Does Your Business Need a Loyalty Scheme? Will It Work?

“If you are not taking care of your customer, your competitor will” – Bob Hooey. And that’s exactly where loyalty programs come in. Why do they work? Rob Meakin, Managing Director at Loyalty Pro, explains.

Those are words for any business leader, retailer or independent store owner to live by. But actually, are you taking care of your customer? Are you putting them first, or your business first?

The difference between the customer of 2008 and 2018 is very different. Ten years ago, online retail was a relative youngster, the high street dominated retail purchasing and waiting 3-5 days for an online purchase to arrive wasn’t considered strange. Nowadays, customer loyalty has shifted from brand to service, Amazon now offers delivery within an hour and consumers do a vast amount of their shopping online.

The decline of the high street store and rise of online shopping have reduced footfall and revenue for many companies looking to compete in an increasingly shrinking space, particularly those in the independent retail space.

In a country with increasing inflation, tightening purse strings and a lack of confidence in its economic future, gaining customers’ loyalty and increasing repeat purchases is more important now than ever before.

Whether you’re an independent coffee shop owner or Managing Director of a local toy store, everyone is looking for a solution to increase footfall and entice the customer back.

Empowering the customer

This solution lies within a loyalty programme that addresses the needs and wants of the customer first and the business second. Yet far too often, loyalty schemes are designed with the latter in mind. Look at Tesco – they attempted to redesign their loyalty offering to make it “simpler” for the customer, but appeared to put their business interests first.

And what happened? The move not only alienated customers, but the social media and general public backlash was so pronounced that it forced the supermarket to delay rolling out their new scheme. What Tesco didn’t do was to think about what the customer wanted. Or if it did, it certainly didn’t do enough market research on it.

It put the supermarket on the back foot and facing a PR nightmare. It took power away from the customer by “simplifying” its vouchers, but what this ultimately meant was reducing some of the vouchers’ values. This was very much egg on the face for the UK’s biggest retailer.

The sweet spot of simplicity

Pulling wool over customers’ eyes in the case of the above example won’t go down too well. But actually, businesses are able to create a loyalty scheme that can find that perfect spot of simplicity and genuine reward.

If you’re a business that relies on repeat custom, you need an easy loyalty solution and one that isn’t going to drive away your customers, and you need to make sure you’re satiating the needs of everyone. In practice, not everyone wants loyalty in the same way; this means that you need to ensure that you’re covering both an app and a loyalty card – and even paper vouchers in some instances.

And there’s no use overcomplicating a points-based system, either. It’s not just about simplicity, but simplicity through choice; after all, it’s what you can do with the points that matters. Offer a discount or promotion at your own store. Allow the customer to donate to a choice of charities in the area. Work with other community stores and business owners to increase loyalty in the region.

Personalising your offering

If you do decide to offer promotions and discounts at your own store, make sure that the rewards you are offering the customer are tailored and personalised to that customer. Using the latest loyalty solutions that can take your data, enhance it and give you a complete customer view are essential for bringing the customer back to the store.

It’s about being clever with the data you have. If a customer is going into your coffee chain Mondays, Wednesday and Fridays generally, why not offer a personalised discount on the Tuesday and the Thursday too, specific to that customer? These days, consumers want the VIP treatment and to be part of the ‘membership economy’ – and you can do that through tailored schemes that cut through.

In this age of wavering customer loyalty, you need to deploy a loyalty scheme that is honest, personalised and simple. But these concepts are not mutually exclusive when we’re talking about loyalty in 2018.

Put your customer first so your competitor won’t have to.