Ben Pask from Rare explores some of the findings of a new survey into retailer loyalty schemes revealed by a consumer new survey

Loyalty schemes: what’s the point?

Ben Pask from Rare explores some of the findings of a new survey into retailer loyalty schemes revealed by a consumer new survey

Last year it was revealed that the UK was sitting on an eye-watering £6bn of unused loyalty points from the top 10 retail loyalty programmes alone. This raises questions as to where these schemes are falling short on value for committed customers.

The results of Redefining Customer Loyalty, a recent survey we conducted into more than 1,000 UK consumers’ attitudes towards loyalty, showed marketing professionals are frequently getting their wires crossed in an attempt to prove schemes’ worth.

Amid increasing levels of competition, retailers are embracing change through gritted teeth. Take Macy’s, a staple of the US retail landscape, which recently confirmed future closures of up to 100 stores next year to boost online investment. The lure of traditional high-street shopping is weakening and consumers are gravitating toward buying online. For the likes of Macy’s, greater investment into online shopping will be in vain if they don’t find ways of garnering repeat business. Can a well-run loyalty programme supplement their investment? Absolutely. But mirroring the mistakes of other schemes will ultimately result in time and money wasted. So, how can marketers avoid common pitfalls found in existing loyalty programmes?

When compiling results for the Loyalty Experience Index we looked at measures such as ease of use, purchase experience, delivery on promise and personalisation. Only two schemes – My Starbucks Rewards and Amazon Prime – beat the benchmark, while each of the other 15 brands featured, from M&S to The Co-operative, were either just in line or fell short.

Research from the same study also suggests that 65% of loyalty scheme members would still shop with a brand if their loyalty programme ceased to exist, weakening the case for those including Tesco Clubcard and Nectar.

Failing loyalty schemes such as these are led by mechanics that are motivated by false assumptions about what drives loyalty, such as functionality. While general purchases are driven by price (81%), quality (80%) and convenience (55%), a common failure among retailers is to recognise that true brand alignment is predominantly built on an emotional playing field.

My Starbucks Rewards epitomises a more modern approach to building relationships with their customers. It’s not a one-size-fits-all model that other failing schemes are privy to. Starbucks personally emails its members to let them know that a free coffee is up for grabs, or, once members have built their way to a certain membership level, they get personalised perks. Small steps to take for the consumer, resulting in giant leaps for retailer revenues.

The root of the problem stems from marketers failing to pay enough attention to emotion in the buying process. Likeability (86%) and trust (83%) were identified as crucial drivers of long-term brand loyalty. When asked to name brands to which they were loyal, 90% of people later picked the same brand as one of their favourites. By definition, loyalty is “a strong feeling of support or allegiance” – the secret of brand loyalty is literally within the dictionary definition itself. People like the ‘feeling’ that brands are looking out for them on a personal level.

Do loyalty schemes drive brand loyalty in their current state? No. Can they? Without a doubt, but traditional assumptions about what drives loyalty are holding schemes back. Brand love is an all-important driver of long-term customer loyalty. Offering transactional benefits with the intention of influencing behaviour through regurgitated points-based systems does not work. Values have changed and customers desire more. They want long-term relationships with brands they trust and genuinely like. It’s up to marketing professionals to make loyalty schemes relevant again.

Ben Pask is co-founder of UK marketing and insights consultancy Rare

 




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