Retailers adopt gamification, personalization, and other tactics to reinforce customer loyalty

The trend: As inflation and the sheer amount of choice weaken brand loyalty, retailers are adopting a number of strategies to keep customers engaged and spending.

Popular tactics include:

• Personalization
• Gamification
• Additional membership perks

A personalized touch: Retailers can improve their standing with consumers by offering personalized deals and product recommendations based on purchase history.

• Kroger uses personalized rewards as a lever to keep shoppers from jumping ship to discount retailers. This has enabled the retailer to protect its margins while still offering value to consumers.
• Misfits Market offers an autocart tool that selects items based on shoppers’ previous purchases, adding convenience to the grocery-shopping process.

Game on: While many retailers offer rewards programs to incentivize customers to return, some are taking it one step further by gamifying the experience to encourage members to spend more.

• Sweetgreen is testing a “Rewards and Challenges” program where customers who perform certain actions—like spending above a certain amount or ordering select items—receive discounts and other benefits.
• Starbucks uses gamification to turn customers into regulars through challenges, members-only competitions, and perks like Double Star Days. That approach has paid significant dividends: Starbucks boasts 27 million active members in the US, who are responsible for 54% of revenues at company-operated US stores, the company said on its latest earnings call.

More perks, please: Still other retailers are adding new features to their subscription services to boost signups and reduce churn.

Ahead of Prime Day, Amazon is offering US Prime members a free one-year Grubhub+ membership, which allows subscribers to order food delivery without paying delivery fees.

• Incorporating restaurant delivery into its already exhaustive list of features allows Amazon to offer enhanced value in comparison to competitors—and causes members to think twice about canceling their subscriptions.

Walmart is incorporating its InHome program—where employees deposit groceries directly into shoppers’ fridges—into its Walmart+ subscription service for an additional fee.

• Making InHome more widely available allows Walmart to meet strong demand for in-home delivery. Our latest US digital grocery benchmark found that consumers consider in-home delivery to be just as valuable as in-store pickup.

The big takeaway: Membership and loyalty programs are important, but retailers shouldn’t lose sight of the importance of the customer experience.

• In addition to offering enhanced benefits, retailers should leverage shopper data to personalize the customer experience and offer additional value.
• “Loyalty programs are the norm now, but good day-to-day experiences are not,” said Patty Soltis, eMarketer principal analyst at Insider Intelligence. “More than anything, consumers want an experience that is consistent and makes them feel value in their purchase.”