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Loyalty programs are one of the oldest tricks in retail to get customers to continue shopping.

Members of these rewards, points or cash-back programs tend to generate 12%-18% more revenue for retailers than customers without membership.

The existence of a loyalty program is also a deciding factor for 72% of customers when choosing where to shop.

However, running one can be a considerable investment. In the US, companies spend $50 billion a year on these programs alone.

And just because a company has one doesn’t mean they always add value – some companies with loyalty programs reported a 2.28 percent comp sales increase, while companies without reported a higher 4.26 percent.

To ensure the effectiveness of a loyalty program, brands need to consider a number of factors and understand that there needs to exist a value proposition that addresses the needs of both the consumer and the brand.

loyalty program retail

Retailers need to consider different value factors that fits their objective for the loyalty program. Source L2

Important value factors for an effective loyalty program

Although monetary incentive is still the main drive for 67% customers to join a loyalty program, non-monetary benefits can distinguish the brand from others.

Offering a tiered loyalty program that provides differentiated rewards based on spend allows for more customer segmentation and targeted marketing as well as add interest and incentives for customers.

Giving exclusive access to the brand’s special promotions and offering an overall higher priority service for the members are the kind of personal experiences that customers look for when they joining a loyalty program.

 

Discounts tend to be the most popular loyalty features but only lift a considerably low points of consumer satisfaction factor. Source: L2.

Having a loyalty program, if done right, could actually lead to the biggest revenue generator for a company and lower the user acquisition costs. Amazon Prime by Amazon is one of the best examples.

In addition to offering Prime members the usual perk of free shipping, Amazon also holds an annual sale exclusively for Prime members called Prime Day. This year, the company broke its sales record by 60%

compared to the same period last year, selling most of its private label brands and highest number of new members sign up.

No wonder the ‘Amazon of Southeast Asia’ launched its own version of Amazon Prime called LiveUp.

Southeast Asia’s companies better ensure they have strong tactics in place to keep their customers loyal because the US retail giant is about to launch in Singapore in the very near future.

Here’s what you should know today.

1. Instagram’s direct-response Story ads are available for self-serve buys

Ads within Instagram’s Stories feed can prompt people to swipe up to visit a brand’s site or install its mobile app.

Instagram has officially started selling ads that can appear within people’s Stories feed and link to a brand’s site or app-install page in Apple’s or Google’s app stores.

Coinciding with the rollout of swipeable ads in the Stories feed — which is viewed by more than 200 million people daily — Instagram now lets advertisers set objectives for these ads, like whether a brand wants people to view the video, visit a website, install an app or complete a specified conversion event, for example, adding a product to a shopping cart on a brand’s ecommerce site.

The direct-response ads aren’t much different from the version that Instagram added to Stories in January. Brands can feature a single vertical photo or a vertical video that’s up to 15 seconds long as their ad, and they can target the ads using Facebook’s standard ad-targeting options, like people’s age, gender, location, interests and purchase history.

This could be very effective in Southeast Asia, considering how popular social commerce is in the region.

Read the rest of the story here.

 

2. Is Walmart’s new last-mile delivery program brilliant?

Walmart announced earlier this month that it was testing a new delivery method — one that has store associates making deliveries on their way home from work.

While the program is currently being tested at three stores — two in New Jersey and one in Arkansas — the system is an example of how multichannel merchants can further leverage their installed store base to compete with Amazon, its network of distribution centers, and a growing fleet of delivery options.

At a time when so many retailers have been closing their physical presence, this type of out-of-the box thinking needs to happen more with retailers. This empowers employees to make a difference that can count in supporting the company and their important roles. What else are retail experts saying?

Read the rest of the story here.

 

3. Why would Sea do its IPO in New York?

Sea Ltd, Southeast Asia’s most valuable start-up, is prepping for a US$1 billion initial public offering in the United States, a move that would be a major pivot for Southeast Asia’s rapidly expanding tech industry.

“For Southeast Asian tech firms, an overseas listing of this purported scale brings increased investor confidence in the region,” said Adrian Lee, research director at advisory and research firm Gartner.

The downside, however, is that a high-profile IPO such as Sea’s could “create pressure to satisfy overseas shareholders and dilute the focus on building up the core business in Southeast Asia”, Gartner’s Lee said.

Analysts and industry players argue that a listing in the US is the right strategy for Sea as bourses like Nasdaq are considered the best reference for technology IPOs.

“There is no better place to raise the kind of financing Sea requires than New York City, and that’s the simple truth,” said Justin Hall, principal at Southeast Asia-focused VC firm Golden Gate Ventures.

Read the rest of the story here.

 

4. Recommended Reading: The rise and fall and rise of beauty subscription boxes

With every Tom, Dick and, yes, Trump getting into the subscription box business, packaging and mailing curated goods to people on a monthly or quarterly basis sure seems like the big thing to do — which is surprising, considering that for a while there, the signs were pointing to the category reaching busting-bubble status, at least in the beauty industry.

Thanks to a few course-correcting changes, Birchbox managed to make some tweaks to offset its dip in new subscribers by modifying the brand’s loyalty program, focusing on Ecommerce sales, renegotiating contracts with some vendors to get shipping and printing costs down and reducing operating expenses.

“We had to shift gears quickly because we needed to prioritize profitability and take control, that was a great opportunity for us to press reset, dial a lot of things back,” says Katia Beauchamp, the company’s CEO.

Read the rest of the story here.

According to L2, social media has evolved into a dynamic ecosystem where brands can use a multitude of tactics to interact with consumers. Updates to algorithms have increasingly limited organic reach and will continue to do so, but brands can re-position their social media strategies to complement marketing goals by fully utilizing the toolkits available through each social platform.

Over The Counter (OTC) brands face unique challenges driving engagement on social channels as the nature of the products don’t lend themselves to visually appealing content as easily as categories like fashion or beauty. However, creative campaigns catalyzed by well-timed promotional spend can generate organic reach through social sharing while retargeting warm leads with coupons and ecommerce links can nudge shoppers closer to purchase.

Advertising a loyalty program to fans post purchase can increase engagement and spur a network of social brand evangelists.

OTC Brands must use Facebook

Source: info.voodooviral.com

While many brands capitalize on driving awareness with social media, very few maximize the post-purchase opportunity. Only six brands used either the word “reward” or “loyalty” in a Facebook post in the past 180 days, with Systane and Zyrtec accounting for a combined 48% of related post-purchase content. A look at how brands in L2’s Digital IQ Index: OTC Health Care use social media suggests more could integrate purchase and post-purchase goals in their strategies.

Systane provides an example of how brands can deploy these tactics. The brand prioritized Facebook as a CRM tool in 2016, uploading a promoted post roughly once per week. This strategy helped the page earn over 405,000 interactions in the past 180 days. The top post for this period directed fans to register at Systane.com/Rewards in exchange for a three-dollar-off coupon. This link redirects to EyeFile.com, the destination for parent company Alcon’s eye care loyalty program.

Both Systane.com and EyeFile.com experienced 60% increase in traffic since November 2015, demonstrating that social media can be highly effective in engaging shoppers in post-purchase mode.

By targeting a neglected subset of OTC Health Care shoppers, Systane drove fans into its rewards program, creating a direct line of communication with opt-in consumers. Through its Facebook investment, the brand will now be able to collect explicit data and more effectively target leads with personalized content in future campaigns. Furthermore, the majority of millennials identify brand engagement on social media as a key tool for securing their loyalty.

A version of this appeared in L2 on July 8. Read the full article here.