Loyalty programs, rewards programs and VIP programs have been around for a long time. But as the personalization discussion unravels, retailers and fashion companies are revamping the concept of loyalty programs, curating a far more personalized experience for customers in order to build loyalty.
Loyalty over the last decade
Loyalty programs in the past few years have been characterized by the ever-popular point system. Spend a dollar, earn a point.
Point systems are still incredibly effective in their ease of use. A great many consumers have used them and understand them well. For fast-fashion brands, rising e-commerce stores, and companies that just want to keep it traditional, having a point currency is still the way to go.
Loyalty for the future
For brands that want to mix it up, there’s a new look in town that caters to surprising customers. It works great for luxury brands who prefer to keep points and discounts out of the equation, or forward-thinking companies that just want to do things differently. This approach is called Recognition Loyalty. It revolves around three major pillars: surprise & delight, tiers, and specialty rewards.
Surprise and delight
When companies are considering the rewards they want to put on offer, they should consider how they want their customers to be able to earn their rewards. The rewards can be clear and obvious in a catalog format, just like Sephora’s Rewards Bazaar—or they can have an element of mystery and suspense, like SimplyBe!
That’s where the “surprise and delight” trend comes in to play. Brands are beginning to steer away from the reward catalog and instead reward behavior at random intervals. The reason behind this movement is that customers have actually been telling brands that they want to be surprised. In a recent KPMG survey, over 80% of respondents said they prefer surprise offers and gifts over traditional program benefits, saying these surprises are even more important than the feeling of exclusivity!
Tiers: moving up the ladder
Tiers are membership groups through which customers can move their way up as they engage with the brand and purchase its products. Tiers work wonders in a loyalty program, because they’re built to motivate. They also give companies a great way to personalize their offers based on customer spend. Not to mention, they add a feeling of exclusivity to members who have worked their way to the top, because of the members-only access to additional benefits and rewards.
Whether it’s levels, circles, medals or something else entirely, find fun level names that reflect your business’s personality and really speak the language of your target audience. That’s key to tying the loyalty program into the brand. Here’s a tip from Björn Borg: They speak to the athleticism of their customers in their Team Borg loyalty program, with level names like Rising Star, Champion and Legend.
And don’t forget to personalize offers based on each tier. For example, your top tier is where your most frequent, high-value shoppers live. Examine what they aren’t doing yet and try to encourage new behaviors. Turn them into brand advocates with special rewards for social sharing, friend referrals or just make them feel special with a new service that they would love to talk about, like a special hotline or delivery terms that nobody else has access to.
As brands focus more on personalization, the rewards are shifting away from heavy discounts and toward a luxury approach. The fashion industry has tons of resources at their disposal to create value in form of experiential rewards: personal shoppers, free alterations, express delivery or free shipping, early access to new designs, and a zero wait-time VIP customer service line are just a few examples. Curated gift packages and quality advice are also two personalized ways to go.
In conclusion, offer a personal surprise
Customers are quite familiar with traditional earn-and-burn, point-based loyalty. And it seems they’re expecting a change. So instead of following the traditional, focus on cultivating your highest spending groups with a tier-based recognition loyalty program. Incorporating the element of surprise with a high level of personalization is the best way to keep your customers talking—and shopping. I actually wrote an ebook about this topic, so feel free to download, if you are interested in building loyalty in fashion.