Monday, June 16, 2014

Online Retailers Earn Millennial Loyalty Through Shop More Earn More Approach


The topic of brand loyalty has been a hot topic for discussion, specifically when discussed in the same breath as Millennials. Unlike their parents’ brand loyalty that is founded on personalized and long-lasting relationships, a recent survey conducted by only survey firm MindSwarms, describes Millennials’ brand loyalty as user-centric and unemotional. It is important to qualify these descriptors as being tied to a tendency to become temporarily loyal to a particular brand merely to take advantage of the convenience or rewards offered.  An important point to note is that while loyalty/rewards programs can be effective in capturing a loyal following, there are some sizeable challenges to getting people to commit due to the sheer amount of frustration that comes along with the process. A research paper published by Emerald Publishing Group addresses this exact point and highlights four categories of frustration: inaccessibility, worthlessness, qualification barrier and redemption costs.  So the challenge to online retailers, is how to harness the sporadic purchasing behavior of Millennials. This loyalty discussion has become incredibly important especially for retailers that are exclusively online based such as Wayfair. It is no secret that Millenials are savvy online shoppers, yet as an Accenture study has found, they still heavily frequent brick and mortar stores, and often use online sites to find the best price before making a purchase. Therefore, it is very important that online retailers attract Millennial shoppers not only with great prices, but with effective loyalty/rewards programs.

One rewards program I have found to be an untapped, golden opportunity for retailers, specifically online retailers, is the cash back rewards program. I was extremely thrilled to find that Wayfair offered this option having needed to make another purchase after I had forgotten an item. At the checkout page I was prompted to use my cash rewards towards my purchase. Extremely wary of cash reward programs, I did some research, and found to my surprise that it was a legitimate rewards program. And it combats the four categories of frustration:
1. inaccessibility - totally accessible; reward dollars can be applied toward any future purchase
2. worthlessness -not worthless at all; you save more when you buy more (3% back on every purchase). And, you can refer a friend for $10 rewards cash
3. qualification barrier - none; you are automatically enrolled when you sign up
4. redemption costs - none; you choose when to use your cash rewards on any product, no restrictions

The bottom line is more online retailers should be exploring this option!

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