Moving from points to experience
Our 2017 Total Retail Survey found that 67% of Canadian consumers are loyal shoppers
Loyalty programs have been entrenched in the Canadian retail landscape ever since the introduction of Canadian Tire money in 1958. Since then, we’ve seen an explosion of loyalty programs, with a recent study finding that Canadians nowadays have almost 130 million memberships. That’s an average of more than four per person—or more than eight per household.
Because of the proliferation of loyalty programs in Canada, consumers are changing their definition and expectations of loyalty. These days, it’s hard for consumers to understand the real value of their points, so there’s a commoditization of loyalty programs. To combat this effect, traditional points programs need to be tied into consumers’ overall experience. Modern brand loyalty goes hand in hand with consumer expectations of personalized, seamless experiences that are tailored to their unique tastes and preferences.
Amazon doesn’t have a “traditional” loyalty program; instead it drives loyalty by providing a seamless customer experience that integrates convenience, personalization, product assortment and price. According to our survey, 83% of Canadians are Amazon shoppers—and in the United States, almost half of households are Amazon Prime customers. These loyal customers shop less at both physical and digital stores—in fact, 24% of Canadian Amazon users said they shop less often at retail stores, 18% shop less often at other retail websites and 3% have stopped shopping at retail stores and other retail websites altogether.
Retailers need to integrate loyalty into their overall experience to fully embody and support their brand. By combining benefits that go beyond points (exclusive events, personalized deals, real-time promotions and digital offerings) with a holistic loyalty approach, retailers give customers a more engaging shopping experience, while boosting overall customer loyalty.
An example of this is the loyalty experience at Starbucks. Closely tied to its mobile app, the program doesn’t just offer free food and drink to loyal customers, though that is important. It also provides customers with the ability to pre-order and receive recommendations based on past orders. In turn, these customers spend more money (tracked by order size) more often (tracked by average transaction). They can also customize mobile orders in advance and then pick them up at a nearby location without waiting in line. Starbucks makes it easy for customers to linger with its expanded menu offerings, easily accessible WiFi and warm ambience, becoming a customer’s “third place”—home, work, Starbucks.
The digital journey has flipped the way we collect and use customer loyalty data. In the pre-digital world, the main incentive for creating loyalty programs was to collect customer data and other information not easily accessible—insights retailers could use to shape business strategies. Nowadays the constant stream of digital data available to retailers allows them to create a unique client experience that drives customer loyalty even further. By capitalizing on the power and capabilities of data, retailers can unlock a profitable force that can predict demand, personalize communications, create targeted campaigns, adapt to specific demographics and identify new potential markets for growth.
In retail, collecting customer information isn’t difficult. Point-of-sale software, credit cards, rewards programs and online channels are only a few ways to gather data easily. The real challenge is knowing what to do with it. According to our survey, 74% of Canadian shoppers think it’s important to have knowledgeable in-store sales associates. Retailers should take advantage of data to give sales representatives the tools and information necessary to collaborate with the shopper, creating an ideal interaction that will ultimately lead to a personalized in-store experience.
Whether it’s insightful sales associates, in-store Wi-Fi or self-service checkout, realizing the power of data is a fundamental step for retailers looking to meet shifting customer needs and generate loyalty to their brand.
When it comes to loyalty, creating a strong customer bond is the Holy Grail and this means more than just points. Canadians are loyal to their brands, so it’s important for retailers to maintain that loyalty by staying in constant connection with their customers—it’s not only about what companies stand for or the products they have, but also the way they build relationships and make customers feel about the brand.
When a customer is able to relate to their favourite brand, the overall experience becomes much more engaging and meaningful—and that’s when brand loyalty takes off. If a shopping experience doesn’t connect with the character or values of a consumer, it fails to build the foundation for a loyal, long-term customer relationship.
Retailers in Canada need to recognize loyalty is no longer just a rewards program—it’s the overall experience with one element potentially being a points program. Brand loyalty runs deep in Canada. So bolstering this loyalty today by clearly defining the experience and investing in data-led tactics that provide an even better customer experience—personalized deals, real-time promotions and digital offerings—will pay off tomorrow.
We asked nearly 25,000 online shoppers in 29 territories about their shopping behavior and expectations.
Partner, Digital Services Leader, PwC Canada
Tel: +1 416 687 8417
Senior Director, PwC Canada
Tel: + 1 403 650 2438
Tel: +1 514 205 5113
Consulting Managing Director, Retail & Consumer, PwC Canada
Tel: +1 416 687 8023