.To discuss how Stamp Me can help your business retain customers and boost brand loyalty, please don’t hesitate to get in touch with a friendly member of our team today.Stamp Me provides loyalty solutions to businesses large and small, from our own Customer Loyalty App to fully customised loyalty and rewards programs for enterprises and brands. Contact us if you would like to discuss a loyalty or rewards solution for your business or brand.

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