Following a pandemic that transformed shopping habits forever, retailers are now mulling over the best methods of maintaining a connection with their customers – including revamping their loyalty schemes.

  • Boots and Tesco are making use of data to push personalisation for their loyalty scheme members   
  • Successful schemes require ‘a single big headlined benefit’ 
  • Gamification is used by brands such as Shein, while The North Face looks to the power of experiences to draw customers in

Six loyalty cards fanned out flat: M&S, Boots, Sainsbury's, Morrisons, Tesco, Holland & Barrett

The days of wallets stuffed with loyalty cards, pockets filled with half-stamped cards promising a free coffee and email inboxes bursting with offers and incentives are rapidly becoming a thing of the past.

In an era where almost every brand is now offering its own loyalty scheme, customers are inundated with opportunities to be rewarded.

Today’s consumers are now focusing their efforts on small networks of schemes instead, with most typically active in only three to four programmes, according to Deloitte strategy director Hannah Lewsley.

Beyond that, fatigue can often strike due to a large number of schemes and deals.

“Customers tend to lapse from using those schemes within around 60 days,” she explains. “If you look at the value of points that are unused, on average 30-40% of them are not used.”

Against this backdrop, how are retailers adapting their loyalty offers to ensure they are part of the chosen few that consumers stick with?

Ease of access

Lewsley says consumers may have reached saturation point with loyalty schemes due to the fatigue around downloading relevant apps or keeping up to date with what each scheme is actually offering. 

Retailers must therefore create loyalty programmes that are simple for consumers to actively participate in, whether that be through spending online or offline.

Online ad encouraging customers to download the Superdrug app

One example is Superdrug, which has 16 million members on its loyalty scheme, comprising 24% of the UK population, according to commercial director Simon Comins. 

Reflecting the changing needs of the online consumer, the Superdrug Health & Beautycard app has extra benefits for online shoppers.

Consumers download a digital card on Superdrug’s app to record their activity so they don’t miss out on any points – and they don’t have to add an extra app to their phone to do so. 

Comins points out that loyalty scheme members who spend more than £15 online also receive free delivery, as more consumers opt to order items from home rather than collect from stores. 

Superdrug rewards customers instantly, allowing them to avoid the long wait to gather enough points to make an entire purchase.

“One of the key differences in our scheme is that points collected can be used as part-payment towards a larger basket spend,” says Comins.

Moves are also being made to make membership more simple. Lewsley explains that “more frictionless ways” of proving loyalty membership are emerging, with consumers eager to use their payment cards or phone numbers as membership authenticators, leaving endless app downloads behind.

Data collection and personalisation

With more brands vying for customer loyalty than ever before, gone are the days of simple discounts.

Brands are now utilising the information customers share in return for the best deals for their exact needs. Nowadays, this involves copious amounts of data analysis.

“That’s the powerful bit of a great loyalty scheme – it’s data that builds a relationship,” explains Boots chief marketing officer Pete Markey. 

The Boots Advantage Card, which is almost 25 years old, boasts 15 million users. During the pandemic, it began trialling a new initiative, offering an extra advantage in store to give customers certain pricing on selected products.

“It’s more about targeting the right offers to the customers at the right time and using data very effectively”

Pete Markey, Boots  

“Our journey into mass personalisation, greater use of data, investment in Adobe Marketing Cloud – that’s given us the chance to target offers,” says Markey.

“It’s more about targeting the right offers to the customers at the right time and using data very effectively.” 

Personalisation, made possible by similar methods of data collection, is also being utilised by Sainsbury’s for Nectar app members.

Users of the app, which has been downloaded more than 8 million times, will now benefit from personalised discounts on 10 key products that have been chosen based on their shopping habits.

Tesco chief Ken Murphy also envisions a future of personalisation for Tesco Clubcard members, saying that the retailer is “committed to turning it into a digital platform”.

The next plan is for the consumer to lead their Clubcard experience, highlighting their product preferences and relevant categories to the retailer in return for discounts. 

“Personalisation could be thought of as intrusive,” he says. “But what we actually wanted to do is for consumers to say: ‘This is what I am interested in, serve me them in this way, reward me and I’ll shop with you.’”

Markey echoes this, recognising that customers need to be aware instantly of the value exchange of sharing information when participating in a scheme like Boots Advantage Card.

“For me, a less effective loyalty scheme is one where the customer can’t see a tangible benefit,” he concludes.

This reflects a growing concern surrounding the swathes of data being collected during loyalty scheme sign-ups.

“Across any loyalty scheme, there has to be a single big headlined benefit that customers can really quickly understand and engage with”

Hannah Lewsley, Deloitte

While many, such as Boots, are using data to tighten up their offerings, consumers are often left wondering why so much information is required when there is no clear reward in return for sharing it. 

“Across any loyalty scheme, there has to be a single big headlined benefit that customers can really quickly understand and engage with,” Lewsley says.

“Where people are much more reticent about data being gathered about them by brands is where it’s not then clear if that data is being used to their benefit.

“There’s definitely a bit of cynicism that brands collect lots and lots of data so they can just learn a lot of things about the individual.”

Gamification 

Another way of maintaining a loyal customer base that has grown in popularity, particularly with regards to attracting younger consumers, comes in the form of gamification.

More brands than ever encourage prolonged engagement from their customers due to a targeted set of activities, games or goals.

The impact of adding an element of play into a loyalty programme has proven successful for Mexican food chain Chipotle, which reached $2bn in digital sales in 2021. 

This influx of digital sales – accounting for 48.5% of total sales in 2020, compared with 19.6% in 2019 – has been attributed to its loyalty programme, which encourages customers to participate in challenges to earn badges or points for simple acts such as adding guacamole to an order.

Fast fashion giant Shein also employs a gamification model on its app platform, allowing shoppers to quickly rack up points without spending a penny.

A spokesperson tells Retail Week: “We have learned that our customers appreciate that they can accumulate loyalty points without having to make a purchase.

“By offering points to customers on things they love to do anyway, such as shopping, checking in, watching our livestreams, submitting product reviews, entering contests and taking surveys, we make the shopping experience even more fun and enjoyable.”

“What people are attracted to is instant gratification – provide me with a discount code, show me what the benefits are now”

Dimitrios Tsivrikos, psychologist

However, despite the rise of gameplay in winning hearts, minds and purchases, Dimitrios Tsivrikos, lecturer in consumer and business psychology, believes it is just the first element in creating a strong loyalty scheme.

He says that consumers will quickly grow tired of games if they don’t see a prize on the other side. “If it is just to collect my data and not give me any benefits, what is it there for?” 

Tsivrikos is confident in the effectiveness of gamification, but urges retailers to ensure a reward awaits the consumer at the end of the game or else participation will dry up.

“What people are attracted to is instant gratification – provide me with a discount code, show me what the benefits are now,” he says.

Experiences

While many programmes are firmly rooted in price discounts, some retailers are introducing new methods to urge users to form a more emotional connection with the brand.  

One question brands are asking themselves is: how do we create communities of like-minded people that customers want to engage with?

This means more focus on social agendas, rather than monetary gain, Lewsley says. She cites “exclusive events reflective of a brand’s core values” and opportunities to actively experience the brand’s lifestyle as examples. 

Promoting sustainability is one method of connecting with customers. For example, skincare brand Kiehl’s champions recycling through its Recycle & Be Rewarded scheme. 

The-North-Face-XPLR-Pass

Another approach, which typically requires more financial and time investment, is being explored by activewear brand The North Face, which offers savings and the promise of activities reflective of the brand’s ethos.

“We’re balancing both emotional and functional benefits, matching simple things like free delivery with emotive elements such as exclusive access”

Michael Horsch, The North Face 

The brand’s XPLR Pass membership numbers surged by 250% in 2021 alone.

“We’re balancing both emotional and functional benefits, matching simple things like free delivery with more emotive elements such as exclusive access,” explains Michael Horsch, vice-president for product and marketing EMEA. 

These emotive elements include climbing with professionals, secret gigs and free giveaways of signed copies of books from the brand’s latest collaboration partners.

While the past 18 months may have changed attitudes to shopping, loyalty schemes across the UK have embraced technological advancements to cater for the modern consumer.

Although customers could now be overwhelmed by the sheer volume of brands campaigning for their loyalty, schemes with a clear and achievable benefit look set to emerge as the strongest contenders for prolonged participation.

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