MD Threefold
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How retailers can drive customer loyalty in 2018

30th Jan 2018
MD Threefold
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It's harder than ever for retailers to gain and retain customer loyalty, and as we approach 2018, this will become even more challenging. With a huge number of retailers to choose from, and with shoppers increasingly looking for convenient, time-saving options, we’re noticing that consumers are often inclined to simply shop from the store closest to them.

Firstly, it’s clear that shoppers are already experiencing loyalty card fatigue. A study by Nielson last year revealed that while UK shoppers are among the most likely nationality to have a loyalty card, they are also among the least likely to actually use them. With so many cards to choose from, apps that can combine them all into one place seem like a logical next step, which begs the question as to whether the physical loyalty card – and potentially loyalty programmes in general - have had their day. It is easy to forget to redeem points, especially if it takes a long time to collect enough points for a reward, which is why it’s not surprising that shoppers are not reaping the rewards from the points-based loyalty schemes. Indeed, Tesco recently revamped its Clubcard mechanic to remind shoppers how they could spend their points.  

With this in mind, retailers should consider increasing customer loyalty via non 'card' mechanics, in an age where card-dependent or points based programmes hold less value in shoppers’ minds. This can be achieved via digital methods like newsletters, email alerts, or member zones on websites. However, retailers should be mindful that much like ‘card fatigue’, there is risk of customers signing up to too many mailing lists as part of reward programmes and opting out if information sent is not relevant or deemed a reward for loyalty. This is where targeted, bespoke programmes become more relevant to shoppers. “My Mothercare” communications, for example, allows mums-to-be to opt into weekly updates on their pregnancy development, and provides them with advice and offers relevant to parents at the right life-stages. This demonstrates that the retailer understands what its target audience wants.

However, it’s not enough for retailers to simply introduce a customer loyalty scheme and hope it works. Retailers must ensure they are using it for the right reasons and providing real benefit to the customer – ultimately rewarding them for their loyalty, rather than trying to tempt them into the next transaction with a 'money off the next purchase' coupon. Rewards like the free in-store coffee offered by Waitrose, for example, encourage additional visits to the store without being directly linked to the next purchase. This helps to build a more personal connection with the customer by making them feel valued, encouraging them to purchase from Waitrose in the future. This is the same with the Co-op membership programme, where customers can earn back a percentage of their in-store spend, or contribute this to local causes. It’s therefore no surprise that both the Waitrose and Co-op membership schemes are seeing strong growth in applicants.

Online retailers are also using novel ways to increase loyalty in ways that clearly consider the real benefits to the customer. ASOS, for example, offers a delivery pass incentive. The delivery charge can often be a major barrier to purchase, but the cost of the pass is a relatively low investment for shoppers versus the high benefit to them. Online retailers can also increase loyalty by providing tailored offers, for example through on-site personalisation, which can make customers feel more valued by the retailer as they get a unique shopping experience that is highly relevant to just them.

Whilst it is a retailer’s responsibility to increase shopper loyalty (an ability brands rely on), brands can also drive customer loyalty in tandem, if they can identify the 'key moments' in the customer journey where the opportunity to drive loyalty is open. Beauty subscriptions are a good example of this, as they tend to leverage typical product lifecycles, with the retailer emailing the customer at regular intervals to ask if they want to re-purchase the particular branded product they’ve previously invested in. Working in collaboration with retailers to increase loyalty can also give brands a more valued customer to showcase new or exclusive products to first. This can be done by offering samples to all new loyalty members or exclusive access to product launches.

Ultimately, a key selling point for loyalty programmes is exclusivity. The benefits of being part of a loyalty programme/club have to be better than what shoppers would usually receive as a standard customer. Mechanics like member-only rates or early access to sales, are a good way to thank them for purchasing from that specific retailer. There is clearly a huge opportunity for retailers to innovate with loyalty card mechanics in 2018, and it will be interesting to see which ones reap the benefits over the next year and beyond.

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