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Comment: Loyalty that pays


In an increasingly competitive market place and unstable economic climate, securing loyal custom is of course critical for success.

Recent research from Avios, one of the UK’s leading travel rewards programmes, found that carefully calculated shopping is top of consumers’ agenda, with shoppers buying an average of just four new items of clothing each this summer, equating to only £20 per item. Half (46 per cent) predicted it would be even less.

Similarly, recent research from Ipsos Mori found that 62 per cent agree savvy shopping is a priority, and they are more concerned with the cost of shopping than social and environmental issues, with 44 per cent believing the economy will worsen over the next 12 months.

To capture the consumers’ attention and stand out from the competition, retailers that help shoppers’ budgets stretch further, and get something back from every penny spent, stand in better stead than those who don’t.

Indeed, Avios found that over half of those surveyed were making the most of their wardrobe budget this summer by collecting loyalty scheme rewards.

Such support pays off for retailers’ budgets too of course; retaining custom generates long-term value, and helps to spark a connection with the brand. If by the nature of the product this is difficult to create, the bridge a loyalty programme provides can be invaluable for securing emotional attachment and a consumer’s loyalty.

Key to a successful retention, and customer loyalty strategy is data. It’s not just collecting data, but really using it that counts. Loyalty is, and should always be, concerned with the behaviours and motivations of customers.

Throughout the customer journey different audience segments can be identified, listened to and targeted with a diverse, but relevant, loyalty offering that benefits both the business and the customer.

It is therefore important that any loyalty scheme adheres to two core principles when it comes to developing an effective strategy. Quite simply, it must be relevant and rewarding; giving something back to the consumer.

Making loyalty rewarding

This segmentation is crucial to any loyalty scheme’s success. But, it won’t work unless a retailer actively builds its knowledge of the customer base, using behavioural and transactional data to inform more personal and meaningful customer experiences.

To be truly rewarding, loyalty has to be insight driven, and it relies on high-quality targeting to ensure it continues to provide a return on investment for the brand.

This insight driven approach to loyalty segmentation has served supermarket chain Tesco well. It has been able to use loyalty diversification to its advantage by offering exciting and high-value rewards to those customers that view these as motivating. While the supermarket chain can continue to offer lower value rewards, such as ‘money off in store’, to those sections of its audience that find these most relevant.

Need versus desire

Finally, retailers must be able to distinguish between what customers say is important, and what is actually important to them. This can be done by establishing the rational incentives and offers that are important to customers, but also by encourage the emotional connection between customers and partners.

Bridging the rational and the emotional needs of customers to enable genuine, engaged and passionate loyalty to flourish, by consistently being able to exceed these needs and expectations, has to be the driving force behind any brand’s attempt to engender true loyalty.

Published on Tuesday 23 October by Editorial Assistant

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