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48% of UK shoppers fail to make the most of loyalty schemes

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23rd Feb 2016
Editor MyCustomer
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Loyalty schemes have come a long way since the S&H Green savings stamp. In fact, today, there are 3.3 billion loyalty programme members in the US alone - representing an average of 29 per household.

Here in the UK, this overdose of reward in retail has led to nearly half (48%) of us failing to claim points or paper vouchers through loyalty schemes we’re signed up to, according to new research from iVend Retail.

In fact, the study states 33% of consumers are disappointed by the lack of innovation in ‘traditional’ loyalty schemes, with 26% stating they’d prefer personalised offers sent direct to their phone when they enter a store, or receive regular incentives direct to their mobiles or via mobile apps (25%).

Mobile plans a fundamental role in the fact that 15% of us often forget to use the loyalty cards we’re carrying in our wallets.

The report, ‘Omni-Illusion: why are customer connections disappearing when shoppers reach the store?’reveals that on average, UK shoppers are part of three loyalty programmes – far less than our American counterparts. However, this is failing to lead to Brits being more active in their use of loyalty cards, says Richard Kolodynski, Senior Vice President of European Operations at iVend Retail:

“Today’s consumers don’t differentiate between channels – they simply shop using the option that’s most convenient to them at the time, whether it’s online, in-store or via a smartphone device.   And this is just the same when it comes to using loyalty schemes.  Nurturing a lifelong relationship means getting to know someone, so retailers need to make a concerted effort to tailor their loyalty interactions in the way that’s most relevant to their most valuable customers.”

“By using a mobile-first strategy for loyalty, retailers can bridge the offline and online gap, delivering more personalised offers so each shopper feels valued at an individual level whilst using digital capabilities and customer data to better tailor such incentives,” he added.

According to McKinsey, loyalty schemes are fast becoming a wasteful resource  for many brands – so much so that a study at the start of the year found that those with the least emphasis on customer loyalty saw a greater year on year revenue return than those with a high emphasis - by as much as 13%.

The gap in EBITDA for these companies is also widening, with retailers currently not focusing on loyalty have a 16% advantage over those that do.

“The ambition of encouraging loyalty is prudent and potentially profitable,” said Jane Zavalishina, in a MyCustomer post on the topic in January. “The idea is right, it’s the implementation that is typically at fault.

“Ideal loyalty schemes are based on the idea of personalisation – provision of relevant offers and targeted promotions based on the data the companies have about the customer. That is the main challenge to solve, and it is often done wrong.”

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