UK-based loyalty consultancy The Logic Group has published new guidelines on how companies can set up a successful customer loyalty programme in the current climate of 'credit crunched' consumers.
The guidelines were developed in response to research the company conducted with Ipsos MORI earlier in the year, which found that 46% of consumers in the UK did not feel that they were "part of a loyalty scheme", and that those that do feel associated with a loyalty programme tend to feel "luke-warm" about them.
The research also found that, of those consumers that claimed to be part of a loyalty scheme, in the retail sector 51% felt "fairly satisfied" with the benefits while only 24% in retail and 13% in financial services described themselves as "very satisfied".
According to the survey, UK consumers are most actively members of shopping and retail loyalty programmes, as this sector-by-sector breakdown of programme membership shows:
- Shopping & retail: 47%;
- Financial services: 4%;
- Entertainment/Going out: 4%;
- Other sectors: 3%;
- Don't know: 3%.
Most consumers in the UK claimed to have a maximum of one loyalty programme membership, as this breakdown demonstrates:
- No loyalty programme memberships: 46%;
- 1 loyalty programme membership: 45%;
- 2 loyalty programme memberships: 6%;
- 3 or more loyalty programme memberships: 1%.
According to Anamaria Chiuzan, senior marketing manager for The Logic Group, these six guidelines highlight ways in which marketers can increase the number of loyalty programme sign-ups while also improving satisfaction levels for those who are already members:
- Keep loyalty messages relevant and simple
Relevant, clear messages together with appropriate offers and rewards will ensure that customers feel more engaged. Rewards that are relevant to the individual were rated highly among consumers in the survey, with 30% saying that this would encourage them to spend more with a business.
- Always know your loyal customers
Try to understand and keep track of who they are, where they are, how they shop, and where they shop. This essential customer data is paramount in personalising the customer experience and exceeding expectations. As businesses continue to implement retention strategies, the data they collect becomes a key asset in managing the relationship with both valuable and less valuable customers. It is vital that businesses demonstrate loyalty to their most loyal customers as well as an understanding of what is important and relevant to them.
- Deliver loyalty through customer service
A loyalty programme must be integral to customer service, and businesses must ensure that customer-facing staff (and all other employees) are informed about and aligned with the goals of the loyalty programme. A loyalty programme is most successful when its benefits and core messages are successfully promoted to members throughout every customer service touch point. The survey found that good customer service is the top factor in encouraging spending, and poor customer service was the top factor in discouraging additional spending.
- Plan the loyalty journey carefully
Map out the entire customer journey in order to design a differentiated programme. Loyalty offers must be relevant to customers and the loyalty programme journey must build gradually throughout the customer's lifecycle. Loyalty is nurtured over time and not achieved purely through subscription. This approach will sustain strategies to grow customers' profitability and add value to the business. As the survey demonstrated, businesses need to understand that trends in loyalty vary along the loyalty journey, with considerations such as age and lifestyle having a major impact on customer loyalty at each stage of the customer lifecycle. For example, feelings of loyalty tend to grow with age for banks, while they decrease with age for clothing shops. As a result, marketers must create a loyalty journey that responds to changing priorities in life, as experienced by their own customers.
- Integrate loyalty into all communication channels
Build a consistent customer experience both offline and online. Businesses need to recognise customer choices and should communicate via all available channels at the right place and at the right time. A consistent loyalty experience throughout all these channels will reinforce the idea that loyalty is at the core of the business, and will encourage repeat business. For example, the survey found that online customers expect to enjoy the same loyalty benefits as they would in-store, and that 18% will not spend more if they can't collect points when they shop online.
- Invite, analyse and act upon customer feedback
Use customer opinions to monitor the loyalty programme's progress and to optimise the loyalty model. Customers are ready and willing to give feedback if they see that their voice is heard. At the same time, businesses often run customer surveys to better understand expectations and motivations, and this data can be a valuable asset as long as it is relevant and openly acted upon.
"The market is over-saturated with loyalty programmes and very few are successful," concluded Chiuzan. "However, there is enormous potential for businesses to successfully revamp the loyalty experience. Loyalty programmes as we understand them today need to be refreshed and businesses must understand that a successful loyalty programme relies on integrating its intrinsic complexities into a seamlessly excellent customer experience."
The company's survey report, entitled 'Imperatives for Customer Loyalty', has been made available for free download from The Logic Group's web site - click here (free registration required).