Loyalty schemes have been increasingly popular among retailers over the last few years, but a new survey suggests that retailers need to work harder to retain customers.
Loyalty cards and schemes can be a great customer retention tactic, as shown by retailers like The Container Store, which now has 3 million members in its program.
The survey from 3radical find that 93% of UK consumers have signed up to a loyalty scheme at some point, while 75% have been an active member of one at for at least 12 months.
However, there are issues with some schemes, and users do seem to lose interest if they aren’t seeing any value.
Despite the fact that almost a third of survey respondents having five or more loyalty cards, 61% will stick to using just one or two of their favourite schemes on a regular basis.
This suggests its hard to attract consumers to new schemes. Part of the reason could be overload, as people may not want to carry all the various cards around, or sign up to loyalty apps, but there’s also the fact that retailers need to do more to make loyalty schemes worth using.
They’re asking customers to remember to carry and scan loyalty cards, or to log on to access rewards, so retailers need to provide value if they want to retain users.
This is about smart use of data, and customers want retailer to make the most of the data they are giving them.
- 76% of respondents said that loyalty programmes would be more attractive if they provided more relevant rewards based on their purchase history.
- 59% said the ability for them to earn rewards for activities leading up to a purchase, such as researching the brands products, and providing more data would make schemes more attractive.
Some do this better than others. Tesco’s Clubcard does make good use of purchase history and the rewards are obvious.
In my case, I receive some vouchers every few months based on my spending, while offers on specific products are tailored to me. For example, I have a cat and frequently receive vouchers for moey off or extra points on cat food, litter etc.
The Clubcard scheme is also clear. I know how many points I get on a purchase, and I know that these points will add up to rewards. Some aren’t so obvious though.
Marks and Spencer’s new Sparks scheme is one such example. I signed up for it a few months ago, and I’m not sure what I’m getting out of it.
I have 8,084 ‘sparks’ but I’ve no idea what that means and what I can do with them.
I have access to offers but I need to actively log on to add them to my card. Then, as far as I can tell, the offers aren’t specific to me. I’ve compared them with friends and they all seem to get the same offers.
Now, M&S has at least three months’ of my purchase data, surely it can figure out my preferences and serve me offers relevant to that.
The upshot is that I start to lose interest with the scheme. Why should I make the effort to carry and scan a card and take time to log on and select offers when they’re not well matched to me (or indeed especially attractive)?
The message is clear: loyalty schemes need to use the data that customers provide, and make it worthwhile to make the effort to take part in the scheme.
As 3radical CEODavid Eldridge points out:
“Loyalty schemes work extremely well in principal. However, they must they evolve to become a richer, more individual customer experience across the entire customer journey if they are to continue attracting and retaining the attention of their customers.”
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