As the retail model continues to evolve in the ever-complex consumer economy, there is one phrase that every brand manager, owner and shareholder holds up as one of the holy grails of marketing objectives, ‘Loyalty’.
As an agency that specialises in creating genuine trade and consumer loyalty, there are some key considerations that need to be addressed that will ultimately define the success or failure of any loyalty-driving program.
In previous years there’s been some debate over the effect of loyalty schemes and rightly so. Ostensibly people have been divided into two camps:
Some believe that they are a unique and motivating platform that opens up a direct link and conversation with your customers, providing you as a brand owner, with the levers to affect real behavioural change.
Others theorise that loyalty schemes as a way of rewarding people for what they would be doing anyway.
Well here’s the shocker…
THEY’RE BOTH CORRECT.
As with all things in marketing it comes down to planning and execution. It’s this that makes the difference between a successful loyalty scheme and a way to erode margin.
From our perspective, it’s easy to see from the outset how and why a loyalty scheme has been set up. This premise sets the tone from the outset and will ultimately dictate how well the loyalty scheme will work.
The new definition of loyalty
New smarter technologies combined with changing consumer trends have reframed the ‘loyalty paradigm’ making a relationship and loyalty mechanisms more important than ever before.
Messages and incentives can be more personalised and targeted than ever before and the processes of logging points and other behaviours has never been easier.
To help you harness this unique and powerful platform that can drive positive behavioural change, build affection and of course measurable loyalty, we’ve set out the following steps to help you create some truly effective programs that can change the face of your relationships with your customers and your business.
Step 1: It’s got to be
This is probably the single most important consideration.
There must be a fair value exchange: you’re rewarding loyalty, make sure you equate that to a value to the business.
This may be a shock and I hate to be the one to break it to you but the reality is that consumers are not loyal. With a few obvious exceptions they just don’t really care about most of the brands they buy, but with a small amount of communication and incentive you can create this loyalty through a fair, honest and tangible exchange. Equally if you’re giving away your entire margin, its clear that this is not going to be sustainable.
As retailers lose out to the discounters in the war on price, people are looking for other reasons to buy when the price is removed from equation and benefits are less easy to differentiate on.
Though we may tell ourselves differently, in many cases your product really isn’t that different from the competition, at least at a consumer level. But in truth you’re not trying to change the game here, you’re just making your offer slightly more interesting and rewarding than the others – so at the moment of purchase you sway the choice.
Step 2: Be upfront and clear
In consumer studies ,there is scepticism of brands that appear to be giving away something for free. With increased transparency across the board and consumers having a far greater understanding of marketing, unless you state a clear and open declaration of your intentions, illustrating both what’s in it for your audience and what you as a brand get in return, people will mistrust the scheme from the outset.
People tend to be happy to provide you with their details and their loyalty when the trust you and understand the deal. The moment they think you’re trying to do something subversive they will run a mile.
Step 3: Make it INSTANT and EASY… but not too easy!
Whatever format your programme takes, remove any and all barriers that might get in the way of the user collecting and logging points.
The development of digital technologies has been a real game changer in the world of loyalty. Points can be game-changer tap of the button or the click of phone camera – and equally can be checked and verified simply and easily.
If you’re relying on a person to go to significant lengths to collect their points, save a receipt, wait till your home, log the points and send it in via carrier pigeon, then forget it.
Equally, we see far higher redemption and engagement rates from programmes where people have to complete a simple step, as they feel invested as they get a return for their effort.
Step 4: Tell people about it
Make sure you publically announce that you are happy to reward your lovely customers but put the right metrics in place.
Once you have created the strategy for creating loyalty, how well you deliver on steps 3 and 4 define your uptake.
Step 5: Reward them for things that matter
Make sure you put the right rewards for the right activities. If you’re cross-selling in your range, reward that and tell people that’s what you’re doing. If you want frequency, reward people coming to you over the competition.
Step 6: Make it clear and simple, but don’t be afraid to engage
One of the most significant parts of a loyalty programme that often goes overlooked is the ability to create a conversation with your customers. With all the routes to market and retailers acting as middlemen, it’s rare that most brands get the chance to really engage with the people that are actually consuming their product or services.
A thought for the future
The retail model has changed, for the longest time they have held the power in terms of distribution and volume. Now, this is eroding with the discounters taking more power, and the ever-present brilliance of Amazon. More and more, the retailer will be playing a less influential role in the distribution and stocking of your products or services.
Loyalty schemes really are a bit of a no-brainer and they can be an incredibly valuable asset when activated correctly.
- You get to engage directly with the people buying your brands
- You get to effect true change in behaviour through incentives that do much to build affection and brand love more effectively than many other market techniques.
- You can transcend the war on price
- You can make people care about your brand whilst letting them make a personal investment
- Communications can be personalised and hyper-targeted to actual behaviours.
As a part of a successful business culture, there is always pressure on any marketer to provide immediate results and create long-term value for the businesses we work with.
Thinking pragmatically about the efficacy of marketing practices, a Loyalty Scheme does both of these things.
A positively engaged database of active consumers means you own the conversation and have a valuable asset that has real worth to any organisation, creating shareholder value.
And on a day-to-day basis, you have a mechanism to reward loyalty and de-risk the business.
We’d love to hear your thoughts on creating genuine loyalty with your customers. If you’d like to hear more about how new technologies can be brought to bear in the creation of meaningful sustainable loyalty we’d love to show you.