Loyalty programs are the new it thing in retail
Reuters Amazon, the king of ecommerce, has long been a trailblazer in the world of online shopping. But now its business model is rubbing off on retailers, and changing the way we shop in traditional brick-and-mortar stores.
Amazon Prime is a paid loyalty program that costs or .99 a month and grants members many benefits, including free two-day shipping and access to stream online videos and music.
Roughly 49 million American households, or 44% of households in the US, have Prime memberships, according to Cowen &Co.data.That'snearlytriplethenumberthathadsubscribedin2012.
"Whenacustomersignsontoaretailer'sapp,theretailerisabletogarnerawealthofcustomer-specificinformation— everything from when a customer shops, to what they click on, to what they ultimately purchase," says Wiesel. "Outside of the cash in the register, data is perhaps the most valuable currency for retailers today. The best retailers are tracking customers' shopping behaviors and purchase trends at a very detailed level and using this information to inform business decisions that drive profitable growth."
As an e-commerce company, Amazon has near unparalleled insight into customers shopping habits.
CVS's mobile app allows customers to use services like CVS Pay and CVS Express curbside pickup.
To compete with e-commerce, and convince customers to download an app or join a program, retailers need to offer convenience and benefits, like free shipping.
"The success of Amazon Prime has permanently altered customer perceptions about paying for shipping," Wiesel says, citing programs such as and Beyond+. "Given the program's pervasiveness, free shipping has become an expectation and traditional retailers are scrambling to find ways to match Amazon's offer while minimizing the financial hit."
Another way to make shopping more convenient is by offering a multi-purpose app, that allows shoppers to do everything from accumulate coupons to pay on their smartphones.
Payment apps have become more and more prevalent in the last year, with newcomers like Walmart Pay and CVS Pay.
On Wednesday, Kohl's launched Kohl's Pay, a mobile payment option in the retailer's mobile app that is linked to customers' Kohl's Charge card. The app is also home to Kohl's electronic coupons program, Kohl's Cash, and the Yes2You Rewards loyalty program.
With programs like Beyond+ and Kohl's Pay, retailers are aiming for all-encompassing convenience that bridges online and in-store purchases. From free shipping to speeding up check-out with in-app payment, these adjustments aim to draw in customers by doing away with roadblocks that were once simply part of shopping.
Video: Types of customer loyalty programs
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