With the recent launch of the Sparks loyalty programme by Marks and Spencer , the competition to woo the customers and make them loyal seems to be getting more complex than it has ever been – and mobile loyalty could hold the key. Here Dr Alexandra Ranzinger, founder of workinghead takes a look at how the retail loyalty landscape is changing and where tech can play a role.
For many years now, the traditional retail driven loyalty programmes dominated the market place. Tesco with its Clubcard, Sainsbury’s with Nectar and Boots lead the pack.
With the growing awareness around data driven marketing, ease of digital data capture and low cost solutions for small retailers, more schemes are being launched. However, in the name of being innovative or different, many of these have turned out to be complicated to understand.
To add to it, the stiff competition from German retailers Aldi and Lidl has intensified the price war. Almost all the retailers carried on with a price matching scheme and strong loyalty players like Sainsbury’s reduced the point value for Nectar card members.
Terms and conditions attached to price match, selective incentives at limited stores, and in some cases, a completely new jargon associated with loyalty schemes seems to be putting off the consumers.
On the other side, consumers are fast adapting to a digital lifestyle when it comes to shopping. Using mobile payments, browsing prices while instore and shopping online is fast getting into consumer DNA.
A recent YouGov survey conducted in the UK market for the Loyalty Partner Group brought out insights indicating that the loyalty landscape in the next few years can shape out rather differently than where it is going now.
Simplification and choice
First things first, it is time to simplify. According to the survey, 88% customers preferred a simple, easy to use programme.
Of the respondents to the survey, every 2 out of 3 respondents preferred earning simple points on their shopping rather than complicated mechanisms with conditions attached. Also, 54% respondents wanted the freedom to redeem their points and did not want to be forced to shop back at the same retailer.
Expand the scope
Secondly, with the reducing incentive levels from some of the top programmes, customers obviously feel they are not getting enough value.
70% of respondents wanted to see local stores and retail brands from their neighbourhood being added into their loyalty programme. There seems to be a strong case to add local or regional partners.
Surprisingly, they did not wish to defect from their favoured shopping destination. If their brand moved into a multipartner programme, they demonstrated 59% likelihood to shop more at the same retailer.
To back it up, almost twice of the respondents preferred a multi-partner programme over a single partner standalone programme. Clearly, there appears to be a need to consolidate the loyalty programmes into a wider play of choice and freedom.
Also, despite many loyalty programmes offered in the market today, 65% respondents showed willingness to join another coalition multi-partner programme as long as it has the right partners and is easy to collect and redeem points.
Adapt digital, stay multichannel
Lastly, though the print communication is going strong, the digital consumers are catching up. The omnipresent millennial customer wants multiple channel access, both print and digital, simultaneously. In the survey, almost 75% of the younger respondents (18-34 age group) want to have access to their loyalty programmes via multiple digital channels vis a vis approximately 60% of their older counterparts voted for this.
Traditionally, the retailers have been making significant revenue from manufacturer backed offers in print. However, more and more users are getting their first impressions of a brand or an offer via smartphones and online discovery. This trend needs to be leveraged with a synchronized multichannel communication platform.
However, given that simplicity is an equally high priority, the complicated mechanisms must be ruled out to make it a ‘one touch’ experience.
With the rapidly changing digital and retail landscape, the loyalty programmes need to think of the next 15 years and build the multichannel experience which can be flexible to evolve over time.
Much of this can be achieved via collaboration and simplification of the core offering. A multipartner shared platform model provides the collaborative cost benefits and flexibility to adapt to the changing demands.
UK has been the reference market for all the loyalty programmes across the globe. It has set some benchmarks and broken many myths. Over time, it has become a complex marketplace.
The foundation for next phase of successful loyalty programmes in the UK can be achieved by following few fundamental principles:
- Make things simple both in process and communication
- Expand the scope of loyalty programmes to offer wider choice for earn and burn
- Bring in a digital plan which also ties up the traditional communication channels and provides a synchronized multichannel experience
All this, supported by world class analytics is a sure recipe for a successful next gen loyalty programme.