Loyalty Strategies

Tesco’s recent announcement that it is adding a contactless feature to its Clubcard loyalty card scheme highlights both the importance retailers are putting on such programs and the increasingly important role that advancing technology is playing in company loyalty rollouts. The new Tesco’s feature allows consumers to add points to their loyalty account by tapping it at checkout, while also allowing customers to sign up to Clubcard while they shop.

Such loyalty schemes are no longer considered an add-on benefit by retailers, but are now regarded as essential for any progressive and successful marketing strategy. That said however, analysts maintain two fundamental conditions for loyalty programs: they have to be relevant to the customer and easy to redeem.

It’s all about the data! Loyalty schemes are seen as increasingly essential to retailers because they effectively hide the underlying basis for such strategies; large amounts of buying and store browsing data can be collected about every individual customer without the person realizing it’s being collected.

In the retail environment of the future, both online and in the physical store world, knowing your customer and their buying habits is key to customer retention. In the retail world, it’s easier and cheaper to retain customers than to find new ones.

The reasons for, and the benefits of, loyalty programs continue to be the same. Loyalty programs promise a personalized program that offers customers both price advantages and individual preferences, along with making them feel “special.” In addition, they enable brands to add to the customer experience and increase customer engagement. While the nature of loyalty hasn’t changed, the means of achieving it have.

However, that doesn’t mean to say things haven’t gone off track. Indeed, some analysts believe that loyalty programs have gone awry, emphasizing unsustainable discounting in the place of individualized, exclusive products and rewards. And rewards can be the key. Surveys have consistently shown that, while most loyalty program members want to save money on purchases, they also want some sort of reward for staying loyal to a brand.

But maintaining loyalty is easier said than done. Many rewards programs have now progressed from simple card schemes to a “positive-reinforcement” approach where members are rewarded for exhibiting the “correct” behavior. Not only that, but they are being rewarded for exhibiting “correct” behavior across the entire business, not simply with regards buying patterns.

While some analysts maintain that traditional loyalty schemes will give way to schemes based around social media – Facebook Deals, for example - the most effective approach would seem to involve an amalgamation of all personalized approaches and platforms, where social media is integrated into loyalty programs as part of the whole.

While the ultimate loyalty schemes are destined to be cross-platform, untethered to a specific brand, consumers will look for the ability to add to and redeem their rewards from any company, in any industry. As a result, marketers will be able to gather data, and utilize the accumulated information, in order to provide the most effective local and personalized experience and rewards available.

As companies and brands become increasingly aware of the importance of loyalty programs as a way to initiate effective retention strategies, they will also recognize the growing trend whereby marketing strategies need to make the effort to venture to the platforms where their customers reside. In most cases that involves “mobile.”

However, mobile does not exist in isolation. Neither does simple retail. As customers seek rewards and instant gratification, companies need to connect to them via multiple channels. In that respect, as the loyalty programs of the future seek to reach out to their customer base beyond simple retail, they also need to appreciate that any loyalty scheme also needs to be distinctly omnichannel in its approach.

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