Lidl’s Smarter Shopping trial has sparked debate about whether it is a loyalty scheme. It doesn’t matter, as long as it builds relationships.
Earlier this week Lidl unveiled its trial of a ‘Smarter Shopping’ card. Its offer is simple: forget tracking spend to enable tailored offers, just give five million customers across Scotland the opportunity to save £5 when they spend £25.
Lidl’s decision to invest in the scheme without collecting valuable customer data has caused a stir among marketers in the supermarket sector.
Commentators have been debating the rationale behind the scheme and whether or not it even qualifies as a ‘loyalty scheme’ at all. Lidl has said it is not a loyalty scheme but an “innovative way to reward [our] existing customer base”. Others disagree.
Obsessed with loyalty
The truth is that it doesn’t matter what we call it.
The industry has become too obsessed with loyalty schemes or loyalty cards and all the other loyalty lexicon. It seems we’re getting bogged down in the detail and are losing sight of the overall goal: building long-term customer relationships.
Over the years, the way we have done business has changed. Grocers have evolved from local family-owned shops to large corporations. This change has brought new challenges.
It is no longer the case that shopkeepers serve a small community and know their customers by name. Businesses serving thousands of people, seven days a week, are having to work hard to get to know who is coming through their door.
In addition to this, competition among retailers is rife. The choices of where to shop, when to shop and how to shop have never been so vast. Customers need a good reason to be loyal to one brand.
In response to these challenges, the way retailers seek to build personal relationships with their customers has evolved.
In the 90s, stamp collection programmes were commonplace, whereas today customers are rewarded for their loyalty via card-based or mobile schemes.
“Their overarching purpose is to build long-term relationships with customers – the holy grail of retail”
Regardless of which mechanism a retailer chooses, they all have one thing in common. Their overarching purpose is to build long-term relationships with customers – the holy grail of retail.
Relationships with customers are built on a whole number of factors from the in-store environment and the friendliness of staff, right through to how intuitive the website is and how relevant the offers are.
Collecting customer data gives retailers a powerful way of understanding customer preferences, and the opportunity to tailor a customer’s experience accordingly. If this is done effectively, customers are likely to come back.
How we categorise Lidl’s “Smarter Shopping” card is irrelevant. But what is important is the acknowledgement that there is a need to build long-term relationships with customers. Regardless of what it’s called, retailers need to find the right way to keep customers loyal.
- Jan-Pieter Lips, president of the EMEA and executive vice-president, Aimia