Retailers are Committed to Loyalty Marketing
Written by: Dan Slavin
As a senior executive of a Fortune 50 retailer recently shared with me, “We [retailers] are all vying for the same person to walk through the door and purchase our products. It’s how we define the customer experience that will determine the winners from the losers.” 
Over two decades ago, Harvard Business School published results of a study they conducted in conjunction with Bain & Company. The study found that over time, more than 80% of profits will come from 20% of a company’s customer base. Specifically, “The bottom line: increasing customer retention rates by 5% increases profits by 25% to 95%.” Based on this ground breaking study, the loyalty program was born. Fast forward to 2014 and loyalty marketing is as strong as ever and being re-imagined in the context of the customer experience.
Retail marketers are forging ahead designing, modifying and building loyalty programs based on the customer experience in the interest of accelerating the conversion rate. Much has already been documented about conversion including the three cornerstones that define the retailer-customer relationship: Acquisition, Engagement, and Retention. There are myriad of strategies, tools, and best practices available to retailers designed to draw consumers into one of the defined buckets. However, what is often missing from the conversation is the process of moving from one cornerstone to the next with an emphasis on drawing the customer into a deeper relationship with the retailer, not just moving the customer along the continuum.
The above diagram depicts the three cornerstones of the retailer-customer relationship and the processes required to move customers from one cornerstone to the next.
Over the course of the next several weeks, we will present an overview of best practices and strategies to attract and keep customers faithful to a brand through Awareness, Affinity, and Value through digital marketing solutions, or mobile loyalty marketing, forms of interaction.