ALEXANDRIA, Va.—In 2020, loyalty programs will give consumers more choices—and more power—than in the past as convenience retailers work to bring back the emotional bond between themselves and their customers.
According to PDI, the enterprise management software provider, loyalty programs have long focused on earning points at the expense of the relationship between the brand and the customer. But that is about to change.
Most convenience retailers (73%) have loyalty programs, and PDI predicts that in the future, c-stores will rely more on data-driven loyalty marketing. The company’s 2019 C-Store Shopper Report confirms that shoppers love loyalty programs, with 42.5% of consumers belonging to a program in 2019, up 6% from 2018. To transform the loyalty program into an effective revenue-generating tool, retailers must capture the right customer data and be able to “translate” it into actionable insights. Data-driven marketing can increase personalization in loyalty programs, including offering rewards that are relevant to individual members.
Currently, email is one of the top five customer communication channels retailers use to engage members, the report said. However, CRM is becoming more omnichannel, which provides more opportunities to engage members. Expect c-stores to encourage customer engagement via other channels, including in-app messaging, geotargeting, short message service (SMS) and push notifications as part of the loyalty marketing mix.
Artificial Intelligence will help improve loyalty marketing through segmentation and personalization. When members engage with a loyalty program (to track and redeem rewards, visit a store, buy gas), AI can record and analyze information from those actions. The analysis will help retailers segment members according to common factors, such as demographics and rewards preferences, and allow them to deliver customized messaging and offers. In the same vein, AI can help build user profiles from customer engagement, which also can be used to personalize the shopping experience.
Saving money on fuel will continue to be the top loyalty currency. For the past four years, the most preferred loyalty currency in the U.S. has been fuel savings, and today, 66% of consumers belong to a program that offers fuel savings. Adjusting loyalty rewards to meet consumer needs is key to growing membership and driving sales in the years ahead.
Expect mobile app adoption to continue growing as well. Consumers want an easy way to track and redeem rewards, and 52% of c-store shoppers say they prefer using a mobile app for doing both. In fact, mobile apps have overtaken websites in terms of popularity among loyalty program members. In 2016, only 20% preferred mobile apps for reward redemption, but that number hit 44% in 2019.
Loyalty programs should offer more than a transactional platform, the report noted. They can be effective tools for communicating and building relationships with customers, while helping retailers understand and quickly respond to customer needs.