When it comes to customer loyalty programmes, UK consumers want to sign up. Nearly 95% of consumers who took part in research by business analytics firm SAS and retail analyst Conlumino said they owned at least one loyalty card, and nearly 90% admitted to using loyalty programmes regularly.
The report's findings appear to establish the UK as something of a leader in fostering consumer loyalty. In fact, just over 40% of British consumers said they would be less likely to use a retailer that didn't offer a loyalty scheme.
The research found emotional connections are key to fostering customer loyalty as 80% of consumers now believe engaging with a brand emotionally influences their likelihood of making a purchase.
Retailers which have invested in customer loyalty programmes (such as Tesco, Boots, Marks & Spencer and Sainsbury's) showed the highest emotional connection with consumers in the research - with Tesco coming out on top.
It is well documented that Tesco has proven success with its scheme. According to the company's website, Tesco has some 16 million active users and says it is using the information obtained from consumer loyalty card activity to create a "rich and personalised offer" for its customers. And this is exactly what the consumers interviewed said they wanted. Around 50% said if offers were personalised that they would be more likely to use that retailer again.
"This really creates a massive opportunity for retailers because those that grasp the opportunity to understand their customers and treat them as individuals, are more likely to see increases in shopping trolley purchases and add to their profit margin," said Neil Saunders, managing director for Conlumino.
Comfortable data zone
The findings suggest that consumers are comfortable with retailers collecting data they need to deliver these more personalised offers. Nearly half of consumers have no concerns with loyalty schemes whatsoever. In fact, almost 40% actively opt-in to marketing material from retailers, meaning a significant number believe they can benefit from relevant offers by allowing retailers to market directly to them.
But this consumer buy-in to loyalty schemes is not hypothetical; more than one third admitted that receiving marketing material from a retailer makes them more likely to purchase from them, and nearly half would be either likely or very likely to use a retailer if it provided them with truly personalised offers. In addition, almost one third of consumers said they are likely to respond to relevant in-store offers, highlighting the increasing importance of location-aware offers and the potential for mobile services.
The business potential for retailers who grasp this opportunity is evident. The largest loyalty scheme in the UK, Nectar, has, according to its website, some 19 million collectors (and, it boasts, 24 Nectar cards are swiped every second). So, if every card holder received a personalised offer which resulted in them spending a mere 1 extra each year, the collective group of retail partners would achieve an additional 19 million in revenue.
According to Alex Fovargue, retail specialist for SAS UK & Ireland, this personalisation becomes even more exciting in the UK's digitally developed society because customer loyalty is going mobile: "This provides retailers with the opportunity to create instant wins by connecting with customers right when they are making a purchasing decision.
Conlumino's research found around a third of consumers would be likely to take advantage of an offer if they received it via their mobile device while standing in store. About the same volume of retailers agreed customers would do just that. With nearly 88-million mobile phone subscriptions in the UK, the potential business development in getting around 30% of that 88-million to accept offers would have a serious impact on the retail industry's profit margins.
Key to driving this shift will be the adoption of high-performance and visual technology solutions that not only manage big data being collected from loyalty schemes, but also analyse and transform it into valuable customer insights. From there, retailers can make decisions based on evidence to deliver the right product, for the right price, at the right time, to the right person and via the right channel.
According to Fovargue, "This really is the next step for retailers to take to get the maximum return from investment in customer loyalty programmes. Retailers wanting to take this step need to look for innovative technology solutions to turn this into a reality and reap the bottom line benefits."