Customer Loyalty Management...in the Digital Age
Customer loyalty management with points/miles linked to rewards is a long standing strategy used in the services sector especially airlines and hospitality. BPO vendors have responded by offering a slew of services to manage customer loyalty programs such as helpdesks to administration of miles and stays programs of most airlines or hospitality chains. Though somewhat limited in the manufacturing and retail space, we see a new conundrum being posed with the growth of ecommerce and e-retailing. The growth of showrooming...the practice of customers visiting brick-and-mortar stores to "experience" a product but ultimately purchasing it online in e-stores causes considerable pressure on brick- and-mortar stores. These stores due to their larger overheads (real estate, stocks, human resources etc.) cannot offer the lower prices or discounting that e-stores can offer but at the same time are robbed of their experiential advantage by the growth of showrooming. This at times can lead to a vicious downward spiral of larger overheads (more customer visiting the stores) not supported by growth in sales (done mostly on e-stores) leading to the collapse of the profitability and sustainability of the stores. Retail chains have only begun responding to this phenomenon by introducing various initiatives:
- Reducing the price differential on stores and e-stores (keeping online prices artificially high)
- Branding and offering value added services in stores
- Loyalty programs for in store purchases
The third initiative of customer loyalty programs for purchases made in-store is where the maximum innovation is seen and where BPO vendors need to focus on. Unlike the loyalty programs they manage for the services industry, the programs designed by the retail sector are more specific to the market it addresses and supported by customized technology platform. Take the example of "shopkick", the new application which tracks customer's purchases across shops by rewarding them with "kicks" which in turn can be accumulated and redeemed for goodies and preferential treatment in stores. BPO vendors need to take into account these nuances, build strategic alliances with providers of these technology platforms/applications and devise suitable process flows to accommodate the market that they service. But can they extend their expertise from managing customer loyalty programs in the services sector and build on it or is a fresh approach in order? Do we put on our thinking hats and create this new approach or extrapolate our current learnings'?