The Difference Between Online and Offline Loyalty Programs

July 27, 2016 Kirsten Burkard

As early as the 18th century, retailers have been appealing to customers’ buying habits with incentives in order to outsell their competition.  Over time retail has continued to change, and since the birth of ecommerce in the early 1990s, loyalty strategies have made the migration to the digital realm as well.  

With all of these online and offline rewards programs popping up like daisies, you might begin to wonder what the differences are between them.  The best way to approach this question is by understanding the two different landscapes.

online and offline brick and mortar

When a customer decides to purchase something from a physical store, their decisions are often influenced by where a store is located.  The reality is, brick-and-mortar stores don’t need to offer as many incentives because a customer’s proximity and need for the product trump many other buying factors.  This doesn’t mean that they can’t benefit from implementing one, however.  No matter what type of business you run, a loyalty program is always a great idea.

online and offline ecommerce

Online customers, on the other hand, are given a greater opportunity to be choosy.  With the entirety of the Internet at their fingertips, digital shoppers can spend hours researching various brands and looking for the best deal.  These behaviours make their loyalty more valuable, placing a greater emphasis on developing retention strategies.

 

“So What’s the Difference Between Online and Offline Loyalty Programs?”

In order to answer this question, we need to dig into the way these two types of program may be set up.  Keep in mind that the following loyalty strategies can be successfully employed in either commerce landscape.

Offline Loyalty Programs

As I mentioned earlier, location is a huge consideration for many customers who choose to purchase products in-store versus online.  However, there may be additional expenses associated with going to a particular store to purchase a specific product.  

online and offline specific stores

My mom’s grocery shopping habits are a great example.  When I was younger she used to shop at three different grocery stores in order to get the best prices, but eventually chose one store to shop at every time.  She figured that after paying for gas and other transportation costs she wasn’t actually saving that much, and ultimately preferred a particular store to the others.

online and offline loyalty strategies

Even though customers have a higher chance of coming back on their own simply due to their proximity to a specific store, retailers should still be appealing to their customers’ best interests with their loyalty program.  The following are a couple of strategies tailored to fit the brick-and-mortar sales environment:

1. Social Sharing

Even though they might not be shopping on their phone, chances are high that customers will have their phone on them while browsing through physical stores.  Young customers in particular spend an obsessive amount of time on mobile devices, checking into social media accounts over 100 times a day on average.

online and offline social sharing

With those types of stats, harnessing social sharing power is a genius way to entice customers to shop at your store.  Rewarding customers for sharing their experiences with your products on Twitter and Instagram give retailers the opportunity to create brand influencers while also incorporating their brand into the everyday social fabric of their customer base.  

2. Friends & Family Rewards

The other week I received a flyer from the Disney Store which promised me a discount if I came back to shop on a specific weekend.  By referring to their customers as “friends and family”, retailers are able to develop a relationship with both returning and new customers through effective emotional advertising.  People are always looking for ways to be included, and creating this type of community within your brand will ensure people want to come back in order to get that feeling again.

online and offline emotional advertising

Ricki’s employed this idea perfectly.  As members of their Fashion+Friends loyalty program, customers are treated to new promotions, birthday rewards, and much more.  In this way, Ricki’s has created an atmosphere which promises to deliver products that meet their customers’ clothing needs while also recognizing the customers’ desire to feel special.

3. VIP Tiers

This loyalty strategy goes hand-in-hand with the Friends & Family mentality.  Just as those types of rewards work to build community, VIP tiers allow retailers to acknowledge their best customers with exclusive benefits and rewards.

online and offline sephora

Tiered programs are also effective at increasing customer engagement.  Giving your customers to opportunity to earn more encourages them to spend more, and programs like Sephora’s VIB Rouge highlight how willing people are to participate in programs with substantial rewards.  This makes VIP programs an excellent solution for brick-and-mortar retailers, because once a customer is engaged they are more likely to make the trip to buy from a specific store.  It’s the perfect example of how lasting benefits, as opposed to discount prices, are what truly set a brand apart.

 

Online Loyalty Programs

One of the reasons people choose to shop online is discounted prices, which doesn’t come as a surprise when 21% of Americans don’t even have a savings account.

online and offline 21% of americans

With the ability to shop around and locate the lowest price in a matter of minutes, there are many ways ecommerce merchants can work to keep their customers coming back.

1. VIP Tiers

You may recall that I indicated that all of these strategies can be successful both online and offline, and VIP Tiers is a perfect example of that.  Tiers are especially common in industries like supplements and cosmetics because they have intense levels of competition that leave customers wondering “what’s in it for me?”

online and offline experiential rewards

Brands that reward customer loyalty with both experiential and transactional rewards are abundantly more appealing.  Offering customers access to exclusive events or product launches are only two ways that retailers can set their VIP customers apart, and considering loyal customers are responsible for 41% of revenue this strategy is highly beneficial.  

2. Engagement Touch Points

If you want to make your online brand stand out, you’ve got to provide your customers with ways to engage outside of the shopping cart.  With more people using their smartphones for all manner of online activity, people are looking for experiences that compliment their on-the-go lifestyle.  

Social sharing is a great place to start, but why stop there?  Referral programs are another way to encourage customers to engage with your brand throughout their everyday life, and can be seen as the evolution of the offline Friends and Family rewards system.  

online and offline mynb

Brands are also beginning to reward their customers for everyday actions related to their products.  New Balance’s MyNB program, for example, rewards its customers for tracking their workouts using their app.  These types of rewards diversify the rewards experience for customers, making it more exciting and appealing.

 

Understanding Your Customers

No matter where you’re selling your brand – whether it’s online or offline – a loyalty program is a great tool to help shape your customers’ spending habits.  Through exclusive discounts, community building initiatives, and social sharing, you can treat your customers to a lifestyle and loyalty experience that they can’t get anywhere else, making your brand their number one choice for shopping every single time.

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