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Challenges retailers face in managing loyalty programs and promotions
As consumer preferences evolve, retailers must offer personalised promotions and loyalty rewards to stay competitive and retain customers. 91% of consumers are more likely to shop with brands that provide relevant offers. However, many retailers struggle with challenges like data integration and real-time personalization, which can hinder their ability to meet customer expectations.
Here are some common technical challenges retailers frequently encounter in managing loyalty and promotions.
Data Integration and Management
Retailers often gather data from multiple sources—both online and offline. Integrating these datasets, like in-store purchases with online interactions, and then using this unified data for loyalty programs can be a complex technical hurdle. Disjointed systems and data siloes makes it challenging to track and personalise promotions accurately.
Personalisation and Customer Segmentation
Personalisation requires high-quality data and sophisticated algorithms to segment customers based on behaviour, preferences, and shopping habits. Developing or acquiring these capabilities and maintaining them in real-time to deliver timely, relevant offers is technically intensive.
Security and Privacy Compliance
Loyalty programs often store sensitive customer data, making them attractive targets for cyberattacks. Retailers need to implement strong security protocols and maintain compliance with data privacy regulations like GDPR.
System Scalability and Performance
High demand during promotional periods, like holiday sales or flash discounts, can strain retailer’s systems. Retailers need scalable, resilient infrastructure to handle spikes in traffic without affecting the user experience or system performance.
Real-Time Processing and Analytics
To be competitive, many loyalty and promotion systems now require real-time data processing. For instance, delivering instant personalised offers based on recent activity demands real-time analytics capabilities, which can be challenging to implement with legacy systems.
Mobile and Omni-Channel Experiences
Today’s customers expect loyalty programs and promotions to be seamless across online, mobile, and physical store experiences. Implementing a consistent experience across channels requires systems integration and a solid understanding of omnichannel customer journeys.
Redemption and Fraud Prevention
Retailers often face challenges in verifying legitimate redemptions of rewards and preventing fraud. Fraudulent claims, fake accounts, and promotional abuse can impact profitability. Advanced functionalities or third party integrations are needed to track and flag suspicious activities in real-time without impacting genuine users.
Legacy System Constraints
Many retailers still operate on legacy systems that lack the flexibility and integration capabilities required for modern loyalty and promotion technologies. Upgrading or overhauling these systems can be resource-intensive and disruptive to ongoing operations.
Many retailers struggle with these technical challenges, but overcoming them can deliver impressive results. When offered relevant promotions, customers are not only 110% more likely to add extra items to their baskets, but also 40% more likely to spend more than they initially planned—making it clear that addressing these obstacles is crucial.
The current trend is moving towards a unified platform with a low-code architecture that supports all of a retailer’s needs. This approach enables seamless integration of loyalty programs, promotions, and real-time personalisation, ultimately delivering a seamless, more cohesive shopping experience for the end user.
