Customer Loyalty Programs Struggle to Keep Pace with Rising Customer Expectations
A new report titled "How to Keep Hold of Your Customers" has been released by dunnhumby, a leading provider of AI and customer data science. The report, based on perspectives from senior retail leaders in North America and Europe, interviews with CEOs of Tesco UK, IGD, and Synerse, and insights from thousands of grocery shoppers, sheds light on key trends and future focal points for effective loyalty and personalization programs in retail.
Traditional Loyalty Approaches Fall Short
The report underscores that traditional loyalty approaches are no longer meeting evolving customer expectations, particularly in terms of relevance and personalization. Retailers are considering cutting generic rebates and coupons to protect their personalization efforts.
Customer Retention Remains Top Concern
Customer retention remains a significant concern for retailers, with price sensitivity and limited insight into "less loyal" shoppers being major issues. Shoppers, however, agree that loyalty needs to change, and they are looking for exclusive offers and rewards that align with their needs and values.
Three Future Focal Points for Retailers
The study identifies three future focal points for retailers: addressing the threat of loyalty program homogenization, developing the necessary capabilities for meaningful personalization, and positioning themselves effectively for the next iteration of loyalty and personalization.
- Creating Distinct, Differentiated Loyalty Propositions: Retailers must create loyalty propositions that stand out in a competitive market, offering unique experiences and value to customers.
- Building Technology and Data Capabilities: To deliver meaningful, personalized experiences at scale, retailers need to invest in building robust technology and data capabilities.
- Reexamining Retailer Mindsets: Shifting from abstract rewards to daily, relevant interactions that show customers they are listened to and cared for is crucial.
Personalization as a Strategic Priority
Personalization is framed as a strategic priority that should be embedded in all customer touchpoints. Advanced AI and customer data science are critical tools, enabling retailers to design customer-centric assortments and offers that meet local preferences and optimize the shopping experience. The focus is on making loyalty personal every day, rather than just occasional promotions, which drives long-term customer trust and engagement.
In conclusion, the study from dunnhumby stresses that effective loyalty and personalization programs must evolve beyond traditional points and discounts to embrace true personalization, meaningful differentiation, and daily relevance powered by AI and deep customer insights to retain customers in an increasingly competitive retail landscape. Retailers are seeking inspiration beyond the grocery industry, with beauty and lifestyle brands being commonly identified as sources of innovation. However, the report did not provide new insights into customer retention, price sensitivity, or less loyal shoppers, nor did it mention new retailers, CEOs, or interviews beyond those already mentioned.
- To stay competitive in the retail industry, finance professionals must invest in advanced technology and data capabilities to create unique loyalty propositions that cater to personalized needs, driven by AI and customer insights.
- In the realm of personal-finance, it's crucial for retailers to shift their mindset towards providing daily, relevant interactions with customers, leveraging technology and data science, to build long-term trust and engagement, following the trends outlined in the "How to Keep Hold of Your Customers" report.
