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Macala Wright: How Technology Is Changing Customer Loyalty Programs

Macala Wright: How Technology Is Changing Customer Loyalty Programs
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Retailers are building online communities of like-minded people with new and emerging online services.

Macala Wright
  • 29 november 2013

In 2013, retailers began to experiment with technology to better incentivize customer loyalty programs. They did this by heavily investing in platforms and experiences that encourage and reward engagement.

Whether the efforts were campaign-driven or focused on using technology to further augment current loyalty programs, retailers are now focused on creating like-minded shopper communities in hopes of helping build individual customer loyalty with value that extends to the associated retailer.

Investing in communities seemed to dormant practice, as most retailers have focused on building presences on individual social media platforms and channels that their customers use such as Facebook, Twitter, Vine, YouTube, Pinterest and Instagram.

Communities offer retailers many opportunities, including social branding and ways to build future partner marketing opportunities. Best of all, communities can integrate or be fully powered by information shared by their customers on established social networks via those platforms’ APIs. By adding functionality for users to also submit content directly to a portal, you allow conversation to ebb in flow between customers’ social graphs. These communities, if housed within scalable technological platforms, also enable a retailer to gain social and customer insights in addition to engagement and conversation. Bumebox, ThisMoment, and certain offerings from Mass Relevance are great examples of platforms to look at.

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Just a few retailers are building bespoke communities; and often, these communities are powered by social flexible technologies found within their social CRM suites (Starbucks uses SalesForce to power MyStarbucks idea) or a platform such as Mightybell (which powers Lean In and Skillcrush). This allows their communities to be integrated into overall digital marketing plans with little disruption and also used as a connective thread to customer engagement over a much longer period of time.

For example, retailer Urban Outfitters provides its customers with a way in which to upload photos of their selfies. UO rewards shoppers for sharing their style with exclusive offers and discounts.  These rewards are linked to participation in a wider community, providing lasting benefits to both retailers and their customers. Why would Urban Outfitters do this? They’re anticipating the shifts that are beginning to happen in their customers in hopes of maintaining their affinity for the brand. A customer base that comprised of Millennials.

Millennials (those born between 1980 and 1995) are the fastest growing consumer group globally. In 2013, 60% of the global population is under the age of 30, and this group is currently responsible for $1.6 trillion in consumer spending each year.

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In a recent consumer insight study, The Future Laboratory’s forecasting service, LSN: Global noted that Millennials are the most brand-savvy consumer group in the world. These consumers are just starting to enter their wealth accumulation phase and they are willing to engage with brands in collaborative ways as long as the brand is ethical and transparent with them.

The study also showed that Gen Y consumers love to curate their lives in visually rich ways. This is why we seen a rise of visual culture as it relates to the way in which they put their lives together in collages via Vine, Instagram and Twitter and spit them out for their friends and followers to see.

“Millennials are experience seekers, collaborative consumers, digitally synchronized and highly entrepreneurial,” says Tiffany Arntson of The Future Laboratory. “They are so entrenched in brands that they swap and fluidly move through them.” Because everything this consumer group does is based on collaboration, the return of like-minded communities should not be a surprise to any marketer.

When exploring this phenomenon as part of retail marketing practices, it’s import for retailers to ask themselves several questions. To investigate, I asked other experts to co-create the answers to these questions.

What are the trends brands and retailers need to look for in developing loyal communities?

According to Gina Biachini, founder of Mightybell, “It’s important for retailers to create the conditions by which people can organize around topics with people getting things done. That might be the ability to make money or develop an important skill or take on a new activity.”

In the LSN: Global study, 48% of women and 41% of men are willing to share their personal data with brands. But if retailers want consumers to share information, 67% of women and 63% of men were willing to share if there their information for financial gain.

As a marketers, we could ask our selves, “Would paying our community members or financially incentivizing them give us even more accurate information that would enable to provide better products and services in order to maintain customer loyalty?” Thus, we would be creating a self-sustaining cycle that that allows us to deepen our relationship with our customers while also scaling it into new areas to maintain their loyalty?

  • What could your retail brand develop based on the information gathered from your community?
  • What could third party developers create for them based on the data you have available?

What is a retailer’s responsibility to its community?

“Retailers have a responsibility to increase the value of their communities and leave them better than they initially started. They have an obligation to provide opportunities to members that submit quality content, articulate insight or inform product. Brands horribly underestimate the potential of their fans and set expectations so low that they produce the same relationship as an apathetic parent with a bratty kid,” says content marketing strategist Nancy Ihlenfeldt. “Success is determined when at the end of the year the entirety of the community has increased in value as well as in number. You’ll know you’ve done your job when the conversations are no longer directly with the brand but are inspired interactions between the members of the community themselves.”

What can a retailer learn from them? How can they be used for product development or innovation?

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Red Clay founder Abigail Kiefer says, “By giving community members something to do or a reason to participate in events –– like product design. If a brand’s customers know that they have the power to affect the products that they purchase from them, they’ll often participate in the design process. In new forms of consumer research, brands can use their social listening softwares to figure out several core categories that their customers are talking about, then segment them in ways that allow customers to vote on improvements and/or new features that make products more functional.”

By adding some quality controls to crowdsourcing product innovation, brands are able to get very real information that carries over to increase consumer purchase. And it doesn’t require the high costs of traditional market research.

 SmartWool provided a great example of the company leveraged community. “Part of what you can learn is based on the thinking put into setting up the community. You don’t just decide to start community based marketing because it’s going to solve all your problems at once. You decide to do it because you think it addresses specific business needs at that time. So what you can learn is more like what you want to learn,” said digital marketing manager Jeff Snow. “As our community grows, we will segment our testing into focus groups. An example would be that the ski group would only get advanced ski samples to test with a feedback schedule to help inform the development of the product category. All members will be rewarded for their participation based on things they value. The members who offer the best insights will be brought in closer to our product development team and eventually have a product summit with them.”

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What are benefits for brands and retailers to embrace the customer-centric and community oriented practices?

“Watching what a community takes and runs with is one of the most important things any business can do,” says Gina Bianchini, founder of Mightybell. “Community marketing is a dramatically faster way for understanding what works, what doesn’t and where the next generation of opportunities are.”

As a Millennial, not just a marketer, everything I do is about community and I constantly thinking of how my actions are affecting the local place in which I live. As a consumer looking for local groups that share my values, I don’t want to be inundated with choices in the long run. Brands that focus on building the best community portals that address my challenges, makes me feel safe and makes it easy to relate to others are to be the ones that hold my attention and participation.

“While software as a service platforms that allow retailers to build communities are available, they are going to have to become more flexible in terms of branding in order to provide a cohesive experience. Consumers are going to want seamless connections to them as well – that retailers figuring out if these communities live as microsites or extensions of their current e-commerce sites.” – Macala Wright

Like all marketing strategies and tactics, community may have a shelf life; holding long-term benefits only for those who strategically plan them out and have a vision for how to nurture over a long period of time.  Community requires continual dialogue, content creation and care. And from what I’ve seen, not many brands are stepping up to the plate in order to build these types of experiences and environments. Apps and photos loads may be short lived, but a network of like-minded individuals offers infinite possibilities when a little two-way conversation is added.

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Photos by Adveeva, Smart Wool, Red Clay – Product Design

Macala Wright is a business strategist and research analyst with a passion for journalism. As a writer, she merges her passion for storytelling and narrative with her deep understanding of technology and strategy to help bring innovative ideas, products and programs to life. Interested in the tools and platforms that society uses to communicate culture, her writing and studies explore how people can become better communicators in order to shape their futures, share their ideas and create a better world to live in.

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