Loyalty programs...how much profitable does it prove tobe, for a customer centric apparel retailer?

Apparel business has grown to become highly competitive, andretailers have to mull strategies. Having a competitive edge in the businessworld is vital. Rather than relaying on other tricks of trade, retailers preferto establish a one-to-one relationship with their customers to improve theirsales performance. With an intention to enhance their customer basesignificantly, retailers seek for Loyalty Programs to gain direct access totheir customers. It enables them to identify, communicate, and market to theend users, and also maintain the distributor relationships at the same time.

As per a recent market survey, considering their buyingattitudes, apparel shoppers can be classified into three main categories.Fashion forward customers, looking for latest style clothing, conservativecustomers who prefer a traditional look in their garments, and value drivenconsumers who give more preference to value and comfort comparatively overstyle. Fashion forward customers comprise of 16% of the population, while conservativecustomers make 34%, and the remaining 50% is of value driven customers. Ofthis, conservative consumers are more motivated by the loyalty programs, andstore credit cards.


Diverse Loyalty Programs:


A survey states that 76% of the retailers, and 75% of theshoppers are engaged in one loyalty program. One third of the customers areinvolved in multiple loyalty programs. Shoppers stop claims that almost 60% ofits sales are from loyalty members. Many kinds of loyalty programs arefollowed. As customers bought apparels, they earned points that can be redeemedas merchandise rewards, or travel. Points can also be accumulated to acquire amore valuable reward later on. Special promotions are also offered during daysimportant to the consumer such as anniversary, birthday etc. A top-up discountbased on the frequency of visits can also be offered.


Are brands betting on loyalty programs?

Brands also need to foster the loyalty of their customers soas to retain them, especially during tough times. Notable brands such asWestside, Adidas, Levis, and Spencers Retail have managed to keep theircustomer base intact through their loyalty programs, delivering immediatevalue, preference and personal significance. Product launches plannedintermittently, and innovative loyalty programs facilitated them to ride thetide during recession.


Loyalty programs help to create an emotional bonding,thereby resulting in a life long customer relationship. They have gainedimmense popularity in the past decade. This is mainly due to the culture ofentitlement, wherein the customers believe that they deserve a specialtreatment over the normal visitors due to their frequency in visiting theretailer. Retailers have learnt to smartly capitalize this attitude of thecustomers through their creative thoughts. It might cost them a little, butbrings forth goodwill, and ultimately resulting in the long term relationshipwith them. They are now a key to revenue growth of any business. Thus, it canbe precisely called as a Loyalty craze.


References:


  1. http://www.loyaltyworks.com
  2. &sec=article&uinfo=<%=server.URLEncode(2937)%>" target="_blank">http://www.fashionunited.in
  3. &sec=article&uinfo=<%=server.URLEncode(2937)%>" target="_blank">http://www.cioinsight.com