With back-to-school (BTS) in full swing, shoppers are navigating pressing economic challenges like inflation and financial uncertainty, they increasingly seek convenient and cost-saving solutions. Almost all BTS shoppers (94%) report sales and discounts as important purchase drivers, and online shopping continues to be a vital aspect of the customer journey. While it might be too late for you to activate against this BTS season, it is not too late to apply some of these learnings to Holiday and next year's BTS.
While divergent consumer sentiment about the economy and personal finances creates distinct customer groups, i.e., those optimistic about the economy with improved personal financial positioning, and the penny-pinchers trying to make ends meet turning to discount and resale, the takeaway is that everyone likes to save money. As retailers look to position themselves within the competitive back-to-school season, one question is top of mind – how do they connect with customers, and how do they keep them?
A powerful strategy is offering compelling and competitive loyalty and rewards programs – a key value lever for all shoppers, regardless of economic sentiment. Of those who report feeling bad about the economy, 47% plan to use rewards programs or loyalty points for BTS shopping; 44% of those who report feeling good about the economy will tap into the benefits of such programs.
Loyalty programs enable segmented promotions for the budget-conscious shopper, digital marketing to drive omnichannel traffic, and personalized experiences for increased customer lifetime value. While many retailers currently utilize rewards program tactics, here we will explore valuable concepts that retailers can leverage to make their rewards program stand out and generate greater sales.
To Earn Loyalty, You Must First Be Loyal to Your Customers
In the battle to differentiate across the web marketplaces and big-box goliaths, price-cutting alone will not win the day. Seventy-nine percent (79%) of shoppers are likely to compare prices across multiple retailers before making a back-to-school purchase, and in a saturated summer promotional market, blasting blanket deals to all customers is not sufficient. To retain customers, retailers must provide compelling and personalized incentives, and rewards programs have become the name of the game. Brands must invest the time and technology necessary to make customers know their purchase is not just for the latest item, but an investment into a future reward. With 44% of respondents planning to use rewards/loyalty points to buy back-to-school items, if your loyalty program is not competitive, now is the time to act.
Customers do not owe retailers anything. There is no obligation to hit a spending threshold for the next e-mailed coupon, or to make the required number of purchases to move up a tier in the loyalty program – it is up to retailers to provide targeted and valuable deals that consumers cannot resist. Utilizing rewards programs to harness customer data, offer segmented and targeted deals, and provide personalized promotions is what the busy parent and college student is looking for in their summer of back-to-school shopping.
Loyalty is Not One-Size Fits All
Loyalty program success hinges on customer retention over acquisition – merely standing up a rewards program and incentivizing sign-ups does not define success. With 82% of shoppers finding loyalty and rewards programs at least somewhat influential when deciding where to purchase BTS items, one can imagine how inundated consumers’ phones are with pop-ups, store-wide discounts, and flash promos. Effective rewards programs rely on personalization, targeted communication, and meeting each customer where they are. When asked where customers look for deals and promotions in their BTS shopping, 57% report online advertisements, 47% in-store flyers, and 35% e-mail newsletters over passive learnings on social media and word of mouth.
Customers value effective, timely, and personalized communication from retailers on back-to-school merchandise, and segmenting customer data can achieve this. Loyalty programs offer invaluable data, enabling retailers to understand and anticipate customer behavior to target in-store promotions on the customer that frequently utilizes Buy Online, Pick Up In Store (BOPIS), or offer timely e-mail offers when purchasing has lagged.
Do Not Make Your Customer Work for You
Given the state of consumer sentiment currently, it is not surprising that price proves to be the most significant factor in deciding where to shop (84%), followed by promotions and discounts (59%). Brand loyalty is important to only 14% of survey respondents.
As shoppers seek a balance between price, value, and convenience, their choices are reflected in the popularity of top retailers like Walmart, Amazon, and Target.
While implementing reward incentives bolsters customer lifetime value and drives repeat purchases, it is important to keep in mind that seamless integration with online shopping channels is a vital piece of the puzzle. While 44% of all respondents plan to use rewards programs or loyalty points during their BTS shopping, we see online shoppers with a stronger propensity to depend on loyalty programs. Consumers need a streamlined and efficient process for getting the essentials they need, and loyalty points seem to be top of mind for the online shopper. Aligning the rewards strategy with the e-commerce shopping journey is key to effectively meeting customer needs.
With the value and assortments found at the big-box goliaths like Walmart, Amazon, and Target, the consumer with so much choice does not have to be loyal to any particular store – retailers must make them want to be loyal. A busy shopper may only sign up for a handful of loyalty programs, choosing between their favorite stores, the highest sign-up bonus, or the most compelling message. By investing time into the experience, ease of use, and incentives, companies can stand out among the noise. If loyalty programs are the key to a customer’s wallet, retailers must not only make it easy, but worth their while to even sign up.
Key functions include:
- Streamlined Promotional Tiers and Point Redemption
- Fluid Checkout Process
- Targeted Communication and Personalized User Experiences
- Compelling Value and Unique Offers
- Effective Omnichannel Integration
Conclusion
In today's crowded market, brand loyalty alone is not enough to stand out. Retailers must create compelling reasons for customers to choose and stay loyal to them. Loyalty programs are instrumental in this effort, enabling targeted promotions for budget-conscious shoppers, driving omnichannel traffic through digital marketing, and delivering personalized experiences that enhance customer lifetime value.
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