Mall traffic isn't what it used to be. Online competition and shifts in consumer spending have greatly reduced the number of shoppers at malls and brick-and-mortar stores. Simon Malls, which operates more than 200 malls and shopping outlets across the U.S., is fighting back with an enhanced loyalty strategy.
Online sales are expected to surpass $300 billion in 2016 and grow in the low teens over the next few years while retail sales excluding online will grow at only 1.5 percent to 2 percent, estimates research firm Fitch Ratings. Retailers and mall operators are therefore scrambling for a share of this modest retail sales growth.
As part of its strategy for driving up mall traffic, Simon Malls has launched two loyalty programs, Simon Rewards and Simon Insider. Simon Rewards allows shoppers to earn points that can be used to enter to win prizes from gift cards to vacations. Simon Insider lets members earn cash back rewards and perks. 1to1 Media spoke with Ed Vittoria, vice president of loyalty marketing and partnerships at Simon Property Group, about the company's road map for keeping shoppers engaged.
1to1 Media: How did you go about creating a loyalty program and what types of experiences did you prioritize?
Ed Vittoria: We've been looking to develop a loyalty program within the mall environment for the past five years. We experimented with a few methods, but we realized we wanted to have the ability to link or register credit cards with the loyalty program and allow shoppers to earn points based on their spending.
We found Spring Rewards in the end of 2014. In the process of thinking about how to integrate Spring's technology into one of our existing loyalty programs, Simon Rewards [launched in 2014], we decided to work with Spring on a second version of the loyalty program called Simon Insider which we launched last year and leverages a cash rewards bonus structure.
What results have you seen so far from the loyalty programs?
We've already signed up thousands of shoppers. Simon Insider is available at four properties; Simon Rewards is in 12 properties, and we're looking to expand the program to include more specific offers from our retail partners.
Simon Rewards has been out longer-almost two years-so it has a bit of a head start. In terms of sheer numbers, Simon Rewards has more members just because of time. But Simon Insider is ramping up quicker. It's partly because we've learned a lot from launching Simon Rewards on how to engage shoppers and get them to sign up and that learning has helped us be more effective with Simon Insider.
What is an example of an insight that you implemented?
When you're running a mall-wide loyalty program, a limitation that we have that's different from other entities running loyalty programs is we don't own the transactional moment. When you join most loyalty programs, you're in the store at the cash register about to buy something and the sales rep offers an incentive to sign up for the program.
As a mall we can offer a great selection of retail stores and restaurants, but we're not there at the transactional moment. So, we've found it helps to have dedicated staff who are actively signing up people as they walk through the mall. Shoppers may be asking about a store location and we can use that opportunity to tell them about the loyalty program. So investing in our in-mall efforts to get people to sign up has been a strong learning point.
Are you leveraging any data insights from the loyalty programs to personalize your engagement?
We're learning a lot about our members' shopping patterns, which is a key component of having a loyalty program. The crux of our loyalty program is to identify the top shoppers so we can extend to them additional benefits. For instance, in both programs, for our top shoppers, we offer reserved parking spaces. There are dedicated spaces near the most popular entrances. By knowing who our top shoppers are based on what they're spending at the mall, we can offer those types of exclusive benefits.
We're looking at ways to integrate information between the platforms but right now we're not offering both programs in the same malls so there's no overlap. The two programs could potentially work symbiotically but each program seems to work better in different environments. With more than 200 properties under the Simon banner across our regular regional malls, mills, and outlets, we have many different properties in different markets, so understanding what works in each of those could mean one program is more popular than the other. That's what we're evaluating.
Are most users signing up through a mobile device?
Not necessarily. We have kiosks where people can sign up in the mall, and we also sign up a lot of people from dedicated websites for each program. But in general, mobile leads the way for usage practicality. One great feature is immediacy. Once I've shopped at a store using a card registered on the loyalty platform, that transaction has been captured and I can immediately track my progress to earning rewards. The ability to market to people while they're still in the mall is also very valuable.
An important difference is Simon Insider is available through a mobile website, it's not a standalone app [like Simon Rewards]. The reason we did that was so you're not forced to download an app, even though there are benefits to an app.
Are you looking into beacons to further personalize the offers?
We don't really need beacons because we have the spending information. Beacons can tell us if someone is in a certain area, but if people are shopping and spending money, we know where they are. We're watching beacons to see if there's an area where it makes sense to use them but we feel the credit card-driven data we're capturing is ultimately more valuable.
We know who's spending $100 versus $1,000. That ultimately is the most valuable data we could gather as we think of how to reward those people for their loyalty. This will evolve over time as the program grows and we get more retailers involved. We'll have more customized offers based on prior spending, wish lists, favorite stores, etc. We're just getting started.