Imagine a customer going into your business to buy toothpaste. While the customer is in the store, he decides that he also needs a new toothbrush, toilet paper, cloths, glass cleaner, detergent, etc. It is undoubtedly a favorable scenario for you, but what if the customer had gone to a competitor instead? Then you would have missed the opportunity to reap the rewards of a full shopping cart.
The point is, many retailers sell the same or complementary products. Being able to stand out and offer your customer an extraordinary experience makes the customer return to the store when, for example, buying toothpaste. In other words: what makes them loyal customers, and right here, a loyalty program is a valuable tool.
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What is a loyalty program?
There are different types of loyalty programs. Some loyalty programs reward customers with points. Each time the customer trades (or they trade for a certain amount), they will be rewarded with points they can later spend on the business's products. Others reward customers with special benefits. This can be, for example, earlier access to sales, free shipping, or discounts on selected products. In some cases, the loyalty program is managed through an app, while in other cases, it is just a simple stamp card, where the tenth stamp, for example, triggers a free coffee.
Why a loyalty program?
No matter how it is expressed, the core of the loyalty program is the reward of loyalty - and all people enjoy being rewarded. With a loyalty program, you give your customers a good experience and create a greater incentive to trade with you rather than your competitor. At the same time, with a digital loyalty program, you get access to valuable data. For that reason, many millions are spent every year on loyalty programs in the retail industry.
Which loyalty programs stand out positively?
The fact that most of the retail industry has opened its eyes to the loyalty programs also means that a loyalty program in itself is no longer a USP (unique selling point). It is therefore important to have a loyalty program that excels. We have put together a couple of loyalty programs in the Danish retail industry that we believe stand out positively - and which are very successful.
1. føtex +
Føtex's loyalty app 'Føtex Plus' succeeds primarily with two things - to give their loyal customers a personal experience and to meet their satisfaction guarantee.
Customers who use Føtex's loyalty app will find that the app gets to know their purchasing patterns over time and can therefore make personal offers on selected products. The discount automatically takes effect when the customer pays at checkout.
Suppose the føtex plus customer, for example, comes home with an avocado that does not live up to expectations. In that case, the customer has to take a picture of the product and upload it in the app, after which the money for the avocado will be refunded on the next purchase.
For their loyalty app to succeed, creating a personal experience based on the individual customer's purchasing patterns requires an interplay between several different underlying parameters. These parameters include payment terminal, POS solution (52RETAIL), NETS, a third-party provider to identify member ID based on encrypted credit card data, and a third-party provider in the form of a loyalty platform.
Technically, the app works like this:
- The customer uses his credit card in the payment terminal in a Føtex store.
- The payment terminal coorborates with NETS.
- NETS tells the payment terminal the credit card's unique ID.
- The unique card ID is encrypted and sent via the POS solution to a third-party provider who converts the encrypted ID into a customer membership number. This means that the customer does not need a separate membership card but has credit and membership cards all in one.
- The customer's membership goes back to the POS solution. When the customer's membership number is in control, personalized and relevant offers can be made for the individual customer.
- It works by having the POS solution tell the affiliate loyalty platform what the individual customer is spending money on.
- The loyalty platform has a matching algorithm that forwards information about the customer's purchase history.
- Based on the customer's purchase history, the loyalty platform can thus make relevant and personalized offers to the individual customer, which follows back to the POS solution.
- The POS solution's price calculator (52MASTERPRICER) calculates which special items the customer should have discounts on and how much they will cost.
- These calculations are then sent back to Føtex's underlying ERP system.
2. Club Matas
Matas' loyalty program Club Matas is undoubtedly one of Denmark's most successful loyalty programs - their 1.6 million active members speak for themselves.
With a membership in Club Matas, the customer earns points every time they shop, receives invitations to exclusive events, receives personal recommendations based on previous purchases, special offers, tips and advice, and news before non-members.
In an interview with Business Insights, Matas' IT director Thomas Grane says that they can go into great detail about the individual customer's habits and choices via the loyalty program's data. By i.a. combining the customer's purchase history and behavior across channels, Matas can give all their loyal customers a personal and unique experience.
According to Thomas Grane, the data available via Club Matas is useful when "training" the algorithm Matas has built to identify connections and select products that the individual customer could find interesting.
In addition to Matas giving customers a personalized experience through their loyalty program, they also succeed in giving them an omnichannel shopping experience.
Do you want to know more about what omnichannel actually is and entails? Read on here as we go in-depth with questions like; what is omnichannel? And how do I create a successful omnichannel strategy?
Club Matas works across all Matas' channels. This means that if a customer has collected points via repeated purchases in the store, they can easily use the points on the webshop or via the app. 52MASTERPRICER is a price calculator that ensures the value of customers' loyalty points is calculated the same way across Matas' sales channels in real-time.