How Should Retailers Rethink Their Loyalty Programmes to Reflect the Current Economy?

To say “the last few years have been a little tricky for the retail sector”, is a huge understatement. Massive, in fact.

It’s affected the way retailers operate, the economy, and even the way customers interact with brands. More than 75% of customers have changed their buying habits multiple times since the onset of the pandemic.

But it’s not all bad news. With adversity comes innovation, especially in the case of customer loyalty strategies, and their need to prioritise customer retention.

Customer loyalty programmes are good for both companies and customers in difficult times. With both feeling the pinch, customers are looking for good experiences in quality over quantity, and businesses are hoping for returning and loyal customers. 

With the growing expectations of customers, the ‘collect a stamp for a purchase’ loyalty cards are things of the past. Businesses need to be innovative, creative, and engaging with their strategies to encourage that all important customer retention.

Let’s have a look at the loyalty programme space, where it’s been, where it’s going, and how you can navigate it.

The Changing Landscape of Loyalty Programmes

“Frugal, fickle, and finicky” is how analyst Paul Verna describes today’s customers. So, combined with increased competition for their loyalty, and customers’ willingness to switch, you’ve got a challenge on your hands.

To compete effectively, loyalty programs must meet high expectations by integrating brand identity and customer experience. They should provide personalised, real-time, and meaningful loyalty programs throughout the customer lifecycle that empower customers.

How to Make Your Loyalty Programme More Relevant to Today’s Consumers

1. Your best friends – ease and versatility

Ease: The first step is to ensure your loyalty program is easily accessible. Simplify the process to participate and make it rewarding. By creating an encouraging experience, you avoid burdening customers with complexity.

Versatility: Understanding customer preferences helps tailor your loyalty program to their preferred interactions.

For instance, many internet users prefer mobile usage for online shopping, while a third prefer in-store assistance. Adapting to customer needs increases participation and fosters respect and love for your brand.

2. Personalisation, Personalisation, Personalisation

Personalisation might seem like a big job. And it is. But it’s vital for keeping customers in a competitive climate.

Customers face a barrage of impersonal loyalty program messages across multiple channels. This has resulted in 78% of program members expressing dissatisfaction with the lack of personalisation.

To make a strong impression, infuse your communications with a personal touch from the start. Incorporate relevant details that demonstrate individual value and demand attention from your loyal customers.

Pinpoint the personalisation during the onboarding process

It’s important for your members to understand the programme’s benefits right from the beginning. To capture their attention effectively, customise the onboarding process by including personal details instead of sending generic introductions to every new member.

Personalisation makes it less transactional

Tom Peace, managing director of The Loyalty People, also believes in the power of personalisation.

“Loyalty programmes used to be about air miles or Nectar points [Sainsbury’s scheme] and transactional value. But that’s not true any more,” he says.

“It is about prestige and privilege – the way the brand makes the customer feel. If they are loyal and shopping often, what can the retailer do to make the shopper feel special? Free postage and packaging, birthday gifts, access to new ranges – these factors don’t cost the brand very much.”

3. Data is Key

But to achieve personalisation you need a strong and data-driven foundation to tap into your customer’s needs.

Leveraging consumer data helps develop a tailored rewards catalogue by understanding demographics, behaviours, and interests. Additionally, loyalty programs gather valuable data that can be utilised to analyse buying patterns, drive repeat purchases, reduce churn, and sustain programme usage.

One way to combine available customer data to support your loyalty programme is by developing a point economy. By implementing multiple tiers based on member behaviours, you can provide personalised benefits and maintain engagement.

By utilising purchase, pricing and competitor pricing data, along with other relevant information, you can develop a point economy that offers incentivised value while ensuring a positive return on investment (ROI) for the programme.

Emma Wilson, Schuh’s CRM and loyalty manager agrees with the power of data gathered by loyalty programmes. She says:

“The loyalty scheme gives us a 360° view of our customers’ shopping behaviour by identifying them across channels.

It allows us to seamlessly tie in-store transactions to a customer via the unique digital Schuh Club member ID downloaded to the customer’s phone wallet. In return, we can deliver increased personalisation and an enhanced customer experience.”

Loyalty Programmes: The Future

Loyalty programmes today face lots of challenges. But you can achieve success by providing one simple thing to your customers: value.

Okay, maybe not that simple. But it can be. By utilising data to provide a valuable and personalised experience, you’ll have customers returning for more.

Nowadays, loyalty programmes need to revolve around customers. They need to consider what their interests and financial obligations are, instead of handing out blanket benefits. This not only encourages your customers to use your loyalty programme but develops trust and dedication to your brand.

Rewarding customers with exclusive benefits can enhance customer experience and can build better relationships with your top, and most active, customers. Brand loyalty is changing, but you can change with it.