Moving beyond flash promotions: Building loyalty via personalization and sustainability

Undifferentiated promotions, omnipresent in large-scale retail, have become a trap over the years, turning customers into nomads wandering from one retailer to another in search of the highest discount. When companies in the retail sector focus on short-term customer acquisition instead of building lasting relationships, they risk creating a vicious cycle where customer loyalty disappears.

The Loyalty Promotion Monitor, an innovative project by the Channel & Retail Lab, sends a clear message: without a change of direction, loyalty risks becoming an empty word, devoid of real meaning for both companies and consumers.

Initial research conducted by the Monitor, with active participation from a steering committee of 21 managers from Italian retail companies and TCC, a global leader in loyalty programs, reveals compelling insights: customers themselves are demanding more value and fewer short-term promises. It’s the customer, with their genuine needs, who must return to the heart of loyalty strategies. 

But how can companies escape the short-term promotion trap? According to the Monitor, the answer lies in a combination of personalization and sustainability. 

Field research involving over 40 managers from the retail and manufacturing sectors reconfirms the critical importance of managing loyalty effectively, while also highlighting an underutilization of the wealth of information available to companies. A major weakness emerges in measuring and segmenting the customer base. 

Digitalizing loyalty programs not only enables precise customer profiling but also allows for personalized loyalty journeys that move beyond generic discounts, addressing individual values and expectations. 

Sustainability also emerges as a key value: rewarding responsible purchasing behaviors and incorporating green incentives into loyalty programs creates value that transcends price, fostering bonds that simple discounts cannot secure. 

Further analysis by the Loyalty Promotion Monitor team reveals another crucial insight: loyalty extends beyond purchase behavior. Findings from over 200 academic studies show that customer loyalty is a multidimensional construct, encompassing behavioral components (like repeat purchases) as well as cognitive and attitudinal ones (such as trust and preference). Yet, many companies limit their focus to visit frequency or average transaction value, overlooking emotional factors that build a deeper connection with the brand. This represents a missed opportunity, possibly leading to sterile and undifferentiated loyalty strategies. 

The Loyalty Promotion Monitor aims to serve as a guide for those looking to invest in next-generation loyalty management, based on sophisticated measurements and smarter use of informational assets. Relying solely on undifferentiated promotions is a strategic risk the sector can no longer afford. Instead, efforts should focus on segmenting customers beyond mere numbers, integrating variables such as trust and satisfaction. 

The next steps of the research will explore the most effective methods to achieve this goal, including experimental approaches conducted in collaboration with the companies of the Loyalty Promotion Monitor’s steering committee.

Leggi gli altri articoli della serie sulla customer loyalty:

Branca - Measuring customer loyalty: Bridging the gap between theory and practice.