Posted: Wednesday 15th March 2017 in Retail Strategy, Thought Leadership.

According to research published by Forbes, 80% of a company’s future revenue will come from 20% of its current customers, making brand loyalty hugely important. To create true loyalty among customers, many retailers are beginning to think beyond traditional card-based systems. Recently, brands such as Starbucks and ASOS have successfully employed innovative new strategies and unique incentives, leading many retailers to re-think their approach to engendering loyalty from their customers.

Evolving from traditional loyalty schemes

Customer loyalty schemes have come a long way since their early origins. Copper coins, box top coupons and gas station stamps were the original collectables. During the 90s, when the loyalty card scheme first became popular, customers willingly signed over their information with the promise of money off and exclusive offers in return. However, as many became savvy to brands’ intentions, and scandals around fraudulent points activity were exposed, popularity declined.

While people were beginning to question traditional loyalty schemes, smartphone and tablet ownership was growing, and retailers began to find creative ways of using apps to make the shopping experience easier and encourage loyalty through convenience. The burgeoning online shopping industry and the gradual merging of offline and online mean that customers are no longer limited to one brand, restricted by location or bound by service options. Brands also have much greater freedom in how they reach out to their customers. App technology, data insights and influencer marketing, among other methods, all create opportunities for retailers to foster brand advocacy.

Encouraging loyalty through best practice online retailing

The popularity of online shopping means it is more important than ever that retailers create an online environment that is quick, easy and convenient for shoppers. No loyalty scheme will persuade shoppers to use a slow, clunky retail website, and research shows that 34% of UK customers become disloyal to a brand after one bad experience. Through our own research, we discovered that only 18% of top UK retailers offer a full range of channels for customer inquiries (phone, email, online form/live chat and social media), more than a quarter do not offer a free delivery service, and only half provide a full range of different payment options.

Although 92% of consumers have at least one loyalty card, the rise of online shopping and smartphone ownership have undoubtedly changed the ways people shop and retailers sell. But, has this changed attitudes and behaviours towards brand loyalty?

Successful examples

Fashion retailer ASOS has made headway in understanding consumer behaviour and rewarding customers through a scheme which taps into the British obsession with social mobility; granting higher status to those who earn more points. 5 points are earned for every £1 spent, and there are 3 ‘ASOS A-LISTER’ levels (earned at 400, 1,000 and 3,000 points, respectively) followed by ‘VVIP’ level, earned when a consumer reaches 10,000 points. At each level there are various benefits, including discounts, opportunities to earn triple points on subsequent purchases, exclusive offers and early access to sales.

Starbucks’ reward system uses a traditional points collection card, but also integrates smartphone and app-based elements to create an adaptable, modern loyalty scheme. Stars are collected with each purchase, and on the Starbucks app customers can view how many points and associated rewards they have accumulated, and pay for purchases. Similarly to ASOS, Starbucks gives consumers the opportunity to reach different ‘levels’, which allow them to enjoy free drinks and extras such as syrups and whipped cream.

Globally, China is ahead of the curve in many ways, due to its instant messaging app, WeChat. With 730 million active users, WeChat integrates both as a social app and as a CRM tool, which allows personal conversation between brands and their followers. It includes a virtual customer loyalty card, QR codes (barcodes that can be read using smartphones), referral codes and geolocation to enable customers to find offers near them.

The value of customer loyalty

As spending behaviour evolves with the technology at people’s fingertips, consumers are more aware than ever of how brands use data, and their attempts manipulate customers’ decisions. These days, consumers are inundated with cards, apps and rewards to lure them in and ensure their continued relationship with a brand.

Brand likability and trustworthiness are of the utmost importance when it comes to customer loyalty, meaning that it’s not always about price but about continued customer service and sentiment. 87% of consumers who interact with a company daily feel loyal to that company, proving the importance of brand visibility and investment in marketing and content strategies.

With the opportunity to create meaningful, lasting relationships with customers, it’s important to realise that a brand’s loyalty strategy should include a mix of personalisation, exclusivity and engagement across all channels and brand touch-points.

World leader in consumer loyalty, TCC Global, is using digital to evolve its traditional product based programmes, creating retail marketing programmes designed to engage shoppers and grow retailers’ sales.  Find out more at tccglobal.com.

 

Sources

https://www.ometria.com/blog/asos-new-loyalty-programme
https://econsultancy.com/blog/68341-reimagining-customer-loyalty-why-it-s-about-more-than-just-a-store-card/
http://www.nielsen.com/uk/en/press-room/2013/nielsen-survey-84-percent-of-global-respondents-more-likely-to.html
https://www.marketingweek.com/2016/07/13/are-loyalty-schemes-broken/
https://www.forbes.com/sites/alexlawrence/2012/11/01/five-customer-retention-tips-for-entrepreneurs/#646246245e8d


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