Modernizing Retail Loyalty For Improved Customer Retention

2020 will be a defining year for retail. Though Retailers are aware that loyal customers spend 33% more than new customers, 80% of their future profits are likely to come from just 20% of loyal customers and a 5% increase in customer retention can lead to upwards of a 25% increase in profits. ¹With uncertainty ahead, maintaining customer trust in the brand, ensuring early mindshare, recovering customer experience and relationship will become a major challenge for retailers. Clearly, the retail war will no longer be fought on price alone. More empathetic, relevant, and revamped customer loyalty programs will be most prized.

Legacy systems were never built to inspire loyalty. They were focused on delivering standard rewards such as discounts and cashback based on frequency and volume of purchase. In the US alone, the average customer signs up for 14.8 loyalty programs. ² This means, customers rarely distinguish between a 10% discount being offered by one retailer from another. Customers need a stronger reason than a discount or cashback to remain loyal. They need to be engaged/excited across channels, feel special through customized offers and personalized/contextual messages. The need is for a Modern Loyalty Ecosystem – an ecosystem that would leverage data to stay connected to the customer before and after the transaction, and thereby build a lifetime relationship with the customer. In fact, few of the smart retailers have already started leveraging their modernized loyalty ecosystem as competitive differentiators.

However, modernizing loyalty is a complex activity. Retailers need to align with the right partner who can help strategize and orchestrate critical components of the modern loyalty ecosystem to maximize Customer Lifetime Value (CLTV) and improve ROI from loyalty investments. At ITC Infotech, we consider the following critical components while dealing with any Loyalty.

Modernization engagement

  • Customer Data lies at the center of all loyalty programs. Retailers need to unify customer data from first, second- and third-party sources to create a single view of the customer. The data would then get analyzed based on the online footprints, behavior, and actions of the customers, thereby generating actionable insights that are critical to craft promotions and reward programs that bring value. At ITC Infotech we address customer data related concerns by leveraging our in-house Data Science and Analytics experts.
  • Design Thinking helps Retailers to develop customer-first loyalty experiences. At ITC Infotech, we practice a design-led approach to define the customer persona based on their online behavior and intent. We redesign the customer interactions journey map in order to improve and optimize touchpoints experiences to make them more relevant.
  • Smart Personalization is an absolute must for retailers wanting to build long-term relationships with their customers. According to Gartner smart personalization engines that recognize customer intent will enable businesses to increase profits by up to 15%. This is possible only when retailers can deliver relevant content, next best action recommendations, and emotional experiences across every customer journey touchpoint. Personalization is the outcome of intelligent insights generated from all relevant data points and acts as the foundation for long-term loyalty. Today, there are numerous Artificial Intelligence enabled personalization engines that create tailored experiences for customers.
  • Omni-channel experience has become a vital component in the modern loyalty ecosystem, mainly due to the increasing number of channels and devices (e.g., In-store POS, mobile applications, webstores, social media, etc.) that are part of a typical customer-brand interaction scenario. Customers want the convenience and comfort of an omnichannel experience by making the interaction experiences seamless and consistent across channels and devices. And by enabling this experience, retailers not only increase customer engagement but also get access to a rich source of interaction data that helps them to create more precise and relevant loyalty programs. Recent data shows that 60% of retailers use loyalty programs to track customer activity/purchases across omnichannel.³
  • Partner programs or coalition programs deliver much-needed flexibility to customers and ensure that reward points are put to the best use. Customers have more probability to get engaged with a brand that offers a coalition loyalty program. Multibrand loyalty programs, across brands owned by an enterprise and in collaboration with external brands, are difficult to ignore as they extend market reach. The surging adoption of coalition loyalty programs clearly indicates that consumers understand the value they are achieving by being part of a program that allows them to earn and burn their loyalty in the most appropriate manner. At ITC Infotech we spend significant effort in ascertaining the right partner ecosystem that can be leveraged by the Retailer to maximize brand visibility and customer acquisition.

Recently, ITC Infotech upgraded the loyalty system for a Leading Retailer with over 15 million customers. The loyalty function of the retailer aspired to become an independent profit center but was restrained due to its poorly configured and disintegrated ecosystem. The customer churn was high, and the chain could not cross-sell. Our domain experts conducted a detailed program diagnostic and benchmarking workshop and formulated a comprehensive Loyalty Program and Customer Experience strategy. We modernized the platform and built an integrated loyalty ecosystem coupled with an insights platform that could deliver personalized campaigns and promotions with improved loyalty program penetration across markets and brands. The loyalty ecosystem also integrates with partner programs, for increased customer reach and engagement. The retailer immediately witnessed an improvement of 2.5 percent in sales and a 10 percent increase in member spends. But most telling was that the retailer saw a 30 percent increase in its loyalty customer base – an increase that will continue to deliver superior results into the future. ITC Infotech continues to provide application maintenance and support for the client, ensuring ongoing success.


Bijayananda Bardhan
Sr. Project Manager



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