Last week I announced my latest obsession: Magecredit. Magecredit is a store credit extension for Magento. It all started a few months ago when I decided to tackle the problem that eCommerce stores experience a large amount of refunds in their lifetime. For some stores, this kills their performance. In fact, analysts have seen eCommerce store return rates of up to 25%¹, especially in the clothing industry. That’s a 1/4 of all sales!
So what are merchants doing right now to combat this issue? Well, they’re basically giving customers back their money and hoping that the customer decides to chose another product… In my calculations I’d consider this a lost customer unless you can find a way to keep the money in your store. From an accounting stance, returns look ugly as well (especially with the credit memo system native to Magento).
Magecredit helps solve these issues. If you can create credit memos and returns that go directly to store credit, you can incentivize customers not only to continue to shop at your store, but to also potentially increase their purchase size (as suggested by Tony Hsieh of Zappos in Delivering Happiness).
The first step of this journey to retaining customer value is to build the store credit extension for Magento. I’m focusing on Magento store owners simply because I know the Magento ecosystem very well and I can keep close to the merchants using store credit in their store so I can learn and adapt the system to be the best that it can be for merchants. Later I’m going to look at implementing the system for Shopify and BigCommerce, and even some of the larger platforms like Demandware.
So you see see, it’s much more than a Magento module to me. Magecredit is about increasing customer happiness and loyalty. I’m excited to see merchants succeed with it on their side.
I keep seeing all these mobile loyalty companies coming out that claim to have figured it out. I had the opportunity to sit down with the presidents from Loyalty Group and Points.com and to discuss this topic with them recently. At Sweet Tooth we have had the chance to launch a mobile app several times. Here is why we didn’t:
Crappy customer engagement: Do you seriously expect each one of your customers to download an app on their personal phone, register their details with your company, then visit your retail location – all just to be marketed to? Maybe you’ll get some sample people just checking it out to see what it is, but you sure as hell are not going to get that kind of adoption rate with anything beyond your early adopters.
Bad/unknown ROI: Currently no system can measure the ROI accurately or the companies that can just are not reporting it. If it was good, you’d see it on their front page. My educated guess: it’s not great.
Low/no integration: Mobile is another channel. I believe you should try to tackle many channels with your loyalty strategy, but don’t expect the functionality to do anything cool on your POS without hiring a dedicated development partners team to code something crazy up. Expect discounts in your system to be crude, and tacking the result to be disjoint.
All this being said, I do believe that mobile loyalty will eventually become something that everyone should look at in the future.
So when will mobile loyalty become something that retailers should implement?
The answer is when POS goes mobile. When we can accept mobile payments in-store then that link between the brick and mortar world and the online world will be together at last- a relationship that has been awkward for years now.
Square is working on some cool stuff, so is Google Commerce and so is PayPal Here. Watch these guys’ initiatives closely if you want to take your loyalty strategy to mobile. We certainly will be watching these companies in anticipation as well, but for now, don’t waste your time with mobile loyalty.