{"id":4251425,"date":"2018-12-19T10:40:00","date_gmt":"2018-12-19T10:40:00","guid":{"rendered":"https:\/\/www.deptagency.com\/insight\/why-its-time-to-rethink-customer-loyalty\/"},"modified":"2018-12-19T10:40:00","modified_gmt":"2018-12-19T10:40:00","slug":"why-its-time-to-rethink-customer-loyalty","status":"publish","type":"article","link":"https:\/\/www.deptagency.com\/en-uki\/insight\/why-its-time-to-rethink-customer-loyalty\/","title":{"rendered":"Why it’s time to rethink customer loyalty"},"content":{"rendered":"
\n\t\n\t<\/svg>\n\t\t\t\n\t\t\tBack to all articles\t\t<\/span>\n\t\n<\/button>\n\t\tWhy it’s time to rethink customer loyalty\t<\/h1>
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\n\t\tMellissa Flowerdew-Clarke\t\t
\n\t\tVP of Marketing, EMEA\n\t\t\t<\/div>\n<\/div>\n\t
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\n\t\t\t\t\tDate\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t\t19 December 2018\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t\t<\/div>\n<\/div>\n\n
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\n\t\t\t\t\n\n\t\tIn today\u2019s digital age, consumers have access to an unprecedented level of information. Never before has it been so easy to find information that can potentially make or break a purchase decision. Social proofing, user reviews and price comparison sites can all form part of the buyer journey, which impacts not only the digital sphere. In August 2018, Retail Week reported that 76% of consumers research online before making a purchase, either online or in-store. This has resulted in significant challenges for brands to maintain relationships and achieve loyalty.\t<\/h2>\n\n\n\t\tBrands have traditionally tackled customer loyalty with financial reward systems, and many still do. In its research of 1000 UK consumers, \u2018How Brand Loyal are UK Customers?\u2019 DEPT\u00ae concluded that it is time to leave traditional loyalty schemes behind and a new approach to loyalty is required.\t<\/p>\n\n\n\t\tState of the market: The need to re-think loyalty\t<\/h2>\n\n\n\t\tThe majority of loyalty programmes (including the three most renowned Tesco Clubcard, Boots Advantage Card and Nectar), are still structured on traditional \u2018points based\u2019 mechanisms, offering a monetary reward once a given number of points are collated.\u00a0 But, from the eyes of the consumer, these schemes have become somewhat monotonous. With the average consumer carrying 5 loyalty cards and 10m customers hoarding unused points, it seems clear that traditional loyalty schemes are no longer fulfilling their intended purpose of encouraging customer loyalty. Instead, many customers now view traditional loyalty schemes as simply a habitual routine in their spending, with 20% of consumers stating that they only subscribe to loyalty programmes out of habit. Interestingly, none of the consumers we surveyed stated that they subscribe because of personalisation or a better experience with brands.

However, with 53% percent of consumers surveyed stating that they join loyalty schemes for points and rewards, it can be argued that rewards mechanisms certainly still hold appeal. But is this actually drawing focus away from real loyalty? With over 67% of our consumer panel stating they would change brands if it meant getting more rewards, and one third reporting that they would buy something new that wasn\u2019t needed to earn more points or increase their membership status, it\u2019s becoming clear that there is now a disconnect in place between rewards and loyalty.

It\u2019s time to re-think loyalty and invest in the experience you offer to your loyal audiences. We\u2019re already beginning to see a few brands take action in this regard. In October 2018, online fashion brand\u00a0ASOS<\/a>\u00a0announced that it was\u00a0stopping its \u2018A-List\u2019 loyalty scheme<\/a>\u00a0altogether. \u00a0The retailer stated that it was culling its loyalty programme in order to \u201cget to work on even better ways to reward loyal customers,\u201d on a global scale. Although it didn\u2019t explicitly state its plans, the fashion giant hinted it wanted to focus its efforts towards creating a better experience for the customer, and it would appear that an array of other brands are following suit.\t<\/p>\n\n\n\t\t‘In-the-box’ innovation\t<\/h2>\n\n\n\t\tFor some brands, a reward-style mechanic prevails, but a shift is being made in the way that their traditional loyalty schemes are delivered. In August this year, supermarket chain Tesco announced that it was\u00a0launching a new \u2018Fast Vouchers\u2019 scheme<\/a>, giving its Clubcard members the chance to download vouchers via a mobile app, without having to wait for their next quarterly statement to come through. The new scheme makes the Clubcard loyalty program more accessible and convenient to consumers which is a positive step towards building trust, but perhaps not innovative enough to pull the scheme out of \u2018habitual\u2019 consumer spending routines.

Sainsbury\u2019s has recently\u00a0overhauled its Nectar card proposition<\/a>\u00a0in a bid to \u201cgenuinely reward loyalty\u201d. After purchasing Nectar from parent company Aimia earlier this year, Sainsbury\u2019s is making changes to the scheme to give Nectar card members the ability to earn points based on the length of time they\u2019ve been shopping with the retailer and how frequently they shop there, instead of just based on how much they spend. The changes are smart-phone based in order to help the supermarket chain offer a more accessible, personalised and digital-led loyalty programme.

Other brands that still utilise a rewards-based loyalty scheme are shifting their focus on ways to make the programme more personal for a better customer experience. Retail giant\u00a0Marks and Spencer has partnered with Starcount<\/a>, a data science company, in order to better understand its customers and gain insight by personalising its loyalty and customer relationship management initiatives, including its points-based Sparks Card scheme.

In shifting its focus to create a more personalised incentives and better customer experiences, these brands are certainly making positive steps. However, given current consumer outlook of \u2018money can\u2019t buy love\u2019, perhaps it\u2019s relevant to re-think the old reward style mechanic completely. And some brands are already starting to implement these changes in their reward schemes.\t<\/p>\n\n\n\t\tExamples of rethinking loyalty\t<\/h2>\n\n\n\t\tWhilst many brands still offer a traditional points-based loyalty scheme, others are completely redefining their incentives to encourage customers to stay loyal. In the entertainment sector, Sky has introduced\u00a0Sky VIP<\/a>\u00a0loyalty programme, which gives its existing customers a number of tiered benefits based on the length of time that they\u2019ve been a customer. Commenting on the tenure-based framework of the programme, Rob Chandler, Sky\u2019s head of customer loyalty, said \u201cRight now, we don\u2019t need those mechanics where you\u2019re going to get points and you\u2019ve got to get to this. We don\u2019t need any of that bribery action of traditional loyalty programmes; we can do it through making people feel valued.\u201d<\/em>

Shoe retailer\u00a0TOMS<\/a>\u00a0has given its strategy a different spin in order to connect with its customers on an emotional level. \u00a0Its\u00a0Passport loyalty scheme<\/a>\u00a0gives members the option to redeem points towards a donation to a charitable cause or initiative. In utilising goodwill within its loyalty scheme, TOMS is able to encourage loyalty through a deeper emotive connection between the brand and its customers.

UK-skincare brand\u00a0Bulldog<\/a>\u00a0is aiming to enhance customer experience and drive loyalty via a subscription service. The scheme offers customers a discount based on the frequency of delivery in a bid to incentivise repeat purchases from its customers. This is an effective way of building trust; as skincare is a fast-moving consumer product, it\u2019ll need to be replaced at pace, so a discounted subscription service creates a convenient, quality and price-competitive experience for the customer which is likely to evoke a strong brand-consumer relationship.

Finally, there\u2019s health and beauty retailer\u00a0Superdrug<\/a>\u00a0who have recently announced a venture into the mobile phone network business by offering a\u00a0contract-free, SIM-only deal<\/a>\u00a0its loyalty card members. The scheme, which aims to give customers \u201csomething different, useful and great value\u201d, is certainly something we\u2019ve not seen in loyalty before. It poses an interesting question surrounding the creation of loyalty approaches and how close or far away this should sit from a core offering. Will it raise questions from consumers in regards to trust if brands start to engage with them on services without a direct connection to the key health and beauty product offering? Perhaps this is one example of innovation in customer loyalty but, perhaps, it might be pushing the boundary too far. Time will tell!

Consumer loyalty is changing and it\u2019s encouraging to see brands starting to reconsider their loyalty offering. Schemes must mature from being a point incentive system, to becoming a pillar of customer experience and, indeed, the business. Loyalty is based on trust, quality and values; only when this is reflected in a loyalty programme will brands and consumers get the most value out of their relationship.\t<\/p>\n\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\n\t