In the current economic climate,
customers are increasingly likely to shop around for goods and services. When budgets are tight and adding real value
becomes more difficult by the day, maintaining market share is all about customer
loyalty.
During a recession, customers are
less susceptible to a simple discount or a reward in return for a
purchase. Customers know the value of
their money and seek to get the most from every pound. From a commercial point of view, the way to
bring that indefinable added something that customers seek is often through a
loyalty scheme.
If you’re considering setting up
such a scheme, the first thing to realise is that a good scheme is not about
being cheaper. It’s about being better
and being different. It is also an efficient way to influence
customer behaviour without entering into a price war.
Second, you need to consider your objectives and aims carefully. What are
you trying to achieve? Where does your
product/service/brand fit? You need to
understand your customers to hold on to a share of their budget for any length
of time. Examine the supermarkets as a
great example of this. Sainsbury’s gives
points, Tesco gives discounts; the difference is subtle but key to attracting
their different target audiences. A
common objective for many loyalty schemes, particularly for offline businesses,
is to capture customer details such as contact information and other additional
demographic data. Online businesses will often have access to these details as
part of their customer registration process, but could use a loyalty scheme as
a tool to gain even deeper customer insight.
Third, knowing the client inside
out is crucial to keeping a loyalty scheme fresh and ensuring the rewards
remain appropriate. A scheme must
provide clear benefits for members and deliver added value in terms of
financial rewards, customer service and the member experience. Therefore it is critical your scheme collects
relevant data that you can act upon quickly.
It must also offer members a better service than their non-member
counterparts.
Once you have customers earning
rewards for loyalty, you are still only half way there. To build a truly loyal customer base,
redeeming rewards has to be simple. Customers
increasingly like to redeem rewards via the same channel with which they have
initially engaged with the brand. Online
is obviously critical, while QR codes, mobile apps and NFC (near field
communication – i.e. mobile phones chipped for quick transactions) are becoming
more popular as the mobile platform develops. Customers now expect instant in
store reward redemption to complement purchases.
For smaller companies considering a
loyalty scheme but with concerns about cost and operational burden, working in
partnership with carefully selected partners can offer a satisfactory
solution. However there are issues to
consider such as diluting a strong brand, information leaks or customers
receiving irrelevant offers. It is
crucial that brands are compatible.
Loyalty schemes at their best
should deliver for both sides. If a
loyalty scheme is well planned, expertly executed and consistently improved,
the subsequent gain in revenue should far outweigh the running costs. But never forget, a bad customer experience will
always cause damage however many points or gifts you offer the customer. If you neglect the customer experience, your
reward scheme is doomed to failure.
Do you need to outsmart your competitors? Contact us now on 0845 310 2457 to discuss what you want to achieve and how we can help you meet your goals.
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