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interview

How fashion brands can run a successful loyalty program in the post-COVID economy

An interview with Louise Hutchins, Managing Director at The Loyalty People and former Head of Loyalty at Marks and Spencer

Karl Bzik
Founder at Open Loyalty

In uncertain times, we are all looking for some guidance on what might come next and how we can prepare for those changes. One of the most effective ways to predict the future is to ask the opinion of the real loyalty industry experts—those people who understand both the short-term trends and the long-term shifts within the industry.

We spoke to Louise Hutchins, Managing Director of The Loyalty People, CCO of Swapi and former Head of Loyalty at Marks and Spencer. With over 16 years of experience, Louise is an authority on Customer Experience and Customer Strategy. She’s also a forward-thinker who believes that data must be at the heart of every business decision.

Here are her thoughts on where the loyalty in the fashion industry is today and what the coming months and years will bring:

  • How is fashion retail changing?
  • What are the main characteristics of customers nowadays? How did the COVID-19 outbreak change shopping behavior?
  • How to retain and engage customers in the new reality?
  • How should loyalty programs evolve?
  • What kind of CRM and loyalty campaigns are most effective in the fashion industry?
  • How to evaluate my existing loyalty program and make it more attractive?
  • How do you see the future of CRM and loyalty programs in upcoming years?

How is fashion retail changing?

Louise: Firstly, COVID has had a significant impact on the categories that customers are buying into with loungewear, slippers, and pajamas all seeing significant growth, as we look for comfort as our primary need. I also anticipate that value will become a primary driver for the large majority.  As we identify with our ‘New Normal’, we will see levels of focus flex in terms of need states, but I think the impact of office closures, flexible working, and the re-evaluation of how we work. For example, the formal clothing industry will be heavily impacted and will need to diversify to remain relevant.

What are the main characteristics of customers nowadays? How did the COVID-19 outbreak change shopping behavior?

Louise: People now have a digital-first mentality. The impact of having to wear face masks in clothing shops will impact dwell time and in-store purchases. As always, customers want a quick, convenient, and frictionless experience. Retailers should be focusing on their infrastructure and ability to deliver this expected seamless experience, both digitally and in store.

It certainly won’t be the “death of the high street” just yet, though, and we have seen a focus on local and boutique experiences, supporting smaller businesses that have been heavily impacted by the economic crisis. In order to win on the high street, brands will need to focus on how stores are used—whether this is the concept of mini distribution centers to fulfill online deliveries or examples like Alibaba in China creating a beyond purchase experience, bringing in the mentality of a theater within the store.

A High-Tech Retail Experience in China from Alibaba Group

How to retain and engage customers in the new reality?

Louise: Ultimately, this is no different from before: stay relevant, recognize the need states of your customer, and solve for them. Identify how to elevate the so-called experiential side of your brand; be restless in creating the best customer experience; know what points differentiate you from competitors and capitalize on them.

Use a data-led customer strategy to provide a personalized experience in either CRM or Loyalty (or both). The age-old saying ‘show me you know me’ is now an expectation from customers. According to Salesforce, 51% (source: Forbes) of consumers expect that companies will anticipate their needs and make relevant suggestions before they make contact.

How should loyalty programs evolve?

Louise: Loyalty is changing; you can no longer just provide ‘functional loyalty’ as the “basic earn-and-burn” mechanics are worn out and overused. Building a program with a greater focus on emotional benefits can significantly enhance the perception of the brand and drive customer lifetime value (CLV). Think about charity, sustainability, community, and genuine 1:1 thank yous. Put these alongside functional benefits that are tangible and quantifiable and you have found the sweet spot for an attractive proposition.

What kind of CRM and loyalty campaigns are most effective in the fashion industry?

Louise: Ultimately, campaigns that are based on behaviors rather than sweeping generic above-the-line mass marketing. The best in class use a data-led, analytical approach to segmenting their audiences and creating relevant triggers based on behavior. If someone has recently bought a new top, share inspiration on how they can complete their outfit; think about logical next best-action behaviors that feel personalized, and keep the customer coming back.

With loyalty in the grocery sector, there is immediate business gratification as the frequency of shopping is obviously higher. In fashion, it’s a slower burn proposition; you want the customer to keep returning and increasing their share of wallet with you, so relevant functional benefits that make it easy to shop with you—combined with a level of emotional engagement—should keep you front of mind.

How to evaluate my existing loyalty program and make it more attractive?

Louise: As mentioned, think about the benefits offered and ensure that you have a good blend of emotional and functional rewards to offer. Keep it simple. The more complicated a program is—and the more hoops there are to jump through—the more likely it is that customers will switch off. Go digital. It is the future and it is expected. Plus, the more digital the behavior, the easier it is to access and understand the data.

How do you see the future of CRM and loyalty programs in upcoming years?

Louise: These are exciting times to be in Loyalty and CRM. There will be more automated personalization, hyper-sophisticated growth, and targeting models at the touch of a button, with the increased capability of machine learning. We’ll also see a broader level of benefits, with a focus on emotional rewards being the point of difference and more power in the customer’s hands. I also see that more and more customers demand the ability to swap points across loyalty schemes and across industries. Driving spend back into the economy is a win-win and an absolute game-changer for the industry!

Key takeaways

Thanks to Louise for sharing her vast experience and advice on how the fashion brands can run a successful loyalty program in the post-COVID economy. 

Here’re the most important takeaways:

  • Formal fashion brands need to diversify their offerings to meet new client needs
  • The high street will survive but customers now have a digital-first mentality
  • You need to use a slower burn proposition in your loyalty and CRM campaigns
  • Your loyalty strategy should focus on the same foundation: stay relevant, recognize the need states of your customer, and solve for them
  • Customers expect digital experiences and for brands to know them as individuals
  • Personalized product offers and upselling increase CLV and brand loyalty
  • Financial rewards are powerful but customers also value charity, sustainability, and community

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