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Are we thinking too simplistically about customer loyalty schemes?

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1st Jul 2013
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Are we thinking too simplistically about customer loyalty schemes? Mark Thomson examines the latest technological developments in the world of loyalty programmes. 

In times of economic shrinkage, businesses are trying everything they can to ensure the loyalty of their ever more precious customers. Traditionally, customer loyalty programmes have followed the same course of offering savings to regular customers in order to encourage repeat purchases.

Are we thinking too simplistically about customer loyalty schemes? Traditional tactics of buying the customer’s loyalty have been tried and tested before and during the economic downturn. A challenging economic climate should encourage businesses to think about new ways of engendering loyalty, such as through offering a superior customer experience.

Recent years have seen a significant rise in eLoyalty and eCoupon schemes in the retail sector. It is easy to see why. These schemes can drive huge savings by virtue of reducing the operating costs incurred by traditional paper schemes. More importantly, from a customer service perspective, eschemes allow retailers to aid their customers with real-time communications and rewards. They can help foster a relationship where the store in question can actually provide the customer with an offer that is relevant to them rather than stuffing them a buy-one-get-one-free offer which is of little use to anyone. For example, on a hot summer’s day the store could provide their customer with a mobile eCoupon for a discount on BBQs.

There are clear signs of evolution here but the mobile phone opens up far greater possibilities for the customer experience. For stores to take full advantage of loyalty schemes, any such programme must be fully integrated. Truly integrated loyalty programmes will be able to learn from customer behaviour and their purchasing history to offer a real-time, tailored rewards system. Using the earlier example of the BBQ coupon, stores can now acknowledge that this offer has been redeemed and use this information to full effect. The next time that this customer enters a store, a related coupon, for beef burgers for example, can be sent to the customer’s mobile phone, instantly engaging them with an offer that they can use. In the battle to bring high street stores onto a level playing field with online shopping, making a store visit into a personal experience is crucial. This programme allows stores to send individual customers their own personalised offers, not only making the customer feel truly rewarded for visiting the store, but also opening up numerous cross-selling opportunities. 

The personal element of these schemes is critical to differentiating them from traditional customer loyalty programmes. After all, the traditional practice of buying customer loyalty belongs to an era that saw us into recession. It is no longer enough to offer customers something; it must be something worthwhile with some thought behind it. The customer experience is the key to retail success and to engender true loyalty each customer must be treated on an individual level.

While there is great potential in these new loyalty schemes, there are some drawbacks. On a basic level, these schemes require barcodes to be read off the screen of a mobile phone. In order to do this, stores must possess imaging based scanners. The majority of retail stores are equipped with old, laser based scanners and are only gradually making the move towards 2D imaging technology. It is important that the checkouts, which will often make or break the customer experience, are equipped with the latest technology and capable of implementing new customer loyalty schemes. Until now, advanced bi-optic scanners have been laser-based devices, and as a consequence it has proven difficult to integrate these new “smart” customer loyalty schemes.

The introduction of imaging-based bioptic scanners into the marketplace this year will remove these barriers and enable these customer loyalty schemes to reach their full potential. These scanners will be able to read barcodes from paper or a phone screen. Regardless of the condition of the barcode or the angle at which it goes through the till, it will be read accurately. This will have a great impact on queue times and facilitate the new customer loyalty schemes that will bring the customer to the heart of the organisation. Bioptic scanners are critical in allowing customer loyalty schemes to drive retailers onto a level playing field with online shopping.  

Mark Thomson is retail industry solutions lead EMEA at Motorola Solutions.

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