Four Tips to Foster Loyalty This Back-to-School Season

Earlier this summer we conducted a survey to find out more about the second-biggest shopping season of the year: back-to-school. In 2014, people are expected to spend $72.5 billion on back-to-school items, ranging from school supplies to clothing. Specifically, we looked at how retailers are using (or not using) loyalty programs to reach customers in new and more effective ways. This is especially important because our results revealed that where consumers shop during back-to-school can have a big impact on which stores are top-of-mind when the holiday season rolls around.

To get this information, we surveyed more than 100 small business owners and managers who sell "back-to-school" products, as well as 700 shoppers. In doing so, we discovered three important lessons for retailers to keep top of mind this shopping season:

1. Don't underestimate the power of low prices
This might seem obvious, but shoppers really do appreciate a good deal. In fact, our survey found that while 85 percent of shoppers are loyal to the same retailers each year, 91 percent were open to trying a new place if they were presented with a promotion or reward. Shoppers told us that price is a more important factor in making the decision of where to shop at back-to-school season as compared to other times of year. A sizeable 53 percent said price was the biggest factor when deciding where to shop. Moreover, 66 percent admitted they are likely to sign up for a loyalty program during back-to-school season if it comes with a discount at checkout. Consumers are willing to seek out these incentives, and 45 percent said they're more inclined to shop at a retailer if it offers sales, discounts or promotions during the back-to-school shopping season.

Retailer takeaway: If you want to get customers in the door during back-to-school, take advantage of the power of promotions and offer special discounts and sales. Remember to target these not just to your regular, loyal customers but also to people who are open to making the switch if given the right reason. Now is your chance to grab their attention and their dollars.

2. Use loyalty campaigns wisely
The majority of retailers (58 percent) surveyed indicated that they believe loyalty campaigns would be a boon to business during back-to-school season. The problem? Only 34 percent of them are putting their money where their mouths are and running loyalty campaigns this year. The ones who have run them in the past, however, saw significant positive impacts, and 97 percent of those retailers plan to run the campaigns again this back-to-school season, which is a great sign.

Retailer takeaway: Loyalty programs can be a perfect way to drive customers into your store and encourage them to spend precious back-to-school shopping dollars with you. If you haven't tried loyalty programs before, this year is a perfect time to give them a shot. If you've had mixed results in the past, try out some of the new products and services now on the market to help you better reach your customers with targeted loyalty offers.

3. Put data to work for you
Speaking of targeting, remember that loyalty programs are only as good as the data they have to work with. Of our survey respondents, 65 percent are taking advantage of data-tracking and analysis, using data points such as purchase history and demographics. This information can help you paint a clearer picture of who your customers are and discern how to reach them with the kind of loyalty programs and offers that will actually entice them to walk into your store or purchase from you online. Moreover, this data can help you target shoppers with holiday offers, ensuring that they remain loyal to you as the seasons change.

Retailer takeaway: Make sure that the loyalty and marketing programs you are using with your customers gather an appropriate amount of data so that you can better target your efforts over time. Data is the best way to ensure that what you're offering is what the consumer actually wants. A loyalty or marketing program is only as good as the data that fuels it, so don't undertake one without the other.

4. Technology is your friend
Although the new options that exist for retailers to target their customers and better market to them can be overwhelming, technology -- when wielded well -- is the best way to succeed. Consumers also prefer tech-based outreach. For example, consumers ranked plastic loyalty/rewards cards as their preferred method for redeeming promotions, and identified paper punch cards as an unappealing option. That said, technology is not holding most retailers back: 18 percent of those surveyed reported that they will not run a campaign during this back-to-school season because their businesses don't have the necessary technologies. The majority of the retailers we surveyed indicated that they will use email to reach customers with loyalty campaigns during this back-to-school season.

Retailer takeaway: You want to reach your customers where they already are, and technology offers, in many cases, the best way to do that. Whether it's upgrading to a plastic or mobile loyalty program or sending offers to customers via email, take advantage of the many tools at your disposal to reach your audience this back-to-school season.

Russell Harty is senior vice president of key accounts and partner channels at Cayan.
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