Emma Herrod investigates what loyalty means for omnichannel shoppers in 2017.
WHAT IS loyalty? Is it the 16 plastic cards in my purse which tell the retailers what I’ve bought from them and how infrequently I visit their shop? Is it the Amazon Prime membership begging me to use Amazon as the first port-of-call for the everyday things rather than just internationally-delivered birthday and Christmas presents? Maybe I’m loyal to the local shop which I pass every day simply because it’s convenient or is loyalty the services offered by the bank which tie me ever closer making it too difficult to move elsewhere?
“Loyalty means what it should mean to consumers if brands get it right,” says Matthew Heath, Chairman of customer engagement specialist LIDA. “It means I will choose that brand above all others every single time I can because it offers something of genuine value, something I cannot replicate elsewhere.”
Adam Croxen, Managing Director, Future Platforms, agrees, but points out that many retailers still need to get their house in order in terms of services and how those services make life easier and better for their customers. He gives the example of smartphones and how people are anchored into either Apple or Android by virtue of the services offered from mobile wallet and music platform to their photographic capabilities. Customers don’t won’t to move away from these services and this leads back to benefits for the company, he explains.
For retailers, these services translate to a collection point which is conveniently on the way home for the customer to pick up their online purchases with a way to trigger the parcel being brought forward ready for them to collect and a place where all of their e-receipts from online and in-store purchases are stored digitally. “It has to be about the customer… and those services need to anchor the business,” says Croxen explaining how retailers need to ask themselves how they can make the lives of their customers easier.
“Loyalty is about more than loyalty schemes; it is a consequence of the entire brand experience.”
Once a shopper has become a frequent customer, the question is then how do you offer something tangible back to them over a long period of time to increase that loyalty and lifetime value. Is that being part of a club, a loyalty or membership scheme, is it tiered and based on the amount that each customer spends with you or is everyone treated equally?
The alternative is the element of surprise, delighting customers in the way that Pret managers can give a free coffee to regulars. This brings warmth to the experience, builds affinity with the brand and builds the relationship. It creates an emotional response, something which traditional points-based schemes fail to do once their initial, shiny newness turns to habit and the rewards become expectations.
BYE BYE POINTS CARD
But is there still a place for points-based schemes and coupons? A retailer is missing out if their loyalty scheme is simply about collecting data in exchange for money-off some things their customers may want to buy. Loyalty schemes are very powerful, explains Heath since they give an opportunity in the wealth of data to become truly relevant to each and every customer, to reach them with the right message, in the right channel at the right time. “Being truly customer centric is a big process of transformation that these traditional schemes have not faced up to,” he says.
“The thing about good loyalty schemes is they can both recognise high value customers (who may not be able to spend more but still want to be loved) and reward mid value customers (who can be gently nudged into spending a little more, a little more often).”
“Large, points-based schemes fall short on creating an intriguing experience,” says Barry Kirk, Vice President of Loyalty Solutions for Maritz Motivation Solutions. He believes that there is still a place for points-based schemes though since they are effective at keeping shoppers connected to the brand. He explains that neuroscience has shown that the brain likes something to hook into, to connect with and to work out, but once they’ve worked out the rules, the shopper will be checking their points less often. What is needed is something to surprise or intrigue them such as a 2 for 1 off er – or in the case of Barclaycard’s customers an opportunity to choose their own surprise gift.
Croxen also believes that points-based loyalty scheme still have a role to play in UK retail. They have to be transparent with a frictionless way to acknowledge purchases as well as a clear way for shoppers to see their value, he explains.
Shoppers carry up to 10 physical loyalty cards but would stop signing up for new ones when they no longer have room in their physical wallet, discovered a survey by mobile wallet company Veoo. The majority of shoppers sign up for new loyalty programmes just so that they can receive the rewards but 28% of respondents feel that they are not getting as much value out of off ers as they would like.
“People are fed up of being blanket marketed to and want some element of control over what is being sent to them,” says John Bailey, Business Development Manager, Veoo.
This is backed up by a survey by Eagle Eye Solutions which discovered that generic loyalty schemes are alienating millennials. Some 38% of 18-24 year olds said they have left loyalty schemes due to a lack of personalised rewards and excessive, blanket communication from companies.
One answer to this, believes Bailey, is to add the loyalty scheme into the retailer’s app or separately onto a mobile wallet, such as ApplePay. This gives shoppers the feeling of being in control while also having their loyalty card and promotions on them and opening up the opportunity for real-time notifi cations. Vouchers, off ers or promotions can be digitised and targeted in real-time with notifi cations linked with proximity marketing so that off ers can be sent at a time to match the shopper’s location or behaviour, he explains.
Paper coupons don’t have to be carried and they can also be turned on and off and new off ers sent as shoppers redeem them or walk within a certain distance of a store. Bailey explains that the phone’s unique identifi er can be tied into vouchers to reduce fraud, but also allowing them to be passed around and tracked virtually.
For omnichannel retailers, linking a loyalty scheme with a retail app creates a virtuous circle, creating loyalty and more frequent engagement and purchasing, which leads to more data for the retailer, better insight into services to off er which then leads to greater experience and loyalty, increased data etc. explains Croxen.
The time has come to shake up loyalty schemes, to take them out of their transactional silos and look again at where they fi t in customer-centred omnichannel retailing and how they can drive long-term value not just from millennials but from each individual customer.
Loyalty is more than convenience, transparency, experience and emotion. It is the holistic brand package. It’s about the connection and how valued the brand makes each shopper feel. Everything else is just a promotion.