MODERATOR: In your minds, why does a merchant need loyalty?
JEFF MANKOFF: Merchants need loyalty because they need to know who their customers are. If you’re going to advertise, you’ve got two choices. You could advertise to your existing customer base, or you can try to acquire new customers. And, we all know it’s expensive and difficult to acquire new customers. If you have a limited budget, your best opportunity is going to market to your existing customer base. If you have a loyalty program, you have an opportunity to identify your customers. Most merchants don’t know who their customers are. A loyalty program gives a merchant an opportunity to have a means to communicate with its customers, an email address or a text message.With a loyalty program, you have the opportunity to engage your customers on a regular basis, which will drive repeat business. TONY ABRUZZIO: Merchants need loyalty programs to satisfy their customers. We believe that consumers like to have discounts. They enjoy getting a good deal and feel like they’re empowered. It helps keep them coming back. For example, I like to fly Delta, and I definitely will always pick Delta because I’m a member of their loyalty program and I like to get free flights. JED RICE: In mobile, we’re actually seeing the ability to drive very specific customer behavior by using loyalty credentials or loyalty currency—for example, giving extra loyalty credits for coming in during a down time. It’s not just knowing the customer but rewarding the customer.They’re actually driving specific customer behavior. Instead of giving a discount, they’re giving an indirect sort of gamification and rewarding somebody for doing something they may not normally be doing. BILL CLARK: A loyalty program gives you membership in that merchant location, which incents customers to come back to get free merchandise. The Aite Group did a study and said that the number one item on merchants’ agendas is retention. And, I think a loyalty program is one very good tool for helping with retention. It reduces the cost of having to attract new customers because you keep the ones you have. We’re focused on helping merchants actually drive the incentives out to the customer. SCOTT GOLDTHWAITE: Merchants want loyal customers. They don’t necessarily need the loyalty program. Merchants that are providing an amazing product and service will have loyal customers with or without a loyalty program. But, in addition to having a great product or service, merchants can attract and retain clients by having loyalty programs that incentivize that behavior. The key thing for
a merchant is how to balance that out. If I have a great product or service and people are paying market price for it, can I keep the customers loyal, based on that, or do I need an added expense by providing a discount or an incentive to get those customers in? Would they have bought my product or service at full price or would they only be coming in based on the coupon? And, how does that drive the behavior, positive or negatively?
MODERATOR: I think merchants need loyalty, as well. But, the fact is that, even though there’s that need, not all merchants have loyalty programs. What is it that keeps a merchant from adopting a suitable program? MANKOFF: It’s too hard for small merchants to start a loyalty program. Most of the Fortune 500 companies have a loyalty program and they see the benefits of it. If you’re a small restaurant, you’re focused on getting food on your customer’s table. You’re just running the business and you’re not a marketing person. That’s one of the biggest
Jed Rice, Paydiant
“In mobile, we’re actually seeing the ability to drive very specific customer behavior by using loyalty credentials or loyalty currency—for example, giving extra loyalty credits for coming in during a down time. It’s not just knowing the customer but rewarding the customer.” problems. Merchants know they need to go out there and acquire customers. But a loyalty program is perceived to be too hard. I mean, I’ve got to go get the punch cards. And, I ran out of the punch cards. And, if you want to do it electronically, now you’re talking about something that’s really complicated. It’s got to be a turnkey, easy solution. If it’s hard, it’s not going to happen.
MODERATOR: Other reasons why merchants would be reluctant to adopt? CLARK: Administratively, it can be difficult to manage. But I think there is a difference between a standard loyalty program and a promotional program that might bring Transaction trends | January/February 2014 15