Brands Indicate Focus on Loyalty Programs and TikTok Shop, But Where’s the Disconnect?
Meghan Hall
6 min read
Though so much industry buzz this year has been around artificial intelligence, leaders at CommerceNext, an annual conference in New York City, had other topics on their minds.
Brands speaking at the event, which brought hundreds of attendees together to talk shop, had a particular focus on marketing and sales, with a great deal of chatter around loyalty programs and third-party marketplace platforms, like TikTok Shop.
Those topics might seem complementary, in the sense that they both work to target certain demographics. However, the two approaches may actually have some dissonance between them when considering what each strategy shows about the value a brand places on first-party data collection and usage.
Loyalty programs
Many retailers have begun resurfacing lapsed loyalty programs, bolstering existing ones or creating new ones in the past year or so.
Victoria’s Secret, for instance, recently launched its VS & Pink loyalty program, which allows customers to rack up spending-based points in exchange for rewards. But in the process of launching the program, Jessica Dennis Capiraso, the company’s senior vice president of marketing, said, the intimates brand learned that discounting and cash-based rewards might not be enough to fully entice consumers.
“Our customers are asking for partnerships and collaborations that are exclusive to this community, so that’s something that we are exploring. We’re seeing other brands, collaborating on experiences [or] collaborating with like-minded brands, so I think that’s one of the areas that we’re excited to explore,” she said.
Patagonia, meanwhile, is still in the middle of developing its loyalty program. Though it’s known as a brand that has a crowd of loyalists anyway, it has not rewarded that loyalty up to this point. Angela Clark, vice president of digital for the outdoor brand, said the company is evaluating how it can include all of its different sales tactics—from buying new online, to resale, to in-store purchases—in the program it wants to launch.
And as the brand does so, she said, it continues to consider what value it can provide to its customers in using a loyalty program, not what value customers can provide to the brand. Clark said that, as it further plans out its loyalty program, Patagonia will stick to providing strong service and maintaining its standards and values, because that’s what has garnered such a strong degree of customer loyalty up until this point.
“You can’t fake that. When [these things] are a part of your DNA, you might make decisions that might feel irrational or illogical to your competitors,” she said.
Bringing customers in for repeat purchases has proved crucial for many brands as consumers continue to face a broad variety of choices, particularly for e-commerce transactions.
TikTok Shop
While some brands and retailers have turned their attention to loyalty programs to grab customers’ attention, others have tried to meet consumer expectations in a new way: social shopping.
PacSun, for instance, has developed a strong presence on TikTok Shop. Addie Rintel, vice president of merchandising and design for the company, said TikTok has become such a strong sales driver for PacSun that it has shifted major pieces of its brand strategy.
“We are adjusting our [marketing] spend and our strategy with creators and influencers, but the product strategy has also changed,” Rintel said. “We are adjusting our [inventory strategy] based on what is happening on TikTok specifically. Our fall back-to-school assortment and plans are tied directly to what we can do on TikTok, knowing that the virality of certain items can have such a halo effect to the total brand.”
The brand has learned that a few types of content do particularly well for it on TikTok: behind-the-scenes content of campaigns it runs with celebrities or influencers; content created by non-influencer shoppers showing how a product fits them and content that brings the consumer closer to the store.
That last piece could be important if PacSun has high hopes for customer retention or capturing first-party data. And, so far, it seems like the effort to engage with consumers in multiple ways may be effective for PacSun; Rintel said in-store associates have started to receive customer inquiries about “the TikTok jeans” and other products the company enables creators to co-sell on TikTok.
And though new legislation has surfaced that could ban U.S. app stores from offering TikTok for download if its parent company, ByteDance, doesn’t sell it, brands and retailers don’t sound concerned over that. At the conference, when a moderator asked for a show of hands over who felt worried that TikTok Shop would soon be a thing of the past, almost no leaders showed any signs of fretting.
Several said they don’t believe the ban will actually happen, whether because ByteDance does sell TikTok or because TikTok wins its lawsuit against the legislation that would ban it under certain circumstances.
Data disconnect
While it may seem natural enough, having third-party selling and loyalty programs as side-by-side themes is an interesting paradigm; it shows that even as leaders continue to discuss the importance of clean, reliable data for retail’s future, some brands are hyper focused on the now.
Some brands and retailers insistent on selling on third-party platforms like TikTok Shop relinquish much of the control of the first-party data they could have had by selling on their own sites. While it may make sense from a product revenue perspective to sell via TikTok Shop or Instagram Shop, brands doing so may not have the same level of granularity in their consumer insights as other brands.
That’s because TikTok algorithms help determine what shows up on a consumers For You page, based on their engagement with certain pages, products and creators. While a brand may receive a consumer’s name, email address and location if they convert and place an order through a platform like TikTok, they often lose out on the journey that led the consumer to purchase.
Transactions that happen on a retailer or brand’s own site, conversely, offer further information about what a consumer looked at, how long they spent considering items, how many site sessions it took for them to convert and more. And loyalty programs help juice up those data sets even further.
That kind of data becomes increasingly important for AI-enabled systems. That’s especially true for recommendation systems and other technology that increases personalization for a user, whether on the main site or via email or text. Typically, those systems help increase average order size or encourage first-time consumers to become repeat customers.
While the split between brands encouraging repeat purchases on their own sites and in their own stores and brands using third parties to help sell one-time purchases to new customers, there may be a common ground.
Brands today know they have to be where the consumer is, doing what the consumer wants, especially as consumers continue to migrate toward value and convenience.
Whether they do that through AI-based personalization enabled by consumer data, by meeting consumers on social media rather than traditional e-commerce channels or through a combination of multiple approaches, consumers will continue to expect high-quality experiences that evolve over time.
