Today's society is one where people have dozens, or even hundreds, of options when choosing where to buy things. Retailers know that numerous factors – from the overall selection, to the quality of customer service received – determine which stores earn customers' loyalty and why. In this piece for RetailTechNews, Kayla Matthews (pictured below),  explains why many forward-thinking brands have dedicated loyalty programmes to entice customers.

Loyalty programmes aren't new, but one thing that's different now compared to decades ago is that retailers have numerous technologies available to them that weren't accessible then.

It's common for brands to take high-tech approaches to keep customers happy and coming back for future visits. Here are just a few ways that tech has evolved loyalty programmes.

1. Makes It Easier to Utilise Data

There was a time when retailers primarily relied on their observational skills and guesswork when determining the factors responsible for customer retention rates. Now, they can depend on robust big data platforms that collect information, analyse it, and provide insights into brands.

Research indicates that loyalty programme customers make 90% more frequent purchases, and data analytics can take a closer look to uncover characteristics shared between the customers who visit a store most often. Then, executives can apply the data to the decision-making process for improving a loyalty programme.

Kayla Matthews, Digital Branding & Ad Tech writer

For example, an analytics programme might show how more than three-quarters of the people who stop by an independent grocery store frequently don't leave without grabbing a coffee at the cafe that operates within the establishment. Then, the retailer might create a loyalty programme where people earn free drinks after accumulating a particular number of visits, shown on punch cards or in an e-loyalty card app.

Regardless of how retailers depend on data for loyalty programme purposes, the information they uncover can help them feel more confident by illuminating the aspects that make people choose certain stores over others.

2. Helps Predict Customers' Actions & Habits

Artificial intelligence (AI) has already impacted various industries; and retail is not an exception. Statistics indicate that 70% of people would be more loyal to stores that implemented customisation into their establishments. But offering what customers want often requires anticipating their likely behaviours and catering to them.

One helpful aspect of AI, and a subset of AI called ‘machine learning’, is that the technologies can examine large quantities of data and spot patterns within it that humans would either miss or not have time to find. Having that option could be exceptionally useful when a company chooses what kind of loyalty program they offer, ranging from a cash-back option to non-monetary rewards.

Moreover, AI can be both predictive and influential while giving personalised content. The prediction aspect helps create a customer profile with numerous sources of information, including some potentially coming from a loyalty card.

An AI system might find that a person has shopped at a particular mass market retailer every week for the past three months, usually did so on Friday evenings, and bought wine and a lifestyle magazine each time. Then, store representatives could conclude that the individual is stopping by after work and purchasing those items to unwind during the weekend.

The AI system would first predict that the next time a person will come in will probably be on a Friday evening. It could take the next step by influencing that individual to not miss out on the expected upcoming visit. The technology could suggest that retailers send a coupon for £5 off any brand of wine, distributing it to the person's inbox by Thursday morning.

3. Gives People More Ways to Engage with Retailers

Deciding how to reach out to customers is not always straightforward, especially when you're urging them to sign up for loyalty programmes. One way of doing it is to ask people if they're part of loyalty programmes when they reach in-store checkouts or enter payment details online.

However, in those instances, individuals might be primarily focused on obtaining their items. They might not want to take the time to fill out a form or provide information about themselves. The convenience store chain 7-Eleven catered to that reality when it let people sign up for its loyalty programme while interacting with a chatbot.

The chat interface gives people electronic loyalty cards that they can scan to earn points. Plus, the chatbot provides details about current promotions and helps people find the 7-Eleven locations closest to them. The primary advantage of this approach is that individuals can get information about brands and sign up for loyalty programmes at times most convenient for them.

4. Shows the Payoff of Loyalty Programmes & How to Improve Them

Besides depending on big data to understand how to keep customers content, we can use such deep analysis to spotlight the characteristics that make loyalty programmes worthwhile. For example, statistics from Nordstrom show that the department store's loyalty programme customers – of which there are more than 10 million – spend 4x more than non-members and shop at the stores more often.

These findings indicate that Nordstrom's loyalty programme already resonates with its target audience; but even successful programmes often have room for improvement. The brand recently revamped its loyalty offerings under the title 'The Nordy Club'.

Participants can now earn rewards faster than before. Plus, they have opportunities to interact with the company, including through access to new products. When Nordstrom unveiled the new perks, it kept some of the familiar things that customers liked as well.

Big data platforms are advantageous for helping companies decide if they need loyalty programmes and if offering them would be beneficial for profits. If stores already have these programmes, they can analyse the stats to locate shortcomings and provide enhancements that customers appreciate and feel excited to use.

The Most Effective Loyalty Programmes Keep Customers in Mind

These technologies prove why it's so smart for retailers to rely on tech solutions to connect with customers. After all, loyalty programmes work best when they're relevant to the target market.