There are some brands and businesses that customers are truly loyal too – where it would take considerable push and pull factors to draw consumers away. Some good examples are daily newspapers or magazines, a default radio setting that listeners always tune into, or a local small business, such as a butchers, that has a shoppers’ loyalty due to a combination of convenience and personal relationship with the staff.
Online shopping gave choice back to the consumer, allowing them to shop around and compare prices, product features and deals, rather than rely on their local high street and nearby shopping centres. Potential consumers are only ever one click away from finding something cheaper, more convenient or more suited to their needs, and there is little to stop them flitting between one brand and another until they find it. So while consumers are likely to still have a couple of brands that they are unswervingly loyal to, the vast majority of their custom is ‘up for grabs’.
This easily-distracted type of consumer creates a great opportunity for retailers to encourage consumers to try new brands, but it also means developing loyalty is much harder; brands have to invest more in trying to keep customers once they’ve got them. Online this is even more prevalent. Without the friendly staff contact and human customer service, there is a danger of online shopping becoming faceless and impersonal. This means that great offers, personalised shopping experiences and other interactions that make a customer feel truly valued, is the difference between losing that hard won customer next time they shop, and holding on to them.
As a marketer, unless your brand is one of the few examples that have earned long-lasting loyalty, you’re probably after the spend that a well-timed offer, the promise of collectable points or another targeted reward can influence. These short term marketing tactics can lead to a sale that a shopper may not otherwise have made, but the real value to the business is in winning the loyalty of that person longer term. This will mean repeat custom and a bigger share of customer spend.
The digital revolution in retailing has not just given power back to consumers; it has also changed loyalty programmes forever. It’s no longer merely about brand recognition and in-store redemption of repeat-purchase promotions. Now, it’s all about data. This data is worth its weight in gold to retailers, as it tells them what their shoppers want, when they want it and how they want to buy it. Shoppers also understand that by parting with a carefully selected amount of data on their shopping habits, likes and dislikes, they will receive exponential amounts of benefits through targeted offers, rewards and points. All of these things go to make up a sophisticated, personalised and effective loyalty programme.
When building a digital loyalty programme, think about what you are trying to achieve. Do you want your existing customers, who see you as a department store, to try out your new food range? Do you want your customers to have more positive associations with your brand and give them that warm fuzzy feeling when they think of you? Do you want to give them a sense of belonging to an exclusive group which they’d encourage their friends to join? This will give you clues as to the type of loyalty programmes and platforms that are going to be most effective for your brand. You can then think about what reach these platforms have and what type of customer they have. Many of the larger loyalty platforms have profiling information about their users which they will share with you if you partner with them.
Companies like Boots Treat Street and Nectar (and a whole host more), allow you to engage with shoppers via their platform. This offers consumers more touch points with your brand, a higher level of service and rewards them for money spent with you. It also means that they receive tailored messages from the loyalty platform based on their activity – important for habitually distracted consumers. A loyalty programme gives the shopper a starting point for their purchase journey, and gives brands a number of opportunities to engage with that shopper along the way. The idea of ‘personalised bonus points’ or a shopping destination that has all their needs and desires in mind is very attractive to shoppers. It’s this type of programme that retailers should have in mind when implementing a loyalty programme. A blanket approach just won’t cut it in today’s competitive market.
Whichever programmes and campaigns you roll out, loyalty programmes are not about giving away something for free, or offering deals for short-term gains. An effective loyalty programme is about give and take. Marketers and retailers give away rewards and points in exchange for repeat customers and consumer data. This should become a virtuous circle, in which customers are repeatedly rewarded, more effectively targeted, and therefore ultimately spend more. To achieve this, be prepared to invest time in building relationships with partners in this space and understanding their objectives as well as conveying yours. This will allow you to collaborate effectively so that there’s a common goal for the brands involved, as well as a reward and positive experience for the end-consumer.
Martin Ferguson is director of publisher services, Rakuten Marketing