With several major companies, overhauling
their loyalty programmes, 2012 looks like
it's going to be the year when marketers ask
if their loyalty programmes are doing enough.
In today's economic climate we are all feeling
the squeeze, changing our behaviour as a result.
Consumers on the one hand are cutting back
on their outgoings, becoming increasingly
price conscious as they search around for
the best deal. Businesses too are feeling
the squeeze, tough competition, and weak demand
make it that much harder to be profitable,
and it's not so easy to simply cut prices
to succeed.
What this means is that businesses need to
be smarter, to both attract and retain customers,
and one way to do this is by offering them
something extra in the form of loyalty and
rewards. And it's true that in recent years
we have definitely witnessed an explosion
in the number of rewards schemes on offer
from a number of providers.
New research from ICM reveals truths about
why consumers are and aren't using loyalty
programmes. We found that a remarkable 86%
of us are signed up to at least one loyalty
programme, and 40% of us are signed up to
three or more. However many people admit to
not using all the loyalty programmes they're
signed up to, and a staggering one third of
18-24 year olds are not signed up to any programme
at all.
Our research revealed a number of reasons
why participation falls short in the programmes
we're signed up to. For many, the rewards
on offer just aren't relevant, or quite simply
they've stopped being relevant, and as many
people have told us, relevance is fundamental.
I want to be able to get benefits that are
useful to me, that relate to the things that
I buy, I want to buy, or the services I use
on a regular basis.
I like the Boots one because it gives you
quite generous amounts of points every time
you spend money. They send you specialised
offers and give you generous points.
Unsurprisingly, near cash rewards are more
compelling than ever, however what's fascinating,
is that what we find relevant depends on the
sector the business is in. For example, if
our mobile phone provider was to offer us
a reward, many of us would prefer to receive
something that is not related to our mobiles.
For example, a voucher for a high street store
is much more appealing to us than free minutes,
free texts, or free mobile internet. Whereas
if our supermarket was to offer us a reward,
many of us would prefer to receive offers
or discounts for us to spend at that supermarket.
What's interesting is that rewards that are
as close to hard currency as possible tend
to resonate most strongly. For example, a
voucher for a high street store is much more
appealing to us than cinema tickets, restaurant
vouchers or donations to charity, and we prefer
rewards that we think will benefit us financially.
However, it's not just about providing the
right rewards but also offering them in the
right way. Many people told us they find some
loyalty schemes difficult to use and not that
easy to understand and this presents the wider
challenge of delivering rewards in the right
way.
I have a Cooperative Group card, but I don't
even know how to claim the points off it.
The successful schemes like Tesco Clubcard,
Boots Advantage and Nectar is borne out by
our finding that three quarters of us would
prefer to receive small, guaranteed rewards
on a regular basis rather than the chance
to win something big. Now this presents a
creative challenge; how to deliver a loyalty
programme that is exciting, engaging and differentiating
whilst delivering rewards on a piece-meal
basis.
In my time I've entered a number of these
kind of one big prize type competitions and
haven't yet won one, so I feel you could have
a lifetime of being in contention but never
actually getting anything so I'd rather know
that I've got some, some kind of benefit.
The better the prize, I would assume the less
chance I had to win it. So there wouldn't
be, yeah it wouldn't encourage me at all.
Knowing what our customers want from a loyalty
programme and what will truly stand out, will
help turn today's economic pressures into
the start of tomorrow's long term business
success. And with many of us not using the
all the loyalty programmes we're signed up
to, and one third of 18-24 year olds not signed
up to any programme at all, there really is
a huge opportunity for brands that get it
right.
