Loyalty schemes: the new approach
Why the cookie-cutter approach just won’t shape up.
It is rare to find a retailer today that doesn’t have a customer loyalty scheme of some sort. However, an increasing number of consumers are seemingly walking away from these programs, with a recent survey showing more than a quarter had defected from a loyalty scheme over the past few years*.
In a struggling retail environment, consumer loyalty is more important to business than ever. So where are retailers going wrong with their attempts to retain valued customers?
The answer is really quite simple: retailers aren’t offering incentives their customers want or need. Our own research showed that although three-quarters of Australians are members of a loyalty scheme, only two-thirds used it each time they visited the retailer. The biggest reason given for this was they didn’t see the value or benefits of the offering.
Despite this, more than half (55 per cent) of the respondents in our research still said they were more likely to recommend a retailer that has a loyalty scheme over one that doesn’t, so there is quite clearly a place for these programs.
What retailers must, therefore, ensure is that they are incentivising customers with a strong and relevant proposition to maintain loyalty and encourage repeat visits. The ‘cookie-cutter’ approach adopted by so many businesses simply doesn’t work.
Whether you provide points or product-based accrual, automatic discounts or vouchers, what you are offering should be dictated by what your customers are telling you they want.
Once a retailer has established what its consumers are asking for, it needs to turn its attention to how it can best deliver these incentives.
For example, with 69 per cent of consumers saying they would be more inclined to use an electronic loyalty scheme, retailers still embracing the traditional ‘stamp card’ may wish to rethink their strategy.
Modern technology allows for loyalty schemes which are software-based and easier for consumers to use. Their details, including any vouchers or individual offers, are stored in the cloud and accessed whenever their member card is scanned. They have access to a website where they can edit their details, view their transactions and accruals and see the offers, vouchers or other benefits available to them. They have ownership over their shopping experience.
In a nutshell: it’s quicker, easier and more convenient for customers. Retailers also have more information available to them to identify sales trends and improve their marketing efficacy.
Many of our clients are taking their loyalty programs a step further and using mobile technology so members don’t even need a card. Instead they can get their points or discount simply using their smartphone, which they can also use to store, view and edit details, transactions and vouchers. Soon members will be able to pre-order via this app too, so their order is ready and waiting to collect or enjoy.
However cutting-edge the program, it must always come back to the relevance of the offer to your core customer base. Whether this means revisiting what you offer or how you’re offering it, really understanding your consumer is critical to getting it right.
Jono Britton, Shift8 founder and director
* Share the Love: 2014 Consumer Study into Australian Loyalty Programs