Using card-linking tech could encourage customer loyalty

With the Australian retail sector becoming increasingly competitive, in part due to international companies like Amazon creating an unlevel playing field for local merchants, customer experience has become the key differentiator helping merchants compete with organisations of any size. Retailers that can improve customer experience are better placed to boost revenue and profits in the face of growing competition. A shift to debit or credit card-linked loyalty programs could also help improve the retail customer experience and engagement by reducing the friction that can occur at the point of sale, according to Loyalty Now.

Almost three-quarters of Australians said customer experience was an important factor in their purchasing decisions, according to a PwC survey. Consumers were willing to pay a price premium of up to 16% on products and services if they received a greater experience in return. Cary Lockwood, CEO of Loyalty Now, noted that great loyalty programs help consumers feel connected to the merchant, making them more likely to be repeat customers. “When consumers participate in a retailer’s loyalty programs, they are 80% more likely to download the retailer’s app, twice as likely to subscribe to email and push notifications, and three times as likely to engage with the retailer’s social media presence,” Lockwood said.

However, when loyalty programs require participants to carry additional cards or enter codes at checkout, the resulting friction can make that consumer less likely to enjoy their experience due to inefficiency. Inefficiencies drive close to 45% of consumers away, highlighting the importance of low-friction transactions. Lockwood added that even consumers who thoroughly enjoy the shopping experience tend to get impatient when it comes to finalising the transaction; being asked multiple questions or having to provide many pieces of information can create frustration for the consumer and unnecessarily prolong the transaction.

“At worst, this can make customers view their experience in a negative light, leading to customer attrition. At best, the customer may still purchase from the retailer but may not engage in the loyalty program, depriving the retailer of potentially valuable customer data and reducing the value of these programs,” Lockwood said.

Carrying a physical card as proof of membership to a loyalty program is a barrier for 79% of people. In contrast, a card-linked platform can link the customer’s rewards to the debit or credit card they use to make their purchases. This means the customer can complete their purchase without having to include additional details about their membership, while being assured that their purchase will accrue rewards. Removing this friction and inefficiency can transform the customer experience.

Organisations are encouraged to transform the customer experience across all points of engagement. With more than 80% of companies investing in an omni-channel experience in 2020, merchants need to consider how customers interact with them online as well as in-store. For example, many websites may automatically save the customer’s payment and rewards details but, when that customer visits the same merchant in a bricks-and-mortar store, they are still asked to present their payment card and loyalty card. With a card-linked loyalty platform, customers don’t need to present a loyalty or membership card and can instead accrue rewards by paying for their purchase. Lockwood added that card-linked loyalty platforms improve the customer experience by removing friction from transactions and making it easy for customers to engage with rewards programs. Card-linked loyalty programs can also help deliver a stronger return on investment in loyalty programs for merchants and program operators.

“Consumer expectations are at an all-time high. With so much choice available to them, consumers are happy to shop around and less likely to be loyal to a particular merchant unless they’re given a compelling reason to be loyal. In such a competitive market, every incremental advantage can make a difference,” Lockwood said.

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