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Building loyalty programmes


In the past few weeks, Retail Gazette has reported various articles about and the great lengths in which companies are going to, ensuring their loyalty scheme point awards are in fact a successful reward system for their customers.

Jason De Winne, works at ICLP, a company which works with major brands on building their loyalty programmes, with clients such as DHL, Manchester United, Global Hotel Alliance and Harrods has spoken to Retail Gazette’s Junior Editor and formulated some top tips for retailers to attract and retain customers.

“The backlash to Sainsbury’s announcement shows how important loyalty services/initiatives still are to the customer experience. However, it also suggests that loyalty mechanisms need to evolve if they are to fulfil their core purpose: customers today expect to be rewarded, so simply doling out points doesn’t go far enough. Retailers should use their data insight, plus rewards and technology to provide engaging communications and offers, so their loyalty initiatives do what they are designed to do. And that is fostering long-term, profitable customer relationships.”

Jason emphasises the importance of power data and how it allows businesses to be insightful upon customer shopping habits. He talks about diversification within companies due to omni-channels.

“A host of new technologies are making such micro-targeting possible. For example, Point-of-Sale benefits enable retailers to serve up loyalty offers to customers at the moment of transaction. These could be based on their own product lines, or could come from a different brand altogether. Another innovation is iBeacons, which beam offers straight to customers’ smartphones.”

A key point Jason makes is that it is very important for companies to redesign loyalty schemes, working from the customer outwards. Award schemes should be designed to allow individual recognition amongst customers, as fundamentally everyone likes to feel special. For example customisation personalisation can be gained through customer identification which is created through power data and permits a ‘wealth of insight.’ This has the result of allowing companies to really know their customers and create loyalty programmes/rewards that their customers actually want. Resulting in retention of loyal customers.

“I believe this doesn’t mark the end of loyalty marketing for retailers – it merely confirms that retailers need to stop thinking solely about one-size-fits all ‘loyalty programmes’, and think more about how offers, points, benefits and other mechanisms can be combined to target the most profitable customers in a far more relevant way.”

“Given these new possibilities, retailers need to work out what I would call ‘brand relationship equity’ – the real and perceived value a customer believes a brand offers in the relationship. If retailers provide relevant, tailored rewards and get the value exchange right, then they will find customers stay with them, spending more, for longer.”

Jason mentions iBeacon technology and how these are a great opportunity for retailers to entice new customers. Although Jason spoke passionately about current customers being ‘advocates of the brand’ and it is in fact these customers who help keep brands successful. For instance, customer engagement enables consumers to review brands and shopping experiences online via social media which can then be shared with countless amounts of people, either encouraging or discouraging people towards a certain product or service.

“There’s evidence to validate that this form of loyalty programme design and microtargetting works. It’s an approach that’s been applied with great success in the airline industry (another sector which has been rocked by new entrants competing on low prices) where tier status offers profitable customers the value they expect. ICLP has been involved in the best-known airline programmes for over two decades so the concept of tailored programmes and relationship marketing to attract, retain and reward the most profitable customers is familiar terrain.”

Jason De Winne sees the future of loyalty points requiring retailers to create rewards schemes that must be centralised around customer data identification and acquisition. Companies must ensure they create schemes that form value for customers. Most importantly loyalty schemes must serve as a platform that allows rewards and recognition for customers and brings total value to the brand.

Published on Friday 14 November by Editorial Assistant

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