THE WAIT IS OVER: WHY REAL-TIME REDEMPTION MAKES LOYALTY BETTER These are challenging times for brick-and-mortar merchants. Across the world’s top 250 retailers, the average annual rate of revenue growth has declined by almost 50% in the past 10 years. As retailers work to reverse this trend, it is clear that improving the delivery of value-added services (VAS) such as loyalty and rewards programs can create significant advantages. VAS program members can contribute between 12-18% more revenue than non-program members. It is also far more efficient to retain existing customers than attract new ones, and loyalty and rewards are integral to increasing consumer lifetime value (LTV) by incentivizing important repeat custom. In the battle to enhance the effectiveness of VAS programs and keep consumers engaged in a hugely competitive market, real-time redemption is emerging as a powerful tool. Ending the waiting game – making VAS work better Although VAS programs can undoubtedly be effective, many consumers are demonstrating signs of ‘loyalty fatigue’. For example, the average U.S. household is registered with 29 loyalty programs, billions of dollars’ worth of reward currencies lie dormant, and over half of loyalty participants do not actively participate. A significant factor behind this ‘loyalty fatigue’ is that it simply takes far too long to generate any meaningful rewards, so consumers quickly lose interest. This is because loyalty and rewards programs have traditionally emphasized repeat custom over a long period of time. Buy 10 coffees and get the 11th free. The problem is, if I only visit the coffee shop once a week as a weekend treat I’m not going to see a return on my loyalty and investment for a long time. Without an incentive, there are plenty of other places out there for me to try. 14 |RAMBUS
Demographic shifts only add to the challenges for retailers. Younger consumers are more willing to shop around compared to previous generations, and the on-demand economy means there is an expectation of instant gratification. To get ahead of the game, VAS programs need to be easy to access, available to use on-demand and appeal to the user’s immediate needs. For example, I’m probably not that interested in a free coffee in three months’ time, but I could just be tempted with a half-price muffin right now. Real-time loyalty redemption This is where real-time redemption comes in. Consumers receive their rewards and loyalty coupons instantaneously at the point-of-sale and can use them for that purchase, rather than having to wait until the next visit. It really works. Consumers who receive rewards instantaneously spend up to 25% more compared to traditional redemption models, and 55% compared to using no loyalty scheme at all.
