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Five considerations for retail brands when using customer loyalty programmes

  • Jed Mole

    Jed Mole

Created at June 25th, 2015

Five considerations for retail brands when using customer loyalty programmes

Enhance the customer experience with customer loyalty programme technology

It’s pretty well documented that it’s more cost-effective to keep your existing customers happy than it is to find new ones.

As long ago as 1990, a Harvard Business Review article argued that by retaining just 5% more of its existing customers a company could double its profits and within five years a company with a 70% customer retention rate will have lost two or three times as many customers as a firm with a 90% retention rate. This assertion is rarely questioned, as we know loyalty pays off.

Moreover, digital innovations have enabled faster and more efficient ways of singing a company’s praises and airing grievances. This in turn means a more fickle customer and a greater need to keep them happy.

1. Know your customer

It may no longer be enough to offer a few card points that can only be redeemed in a soft play gym between 10 and 11 on a Wednesday morning. In order to reward that faithful shopper you need to give them something they really want and can use. Everyone likes a free gift of course, but if your customer loves opera then you must offer him or her tickets to the opera in a city they’d likely visit sometime soon, or a discount in a restaurant they are likely to want to eat at. Moreover, there are those customers who just want cashback or discounts. Knowing who they are, requires careful collection of smart data.

2. Make it easy for your customer

Customers have no time to study the small print or go to great lengths to fulfil seemingly random criteria. Customer loyalty opportunities should be curated and tailored to account holders so the customer feels in charge of the benefits. A survey of UK consumers has revealed that 54 per cent feel it takes too long to earn rewards in loyalty schemes, with 27 per cent of people having stopped using a loyalty programme as a result. The research, which surveyed over 2,700 consumers and was carried out by Grass Roots Group’s Customer Engagement division, suggests that brands are failing to keep followers engaged and loyal during this period. Make it easy by going the extra mile to deliver rewards on time (or before time), offer a tracking system, contact details and no fiddly loopholes.

Consumers want to be recognised by their brand of choice. They want the brand to act like they know what they’re about and to recognise them when they get in touch. And sometimes they want to be surprised. One great example of this is Lloyds Bank’s It’s On Us campaign which rewards customers for things they’ve bought on their debit or credit cards.

3. Customer loyalty programmes must be seamless

A 2014 report from Forrester, entitled Navigate The Future Of Customer Service, suggested that customers are starting to adopt a mobile-first mindset. In the Grass Roots survey mentioned above, nearly half of consumers questioned, admitted to occasionally failing to make best use of customer loyalty programmes because they forget to use their card/details. It’s important to build a connected marketing engine, based on recognising, understanding and properly engaging the customer over time, whether that customer simply has a Nero stamp card or a complex collection of loyalty reward points. Acxiom data makes it possible for retailers to understand how different channels work in conjunction with each other and how each channel can add value. Applications such as CrowdTwist provide comprehensive loyalty and analytics solutions to determine how customers engage across channels.

4. Don’t kill customers with kindness

Customers want to be rewarded for their loyalty, they don’t want to be hassled for it. Contact them at the right time and in the right way and encourage them to become regular and not occasional shoppers. Don’t demand that they fill in daily questionnaires letting you know how happy they are with you or they’ll soon cease to be. Again, it comes down to knowing who they are and how they want to be treated.

5. Upsell

The more products or services a customer has bought from a company, the more loyal they are likely to be. We like what we know. Customer loyalty programmes don’t just reward customers they also influence buying decisions. Upselling isn’t a dirty word. Selling add-ons to a loyal customer can benefit them as much as you. Cross-selling can enhance their experience even more. Delivering more value to them can help develop your relationship with them and in turn provide you with the information you need to make their experience better.