When it comes to retail loyalty programs – is Canada falling behind? Lia Grimberg, a loyalty expert in Canada and Principle and Consultant at Radicle Loyalty says yes, and discusses the current state of loyalty along with its future.
Programs are everywhere and more brands are getting on board with having their own reward programs – however, the traditional “spend a dollar, earn a point” is causing programs to be the same and consumers are not seeing innovation.
“I would say right now, the biggest problem with loyalty programs is the sea of sameness. There was a study done that was just published that talks about the fact that a whopping 91 percent of consumers think that loyalty programs are all the same – and unfortunately, I could not disagree,” says Grimberg.
This is a downfall as each reward program that uses a point base metric will end up blending in with other retail brands, and make it hard to stand out.
“This is the format of you spend a dollar, you earn a point and redeem that point for something in the store and repeat and so because consumers are not seeing innovation. Are we actually gaining any loyalty in our programs or are we just giving away points? And if everyone is the same, then it does not really matter what consumers are spending.”
The Shift in Loyalty Programs
Particularly after the pandemic, and with the recession and high inflations, consumers are now looking for programs that provide good value. Because of this, retail brands should start looking at their own loyalty systems and start asking themselves how they can add more value and how they can stand out from others in the market.
“During Covid, consumers started seeing a lot more of which companies were there for them. They are willing to use their wallets to support those organizations, along with brands that are aligned to the same values. Some retailers are starting to recognize the change and MasterCard is saying that 88.5 percent of loyalty members are looking for loyalty programs to help them through this period.”
Grimberg is also seeing an increase in innovative partnerships. One example is the change in Aeroplan, as they have recently added Bell as a partner to provide free messaging. Also mentioned was the recent announcement from Air Miles, adding Dollarama as of August.
These two changes were not contemplated in the old economy and previously, dollar stores were not part of loyalty programs. Dollar stores and discount stores were not previously part of any loyalty programs, as they relied on price as a differentiating factor.
Along with these new partnerships, Grimberg says she is also seeing a shift of long-term partnerships, to a rise of temporary partnerships. This allows banks or other third party providers to put together a temporary partnership, where retailers can join and provide offers to consumers who link their credit card information. With temporary partnerships, brands are able to “attract new customers by providing these kinds of offers.”
Keeping Consumers Happy With AI
“I am seeing a lot more AI in international markets. To be honest, Canada is still lagging behind in both when it comes to loyalty. It is a huge enabler on the playing field in terms of our ability to access data and put it to better use.”
There is so much that can be done with new technologies for loyalty plans, and should be used as loyalty programs are a great support to the overall marketing strategy. By using AI, retailers can create a more personalized experience for consumers. They will be able to retrieve data and put it to better use, and create an experience that is more relevant to our consumers – “so it is a win win.” Grimberg says companies that do not look at personalization or use its collected data effectively will see a decrease of 33 percent of consumers whom will simply walk away.
“There seems to be a lot of questions around how AI will play a role in loyalty in the future, and it has already started as we are already seeing it but on smaller scales. There is a lot of ground and opportunity for more retailers to explore in terms of how AI can be used to personalize rewards, personalize content, and how it can provide a more immersive experience.”
What is Coming Next?
The loyalty expert says she hopes to see more brands use loyalty plans – but in different ways, such as rewarding services instead of money.
“What I would like to be able to see is more platforms that allow many smaller players to work together to create a network effect that will provide more meaningful value to consumers. So could your dry cleaner work with your local flower shop? Depending on the frequency of the consumer, the customer will be able to earn a reward that is meaningful.”
Bottom line, Grimberg says each loyalty program shouldn’t be the same and should start looking at other unique ways they can support, give value, and provide a rewarding experience to consumers.
“There is a tendency for retailers to look at their competitors for inspiration, and that is when you get into trouble due to lack of differentiation – so I would say stop looking at your competitors. Figure out what your consumer needs, how you can uniquely support them, and look at what you can bring to the table that will be different.”