Cementing customer loyalty is one of retail’s biggest challenges. The first recorded loyalty program started in 1793, when a U.S.-based retailer distributed copper coins that could be redeemed in-store for discounts and merchandise. Trading Stamps, which started in 1891, encouraged consumers to collect stamps with purchase and trade those stamps in for discounts and rewards. Those types of programs worked well for retail outlets, but they left the brands to fend for themselves.
Instead, over the last hundred years, CPGs have relied on mass media ads, sponsorships and a healthy dose of hope that their products would engender repeat business. Contests and prizes that required multiple box tops or proof-of-purchase labels were employed with the same goal: encouraging consumers to continue buying the same products week after week after week.
And then, in 2015 Amazon launched the Amazon Dash, a product-specific button with a built-in Wi-Fi radio that, when pressed, automatically ordered replenishment products. Brands didn’t need to offer coupons or rewards for repeat business; they simply needed their customers to press the Amazon Dash button. When the laundry detergent or coffee ran out, or when they were running low on diapers, Amazon Prime customers could just press a button. Two days later they would find their product waiting for them on the doorstep when they came home from work.
While some viewed the Dash as a gimmick, it seemed to be a watershed moment for brand loyalty.
My company, which uses connected packaging and an app to encourage replenishment ordering, is one of the many that have picked up where the Amazon Dash left off. I have seen firsthand how the current landscape is shifting and changing, with more and more companies jumping on the customer loyalty bandwagon and employing tactics to enhance customer retention.
Removing Friction On The Road To Loyalty
The frictionless shopping experience paid off for brands. Slice Intelligence reported in 2016 that the Amazon Dash was “building brand loyalty through repeat purchasing,” noting Tide Dash button users bought Tide 84% of the time. Cottonelle Dash button owners went from spending 43% of their bath tissue dollars on the brand to 86%.
In 2017, Amazon revealed that Folgers Coffee, Peet’s Coffee, Pepperidge Farm and Ziploc were receiving “more than half of their Amazon.com orders via Dash Button devices,” and announced in 2018 that HP, 3M, Epson and others were joining the Dash Replenishment program.
Brands embraced the Dash Button. While the device was criticized for locking consumers into a single product at a single size without the ability to upsell or cross-sell, it created a customer product stickiness that had never been achieved before by brands. However, brands found themselves at the mercy of a retailer. In February of this year, Amazon decided to stop selling the Dash button, and in August announced that they would no longer accept Amazon Dash-generated orders. Amazon now expects its shoppers to use the voice-powered Alexa to order whatever then need at the moment they want it, opening the door to churn that the button had conveniently slammed shut.
Standing On The Shoulders Of Amazon Dash
Amazon Dash excited brands by introducing a frictionless product replenishment process, before reminding them that they are still at the mercy of the retailers who sell their products. It was the first iteration of IoT replenishment, and its Dash Replacement Service APIs are still being used to connect devices.
In the meantime, it inspired a new generation of tech startups that bring the promise of enhanced brand loyalty through automated or semi-automated product replenishment services. The future seems to be filled with appliances that can automatically replenish detergents and other supplies as needed.
One model we’re seeing is replenishment through subscription. Truman’s, which created a green cleaning supply product, offers a subscription model where customers automatically receive replenishment refills every 60 days (customization of subscription is available). There’s nothing new about subscriptions, but what is new is that startups and brands like Giorgio Armani are employing it to sell products.
Canon uses a different model to ensure its customers don’t run out of printer toner. When consumers opt for auto-replenishment, select connected Canon printers constantly monitor toner levels. When the printer detects low toner, it triggers a replacement order. The system uses the IoT to ensure consumers don’t run out of ink, while building in brand loyalty.
Brother printers also use connected printers to ensure consumers don’t run out of ink, but with different fulfillment options. Consumers can have their replacement toner cartridges come directly from Brother, or have them fulfilled by one of several vendors, including Best Buy and Canon. This not only ensures brand loyalty, but allows consumers to earn loyalty points with their preferred retailer.
Amazon Dash Replenishment Service (DRS) is another replenishment option. In contrast to Dash, the Amazon DRS is built into connected devices like a washing machine. Customers log in and select the product they want to automatically reorder. As supplies run low, the device places the order. The big difference here between the Dash and DRS is with Dash, brands were in control of creating the button, while DRS and its automatic replenishment is consumer-driven.
As connected packaging gains more prevalence in the marketplace, I believe that brands will expand upon the loyalty features inherent in a replenishment system. They will begin to engage their actual users and learn more about both the way their products are used and the people who use them.
The result of this data will impact everything from product development to marketing campaigns. Through the replenishment interface, consumers can be presented with upselling and cross-selling opportunities, learn about related products or discover new ways to use existing products.
From the original loyalty programs to the Amazon Dash button, we’ve seen how brands can build one-on-one relationships with consumers and inspire loyalty by removing the friction in the ordering process. It’s now up to us to provide brands with the tools they need to expand and improve upon the experience.