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Changing loyalty (IRM57)

UK retailers need to look at loyalty schemes differently as multichannel and mobile rise in prominence report a number surveys from loyalty consultancy workinghead and Juniper Research.

WITH THE recent launch of the Sparks loyalty programme by Marks and Spencer , the competition to woo customers and make them loyal seems to be getting more complex than it has ever been, believes Dr Alexandra Ranzinger, founder of loyalty consultancy workinghead.

“For many years, traditional retail driven loyalty programmes have 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,” she says.

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 could shape out rather differently than where it is going now.

“Only 3.8 per cent of Argos’s emails are deleted unread.”

Firstly, it is time to simplify. According to the survey, 88% of customers preferred a simple, easy to use programme with 2 out of 3 respondents preferring to earn simple points on their shopping rather than complicated mechanisms with conditions attached. Also, 54% of respondents wanted the freedom to redeem their points and did not want to be forced to shop back at the same retailer.

Secondly, with the reducing incentive levels from some of the top programmes, customers obviously feel they are not getting enough value. Some 70% of respondents wanted to see local stores and retail brands from their neighbourhood or regional partners being added into their loyalty programme, but not at the exclusion of their favoured shopping destinations. If their favourite brand moved into a multipartner programme, they demonstrated 59% likelihood to shop more at the same retailer.

Meanwhile, A study from Juniper Research has found that more than 3 billion loyalty cards will operate as mobile-only or be integrated into mobile apps by 2020, up from 1.4 billion last year, as consumers move to app shopping and want to add their cards.

The research – Mobile & Online Coupons: Redemption, Loyalty & Consumer Engagement 2015-2020 – argued that the improved targeting and personalisation made possible by digital coupons was leading to greater activity rates, thereby resolving a key failing of traditional schemes where the lack of relevant offers had resulted in a downturn in usage.

However, it also found wide variations amongst retailers and other reward card providers with regard to the extent of digital loyalty integration. In the UK, it observed that around 40% of Nectar Card holders had acquired the loyalty app by late-2015, against fewer than 4% of Tesco Clubcard holders. It found a similar disparity between US retailers Walgreens, where 61% of card holders had linked their card to an app, and Target which had only 27% of cardholders linked.

According to research author Dr Windsor Holden: “These disparities are likely to result from a number of factors. While in part they may reflect the level of satisfaction with the app and, or the features it offers, they may also be attributable to a greater degree – or greater success – of retailer marketing of their digital loyalty options.”

The research warned that retailers that did not offer mobile integration were likely to have far lower levels of visibility on consumer activity. As a result, it cautioned that they would be at a disadvantage when seeking to tailor offers and thereby increase the lifetime value of the consumer.

However, as InternetRetailing’s Mobile Editor Paul Skeldon comments, linking apps to loyalty is going to increasingly make sense to retailers as apps are seeing a surge in use across mobile retailing. Almost half of retailers say that between 21 and 50% of their web sales come directly from purchases made on an app, according to a study of more than 100 leading UK heads of ecommerce, heads of mobile and heads of digital within the retail space conducted by Urban Airship – despite only 23% of IRUK Top 500 retailers currently having a transactional app and 4% have no plans to use apps as part of a multichannel strategy.

The IRUK Top 500 also discovered that when it comes to consumers engaging with brands, social is a good measure of what shoppers think of a retailer and likes can represent loyalty. Amazon, for example, with 5.5 million Facebook page likes has nearly five times as many as the average for the Top500 – of 1.1 million. The Brand Engagement Performance Dimension also gives insight into other measures including the percentage of emails read by customers instead of being deleted unread or marked as spam.

Argos topped the listing in this section of the research because 34.8% of the relatively low number of emails it sent were read, and only 3.8% were deleted without being read. Recipients tended to hang onto these emails: a relatively low 8.5% were deleted after being read. Only 0.7% were marked as spam by the ISP and 0.03% by the user, according to the findings contributed by Knowledge Partner Return Path.

Second-placed Asda saw 20.3% of the 71,627 emails it sent read – and 8.2% deleted, while in third place, 22.2% of the 120,031 emails that Boots sent were read.

Interesting findings across all brands included the statistic that messages sent on a Sunday were most likely to be read (27.7% of the 122,804 sent). Wednesday was the most popular day for sending marketing emails, with 255,852 sent, but it was also the day when fewest were read (21.1%).

InternetRetailing is researching further into the topic of loyalty and Research Editor Liz Morrell – would be interested in your thoughts.

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