Consumers spend more for 'valuable rewards'
It's official: customer loyalty drives revenue. But the results of a recent online consumer survey showed very positive responses when asked to think about loyalty in general, with 93% saying they would be most likely to spend more with a brand if it had a great loyalty programme, and 86% saying they would be more likely to visit a particular retailer if there was a valuable loyalty programme to join, according to Sarah Cross at UK-based loyalty consultancy Uber.
When Tesco launched its Club Card programme back in the mid-1990s, one of the top priorities of this major marketing innovation was that it should be used to bring the supermarket chain closer its customers. And, in today's super-austere economic climate, consumers demand real value from their favourite brands: if they're going to choose your brand and your loyalty programme, they expect to be totally 'turned on' by its benefits.
But what do consumers really want from a loyalty programme? Well, "high profile rewards" are top of the list, 79% of consumers tell us that they want to feel like they're getting the best benefits from a brand possible. Second, 75% of consumers said they were lovers of the "feel-good factor": they want to initiate a little envy among their peers, getting exclusive extras just because they are members of the loyalty programme. This is all about spoiling customers with discounts at other brands that might touch their day-to-day lifestyles, or adding value to your products or services by providing programme-exclusive access to advanced services (such as free gift-wrapping).
Consumers also said that they love a bit of "surprise and delight", with 72% saying they want to feel that a brand could surprise them at any moment with a so-called 'Random Act of Kindness'. Incorporating seemingly random (unpredictable) gifts into your loyalty programme gives you the chance to 'go viral' on the internet within minutes, and could provide an almost unlimited capacity for brand exposure while your main marketing spend is still only going on your most loyal customers.
Interestingly, consumers generally don't subscribe to the "points make prizes" reward strategy, saying that they just aren't as excited by programmes that involve the collection of points (50%), and only 11% said that "collecting points to receive a gift from a catalogue would turn me on". It is therefore the immediacy of redemptions - or rather, the lack of it - which customers feel is the key problem with the points-mean-prizes model. One respondent commented: "I want something that gives me immediate value; I don't want to accumulate loads of points to get little back."
And there are other problems with points. Consumers are smarter than ever about points games, and their response to a points-based loyalty programme could lead to a "points war". For example, one respondent observed: "Last weekend, Superdrug offered me a similar scheme to Boots, although it was quite difficult to build up points as £1 = 1 point, whereas at Boots £1 = 4 points."
Loyalty programme communications were also found to be crucial, not only in their content but also in their timing and frequency. With one respondent saying "They're great offers but the emails are too frequent, so now I often just delete them," communication has become a very delicate balancing act. Consumers do not want to be hassled by over-frequent communications, with 29% being happy to be contacted by a brand weekly or more, while 64% prefer "twice per month". And of course the final step is keeping the communication relevant. Consumers said that they "like relevant, tangible, good communication that doesn't seem invasive", and that "loyalty is about generating goodwill through customer service".
Money off vouchers get consumers most excited about a loyalty programme, with 64% saying that this is what they love to see - but be careful not to devalue your brand. Customers said they want to receive "vouchers for a decent amount", and they know they've got to show their loyalty to qualify for those benefits. Many said that offering a "recommend-a-friend scheme with a large percentage discount off your next purchase" was a key reward for them. This is good news for the marketer: the customers themselves have confirmed that money-off rewards will successfully drive profitable behaviour.
"When we got consumers thinking about rewards, they gave more support still to the idea of redeeming benefits at other synergistic brands that weave through their lifestyles," said Cross. For example, 62% said they would be more likely to sign up with a programme which offered discounts and benefits at other favourite brands: "Just like flashing your exclusive credit card to receive extra benefits at a retailer or bar, your customers want to receive little treats just because they are loyalty programme member. It supports their love to 'involve multiple retailers' so they can 'redeem on lots of different things'," concluded Cross.
But, for consumers, what really came through as a crucial aspect of customer loyalty was the level of personalisation of the programme. Almost three quarters of consumers said they are happy to provide additional personal information to a brand so they can be contacted personally with reward offers on special occasions, whether it's for things like a nice gift or card for the customer's birthday, or communications involving their children or pets. Another surprising example of an area in which several consumers said they would like to see greater personalisation is for apparel retailers to remember their clothing sizes, and styles that they are fond of, making it easier for them to search through clothes online.
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