Are traditional retailer loyalty schemes enough to secure customer loyalty?

drum

We’re living in a new retail age, where customer loyalty is becoming harder and harder to earn. Advances in technology combined with changes in our working and social lives have dramatically changed shopping behaviour over the last decade, while multiple channels mean that the customer journey is no longer so linear, but fluid and changing. There are more opportunities than ever for customers to buy from a competitor. So how do retailers keep people coming back?

Historically retailers have used traditional schemes such as ‘Tesco Clubcard’ and ‘Boots Advantage Card’ as a key weapon in the battle for loyalty. Such schemes provide customers with a perception of added value in the form of discounts and offers (often personalised to the customer). In return, the retailer benefits from access to customer data enabling them to further target their marketing and engagement with customers. Win win.

Waitrose and M&S have recently taken this one step further introducing the ‘My Waitrose’ card and the ‘Sparks card’ respectively. Both these programmes reward customers without the need to collect points and are positioned as being more like a members club, offering freebies and exclusive invitations.

But are any of these schemes enough?

We’ve noticed retailers becoming even more sophisticated in their approach recently, wooing customers with new ways to create loyalty centred around a core theme of trust. Build trust in your brand by delivering everything a customer needs – in a way they want it, when they want it – a true ‘shop your way’ approach, and why would they go anywhere else?

So how can retailers build this trust to ensure they capture loyalty?

One of the key areas is convenience. This can simply be a matter of location – a store en route for customers (commuting or on the school run etc) will encourage return business simply because of ease. But some retailers are going a step further. For example the new BHS Foodstore convenience concept. This new ‘shop within shop’ format is designed to offer existing BHS customers ‘more than before’ with a wide range of food essentials and kitchen staples. When you can pick up the tonight’s dinner along with the school uniform, new towels and a kettle, it gives the customer less reason to shop elsewhere and builds equity in the BHS brand as a true ‘one stop shop’.

Another, more traditional way to increase loyalty is through ‘giving back’. Today’s increasingly savvy customer is wary of marketing gimmicks, bold claims and over-promising. But retailers who offer genuine added value to customers’ – and others’ – lives through corporate responsibility initiatives go a long way to earn trust.

The Tesco Eat Happy Project is one such initiative. It promotes a healthy relationship between children and food by educating them on where their food comes from and how it gets onto their plates. It brilliantly places Tesco as the supermarket that customers can trust to look after the health of their family.

The addition of innovative technology is another way retailers are developing a more convenient and personalised customer experience. The best of these innovations ease the shopping process and seamlessly link channels allowing customers to move through the brand experience painlessly. Tesco’s new mobile Payment Service ‘Payqwiq’ is a good example. This allows shoppers to store their debit card and Tesco Clubcard details and pay for baskets worth up to £400 – dwarfing Apple Pay’s £30 spending limit. Customers simply present their mobile at the checkout to pay, redeem offers and collect loyalty points – all in one. It’s faster, and has the added trust advantage that everything is kept one secure place.

Finally, there’s no escaping the fact that customers constantly modify their shopping routines and will go a long way to ensure they receive a great price (whether this is physical distance or cross channels and brands). Therefore, a clear and well-communicated value proposition is an absolutely fundamental foundation for all retailers in the battle to earn customer loyalty. Retail brands may have very different propositions, but they are all striving to communicate one thing when it comes to price – that they’re great value (in fact, just as great value as the competition) and therefore encourage customers to keep coming back.

It’s a hot topic, and one that keeps us very vocal here at Whippet. It’ll be interesting to see where it will go next.

As published in The Drum 17th August 2016

Author

Sean Dwyer

We’re up for an awards gong!

Excitement all round at Whippet Towers – we’ve been nominated for a Marketing New Thinking Award for our work with The Tesco Eat Happy Project. Fingers crossed on the 28th September we’ll be bringing home the silver for this great cause.

Click here for more info!

EatHappy

Author

Sean Dwyer

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