Loyalty Plan: A Compelling Showroom Model

Recent news stories regarding the trend of “showrooming” have me wondering why more merchants aren’t showboating the one feature that distinguishes them from online competitors: the aspirational rewards and recognition their loyalty plans offer.

Showrooming, as explained in a recent Wall Street Journal article, is when shoppers research products in the store aisle but then buy them at an online-only merchant for less. Best Buy’s recent financial problems and store closings shined a light on this issue and now several retailers are taking action against the practice.

Target, for example, is offering exclusive products, sending coupons to mobile devices and selling items online at a slightly lower cost than in the stores (this is to compete with online rivals).

But while coupons may get consumers in the door, they alone won’t necessarily bring them back or make them loyal to the brand. What most merchants should know is that a well-crafted retail loyalty program will reduce consumer reliance on such traditional discounts and coupons because it emphasizes aspirational rewards, from points to special treatment. And these rewards grow in value to the customer over time.

Put another way, a loyalty plan member will see extended personal benefits to staying with your brand, and as a result consolidate more of his or her spending with you.

The other thing to consider is that if a company makes good use of the information it gathers about its customers, it can craft targeted messages that are relevant to each customer’s values and needs, thus enhancing the relationship. True, while this approach won’t win over every customer – especially those focused solely on price – it will resonate with those who are receptive to the long-term value they’d receive by showing a degree of loyalty to your brand.

A program can, for instance, use its data to deliver exceptional experiences or services based on the customer’s specific shopping patterns. These soft benefits can range from an invitation to a cooking class to free alterations, but what they have in common is they resonate with the consumer.

And further, these types of rewards engage the consumer to come back to the showroom. Once the consumer is there, it is up to the merchant to dazzle him or her with more relevant merchandise, messaging and experiences.

Otherwise, expect to see them online.

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