Editorial Articles

Loyalty programmes have been part of the retail landscape for more than a century. Collectable stamps were first introduced in 1896, since then, loyalty schemes have been adopted on a widespread basis as a way to retaining customers, acquiring greater purchasing frequency and attracting new clients. Consumers now have so many loyalty schemes to choose from, all offering varying reward options across a multitude of sectors, that it can be argued that these programmes are seen simply as a way of getting money off purchases that would have been made anyway.

When loyalty programmes are discussed and conceived, most internal corporate battles take place between Finance and Marketing. The finance department will argue that the company is simply giving away money to customers who shop with them anyway, and the marketing department will argue that the loyalty initiative will drive both an increase in revenue from existing clients and an increase in new customers purchasing goods and services. It is usually down to the marketing department to find a way to prove that the loyalty programme will show positive ROI.

Fortunately for the Marketing department and their desire to prove tangible returns, loyalty programmes today can deliver way more than simply a financial uplift associated with generating more revenue. There are now a multitude of examples that show a well-conceived loyalty solution will not only increase purchasing behaviour, it will establish the foundation for understanding and connecting with a variety of existing and new audiences in a more relevant way. Designed and managed properly, a lifecycle-based programme will ultimately increase customer propensity to use the goods and services more frequently and to advocate this use to others.

It’s no surprise that a better understanding of the individual customer leads to better engagement, and ultimately improved ROI. Yet many consumers are now more wary than ever of providing personal information about themselves and their preferences before trusting in a brand and what it offers. This can be solved by using a range of technology-driven techniques to help personalise the loyalty experience without the need for an online interrogation at the beginning of the engagement.

For example, future experiences can be tailored by capturing and analysing behaviours:

• How the customer joined the programme (for example, online, through a store, via a contact centre)
• What caught a customer’s attention when they browsed the site
• What they have purchased previously
• How quickly they redeem a reward, and what they selected.
• Where they live.
• How they use review sections.

This kind of approach makes loyalty programmes increasingly sophisticated. Audiences can be segmented and targeted with initiatives in real-time, based on their specific demographic, interests and aspirations. These bespoke programmes can encourage consumers to change their behaviour and engage with brands on a far more frequent basis, leaving rich, actionable data along the way that helps to target and encourage future interactions and purchases. It’s essential to make this information dynamic, so that customers benefit from an experience based on their current preferences, not on what they did last year.

To create genuine opportunity and boost ROI, each contact needs to be treated as a chance to develop the relationship with that individual, treating them as a market of one. Imagine the quality of experience your brand can provide if, every time someone contacts you via any communication channel, you are able to combine knowledge from previous interactions with a good understanding of the demographic the customer belongs to; or better still, insightful information on the individual themselves.

The challenge companies face today is not explaining the concept of earning a reward for buying certain items (most people can quickly calculate a programme’s value to them), it’s now about how to use loyalty programmes to make the brand experience and interactions relevant, personalised, timely and appropriate to the wants and needs of the individual; ultimately developing a long-term connection between the buyer and the seller. This is where the real value lies.

Chris Ford
Business Development Manager, Grass Roots