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Creating Loyalty That Pays

December 13, 2016

Why the case for a multi-tender loyalty strategy is better than ever – and four ways to rethink programs to drive long-term growth.

By Jeff Kindle and Kelly Hlavinka

Balancing a brand-wide, customer-focused loyalty initiative with incentives to encourage payment adoption is a persistent challenge facing retailers. For many, it’s really a tug-of-war between the CFO and CMO. In most cases, the CFO is tasked with saving money on payment processing while the CMO is held accountable for engendering loyalty to the brand. As more retailers focus on programs that reduce costs and drive business growth, this misalignment is usually the true obstacle to implementing a multi-tender loyalty strategy.

But 2016 saw loyalty leaders like Nordstrom move past strategies built solely around their store credit card to adopt multi-tender loyalty programs. Why now?

The fight for share of wallet is more intense than ever as consumer attention spans become more limited. Couple this with digital channels that make today’s shopping journey about speed and convenience and retailers like Nordstrom are looking for new ways to capture consumer spend and drive loyalty. Nordstrom recently shared that only one in five customers are part of its card-based loyalty program — but this group accounts for roughly 40% of sales, making three additional visits and spending four times more than non-loyalty members. Nordstrom recognized that not all customers will layer a credit card into the relationship, so a multi-tender approach was a strategic step in reaching out to the other 80% of its customer base.

With increased competition, less time and fewer opportunities to convert customers at the point-of-sale, more advanced tactics are required to fuel loyalty program sign-ups and drive long-term growth.

Retailers can change this dynamic by rethinking their loyalty strategy in four key ways:

  1. Widen the lens for engaging customers: The recipe for joint brand-and-payment success is to start with enrolling customers in the loyalty program. Doing so will allow retailers to get to know who their customers really are and what they are really buying – even if they harbor a preference to pay with their favorite airline rewards mileage credit card. By being part of the program, customers will gain a keen taste for the rewards and recognition benefits they can earn by frequenting the brand more often. And retailers will garner more data and insights about customers.
  1. Use insights to filter offers: A broader set of loyalty members can enable a two-way, personalized dialogue with customers to deepen loyalty to the brand and create emotional connections. The data and insights gleaned from loyalty program interactions will enable more personalized and relevant offers to members, whether or not they are a cardholder with the brand. Further, these insights can inform more strategic decisions about which customers should really be offered a pre-approved credit application – with richer incentives for them to try it out. Still, a critical component to store credit adoption is ensuring a program is easy to understand so that an engaged member or soon-to-be member will clearly see the added benefit of layering a credit card into her relationship with the brand. Personalized experiences and clear benefits are what will engender long-term loyalty.
  1. Offer a persistent way to earn rewards faster on the credit card: Once customers get accustomed to rewards, they’ll better understand what it means to earn them even faster by adopting the brand credit card. The promise of faster rewards plus additional layered benefits for credit card holders can help retailers open up the consideration set among base loyalty program members to adopt a credit card, too. Program promotions should depict these credit-earn accelerators and additional tiered benefits in a visually compelling way, and front-line associates need to consistently remind customers that they can earn rewards even faster when they use a store credit card. Back-end technology should also give customer-service representatives the tools and prompts they need to remind customers of available offers and more.
  1. Consider elite-tier benefits just for credit card customers: The power of recognition is another key element in driving the success of a program. Offering elite tiers of benefits will allow retailers to differentiate the loyalty experience depending on the customer. This approach also ensures they aren’t overspending on customers that aren’t as valuable. For example, it can make sense to offer top-spending store credit card customers exclusive access to an extended return policy or expedited check-out options on busy holidays.

The retail landscape is changing, and customer loyalty is more fleeting than ever. Adopting a multi-tender loyalty approach not only enables deeper engagement with a broader set of consumers, but it arms retailers with the data and insights required to deliver personalized customer experiences that will drive growth for the brand.

Jeff Kindle ( is practice lead, loyalty | customer experience and Kelly Hlavinka is loyalty | customer experience contributor for Epsilon.


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