At one time, our purses were busting open with notes and countless pieces of paper, yet now in the interests of protecting our environment, receipts in many shops are sent via email and most purchases are tappable. Some shops on the high street are switching to card only, as the mainstream national banks close their local branches. The one thing that hasn’t seemed to evolve so much over the years of digital revolution is the loyalty card. Standing at the till of most shops, I am still rifling through my purse trying to find the piece of card or plastic to pick up those essential points or stamps rewarding my shopper loyalty. Whether you are purchasing coffee, haircuts or clothing, most stores will be keen to sign you up. Are they truly rewarding your love or charging a premium for a scheme of little use unless you spend a fortune?
A report by Nielsen looking at Loyalty programmes and their impact on Britons shopping behaviour found that we Brits are among the most likely in the world to hold loyalty cards with a whopping 89% of us belonging to a loyalty scheme, but we are among the least to actually use them, a fact which is visualised by the contents of my purse!
The conclusion of the report was that we are no longer just looking for discounts and better prices, but that if a retailer wants to get the most out of their scheme, they need to be looking at customer experience and service and delivering something that makes their customers feel special.
The rise of the loyalty programme
It would be easy to assume that consumer loyalty began with supermarkets this century, however the first scheme kicked off in 1773 when a US retailer started giving out copper coupons to be exchanged in the store. Not long after this, competitors followed, and the phenomena grew into the next century as shoppers collected loyalty stamps. In recent years, with the rise of data and CRM insights technology these very simple schemes designed to give something back have evolved into huge data integrated consumer data collection exercises with highly targeted offers as a core objective.
How the humble Clubcard changed the retail landscape
The Tesco Clubcard is widely recognised as one of the world’s most successful loyalty programmes, changing the face of how brands and consumers interact within the retail world. Martin Glen, former CEO of both PepsiCo and The Football Association said:
" Customer loyalty schemes are not a new idea, they have been around for more than 100 years, but what Tesco has done is to develop a contemporary version of the original concept which goes much further in developing an active relationship with its customers. Tesco’s marketing works because they combine insight with creativity, value and scale "
Launched in 1995, the Clubcard was the UK’s first supermarket loyalty scheme which began with a simple model of rewarding the customer with £1 for every £5 spent. The scheme evolved into much more. With every use of the Clubcard, Tesco began to build a valuable insight into their consumers’ behaviour allowing them to develop a sophisticated CRM programme which was able to identify each shopper’s individual needs and reward them through personalised monthly communications which included targeted discount coupons.
Within 3 years of its launch, Tesco had doubled its market share. The data collected help to drive new product launches and services, and the Clubcard also became even more personalised with niche clubs introduced such as, a Pet Club, Baby Club and Wine Club.
Loyalty benefits have expanded as Tesco welcomed new Reward partners to the scheme to help elevate the customer loyalty incentive, such as Air Miles, popular restaurant and entertainment brands, days out and holidays. Today, 16 million customers use the Clubcard and Tesco deliver to each of them a bespoke programme that makes them ‘feel special’.
Attracting a younger audience
Younger consumers are less likely than older generations to engage with and register for traditional card-based loyalty schemes. This is reshaping how brands drive loyalty in the next generation. There are a number of loyal based apps which attempt to bring both independent and large-scale retail schemes together in one place, however mass take up for both young and older consumers has been slow. Big brands prefer to invest heavily on shopper apps with integrated loyalty. With every brand wanting to own the direct relationship with the customer, aggregated loyalty apps suffer from low customer acceptance.
Shop local – can our independents compete?
Businesses don’t have to be operating on such a large scale to see the benefits from customer loyalty. Our local shops and privately owned businesses arguably have more to gain from keeping their customers close in a competitive high street. The best loyalty schemes are those that can offer customers benefits without much effort and therefore on the other end of the scale to Tesco, the coffee shop stamp card can still work well.
When love is genuine, what is the best way to reward it?
For businesses both large and small, by far the best way to reward loyalty is to consistently deliver high quality products and outstanding customer service. Meet a customer’s expectations and offer service with a smile and it’s more than likely they will return for more. In addition, they will recommend the brand to others. The loyalty card in their purse, may just be that final trigger to ensure they always revisit regardless of any small inconvenience involved. Digitalising the process enables brand owners to create further trust by tailoring their promotional offers specifically around their known customer needs.
If you are looking at ways to drive customer loyalty for your brand, get in touch with our team to find out how we can help put together a plan.