The pandemic interjected a lot of uncertainty into the world of loyalty and rewards offerings in the last year as consumers’ shopping habits realigned and contracted to meet the rarified needs of the moment.
Travel offerings and frequent flyer miles, long a mainstay of loyalty offerings, fell out of favor as COVID-19 grounded flights and kept consumers wary of venturing too far from home.
But the loyalty playing field has seemingly changed much like the rest of retail in an effort to remain relevant to emerging consumer needs, and it’s seeing some success pulling consumers in as the year is coming to a conclusion.
For example, according to data released by Collinson Valuedynamx, loyalty program shoppers in 2020 spent significantly more than in previous years buying gifts for friends, loved ones and themselves this holiday season. All in, the data marked a 28 percent year-over-year increase in spend with flower and gift retailers as well as a 46 percent spike in health, beauty and wellness. It wasn’t quite a banner year across the board, however, as electronics and appliance spend decreased about 11 percent, and luxury dropped 20 percent when measured against the same time period in 2019.
Loyalty consumers are buying, somewhat differently than they did last year, but there is a will to spend in the segment. It’s a will that we’ve see brands and retailers try to capture all year by leveling up their loyalty offerings. Nike, for example, as of its last earnings call, was reporting big gains for its Nike Membership initiative, a free loyalty program that offers exclusive sales events, rewards points and more.
“Since the pandemic began, we’ve added more than 70 million new members globally, and we’re deeply focused on the member-funnel outcomes, including new-member buying, reactivation and retention,” Nike President and CEO John Donahoe noted in his call with investors. “And it’s working. Importantly, buying-member growth is outpacing new- and active-member growth, and growth in member demand is outpacing total digital growth.”
Last month, loyalty automation platform Glue raked in $8 million in series A funding — money that will be put toward nudging local businesses to adopt loyalty programs.
“… we understood what’s really important to the business owners we spoke with is the ability to keep their customers coming back,” Glue CEO Ira Nachtigal told VentureBeat. “But they are busy. Most local businesses don’t have the time, the knowledge, or the resources to manage it. Loyalty, when done right, is complex, so we decided not to create yet another loyalty tool, but rather to do the work for them.”
Moreover, Ulta Vice President of Customer Experience Kelly Mahoney noted in a panel with KeyBank Head of Payments Mitch Kime, novae Head of Payments Rodrigo McCarthy and PYMNTS CEO Karen Webster, loyalty has to be more than automatable and simple. It’s also a way to meet the reality of the modern consumers’ needs, to be flexible and serve as an effective customer retention tool.
“Everything about the Ulta Beauty experience had to be reconsidered in this omnichannel, highly digitized shopping experience,” she said.
“In the moment you see that they’re browsing and they’re not pulling the trigger, what is it going to take in the moment to reach that customer with the right offer to tee up that purchase?” she added.
Good loyalty, she said, works on that emotional layer. Rewards and loyalty don’t need to give the customer things for free every time, but they do need to connect the customer to something the really want.
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