By Mark Roper, Global Market Development Director, Collinson Valuedynamx
Thanks to Covid-19, the year 2020 will be remembered as the greatest accelerator of e-commerce and the start of a new era for retail. According to McKinsey research, the pandemic forced ten years of e-commerce adoption and consumer change in the span of just 90 days.
With a backdrop of economic decline and smaller consumer wallets, there is a greater need for brands from all verticals to step up and be more relevant and exciting to customers, and to crucially drive more revenue for brands. We’ll explore why and how brands should go above and beyond for their customers, seeking the most exceptional experience at all times, as well as highlight the importance of data and diversified revenue streams in an era of payment convergence
The Evolving Market – Acceleration of E-Commerce: the Move from Offline to Online Shopping
Thanks to developments in technology and the fast-changing payments environment, it is much easier for consumers to shop online. How we shop and then pay for our goods and services continues to be reimagined. With this new commerce technology underpinning consumer shopping habits and payment behaviour, the future is heading towards e-commerce at break-neck speed.
Online shopping now dominates the commerce landscape and not just amongst the younger generation. The pandemic has forced an older generation of consumers, commonly referred to as baby boomers, to embrace e-commerce, and their expectations in terms of security, speed, simplicity, transparency and value are just as high as their younger counterparts.
With consumer expectations surrounding the e-commerce experience at an all-time high, the need for retailers to provide an exceptional e-commerce experience for their customers has never been more essential; from cheap and efficient next day delivery, to virtual fitting rooms where you can try on clothes from the comfort of your own sitting room.
Finding New Customers via New Channels, in a Bid to Drive ROAS
With more retailers needing to move online, coupled with the pandemic-driven challenges to meet increasing demand and higher expectations from customers, there is a growing requirement for retailers to find new ways to be more versatile with their strategies in order to reach new customers and drive return on advertising spend (ROAS).
Brewdog is just one example of a retailer who mid-pandemic needed to reach a new audience, since one of its travel-related channels, linked to food and beverage on airlines, was not performing. Brewdog’s solution was to engage new customers through personalised and relevant offers, in this case through our network of shopping portals, which allowed it to tap into an extended consumer base reaching millions of potential new customers.
Using Payment Linked Rewards to Better Understand Customer Behaviour
Yet finding new channels is only one part of the challenge. The greatest potential failure currently facing retailers is the inability to adapt to the customers’ ever-changing needs and behaviours. As consumers become all the more discerning and demanding, brands must ensure they put their customers first. Entering the mind of the customer and staying there should be a number one priority. Those that fail to do this will ultimately cease to be relevant.
As such, transaction data is one of the most important elements that brands need to take into account moving forward. Transaction data provides important insights into consumer behaviour and allows retailers to get to know their customer better. This in turn enables them to deliver relevant offers and better rewards that meet customers’ needs.
The key to getting hold of this valuable customer transaction data lies in payment-linked rewards. Over the years, loyalty and rewards programmes, offering cash-back or loyalty points, have evolved to enable more everyday engagement with their customers, e.g. the move from stand-alone frequent flyer programmes to partnerships between airlines and retailers supported by specialist payment linked rewards providers, which reward consumers based on their spending behaviour. This approach not only gives the brand a greater opportunity for more everyday interaction with their customer, it also provides a valuable source of data, allowing them to gain insight into their customers’ behaviour and shopping habits. More and more brands across sectors, from hotel groups to financial services providers and large membership programmes, are now engaging in this strategy.
The best way to ensure this approach is mutually benefical to the consumer, the programme and the retailer, is to work with a specialist payment linked rewards provider who will enable the convergence of payment information and rewards programme data in order to create a digital loyalty commerce ecosystem.
A Commerce Ecosystem That Delivers Brand Engagement
There is a growing need for loyalty and rewards programmes to evolve and provide more seamless ways for customers to interact with brands. In order to truly engage with a programmes’ consumers, retailers need to offer them the best and most personalised offers, in a highly targeted and faultless manner at the right time, and deliver a programme which offers greater choice in ways to earn and redeem rewards. One example of this is the new Virgin Red rewards club that enables members to earn Virgin Points when shopping with retailers online.
In this commerce ecosystem, everyday interactions are created with consumers (members), through a programme, with advertised offers from retailers. The consumer is after an exceptional offer from their programme, but they also want it to be personalised, relevant and timely. The programme wants the ongoing engagement with their customer base to ensure that both spend and loyalty remain consistently high. It’s often also looking to monetise its customer base. The retailer is essentially after a good ROAS, incrementality – both in terms of winning new customers and in increased spending from existing customers – and attribution, with the knowledge that these wins could not have been generated through other channels.
Meaningful brand engagement is key for rewards programmes, as are relevant offers and incentives. At the same time, retailers are facing a major crunch, with fierce competition for the consumer dollar. This environment presents an opportunity for retailers to work with a rewards programme through a specialist commerce provider to secure the engagement of today’s consumer, leveraging the powers of loyalty currency and unique marketing channels to deliver a truly dynamic value exchange. In an ever-changing marketplace, the importance of transaction data in helping deliver insights into customer behaviour should never be underestimated. It is these insights that will ultimately help brands to present more personalised and relevant real-time offers and rewards, that enable everyday transaction relevance for programmes. That’s the real power of payment linked rewards.