A new survey carried out by GI Insight has showed that 94 per cent of consumers belong to at least one loyalty programme. However, just under half of these on average are actually active users. Another key problem is the failure of companies to pay attention to their customers‘ needs and effectively analyse the data available to them to offer their customers the most relevant deals.
Various surveys published over the last few months have indicated that loyalty cards are becoming less effective at maintaining customers‘ loyalty; shoppers are leaving more unused points on their cards than they are redeeming. This is an unexpected development in a period of belt-tightening when discounts and offers should be welcome to the average shopper looking to save.Andy Wood, GI Insights managing director, suggests that this is because too many companies who offer loyalty schemes “struggle to fully engage their members – and thus fully utilise the potential insight and gains to be made from better understanding customers”.
That said, Wood acknowledges that “loyalty schemes have become pervasive marketing tools”. Studies have indicated that loyalty schemes are becoming more popular and influential whilst using price cuts is becoming a less effective measure. Loyalty programmes have a big influence in customers switching brands, according to Marketing Week.
Although many companies are failing to make the most of loyalty schemes, one sector is leading the way. There is a huge drop-off between supermarkets (where 79 per cent of customers are joined up to a loyalty scheme) and other sectors. The ‘multi-brand‘ category (such as Nectar and Avios) was the next most effective, with 40 per cent less members at 39 per cent. Some sectors had unexpectedly low results, such as fashion retailers and cinema operators.
Clearly, there is room for improvement in how loyalty schemes are run in nearly all sectors (supermarkets included). But companies must not be rash and look for an alternative system – loyalty schemes have been proven to be the most effective strategy. Instead, if retailers want to make the most of loyalty schemes, they need to find better ways to engage with their customers to deliver a personalised and relevant service.
Below, we take a look at our favourite loyalty card schemes:
Almost 70 per cent of the British population own one. Using analytics, Tesco achieve such success with this loyalty card because they are able to provide personal and tailor-made rewards to their customers.
This loyalty system is all contained within the confines of the GBK App. With challenges and notifications to keep you informed of your progress, this colourful, neatly-designed app provides instant rewards for users‘ loyalty.
The Advantage card is the third most popular loyalty card in the UK, with a very simple strategy. For every £1 that you spend at boots you earn four points, which can then be exchanged in store. The card also works in conjunction with coupons and discounts.
The Nectar card can be used in a wide range of stores and online, including e-Bay, Sainsbury‘s, Argos and Debenhams, to name a few. Accumulating points can lead to not only deals in store but also to days out and even holidays.
The famous Nando card operates on the basis of a very simple currency: chicken. Rather than accumulating points or money, you can earn quarter, half and eventually a whole chicken. The new card offers other bonuses and incentives.