What's Happening in Loyalty?

 As if keeping customers loyal wasn’t hard and complicated enough, along came lockdown! I don’t think I need to dwell on how much of an impact the pandemic and lockdown have had on people and businesses, but I will explore what is currently happening in loyalty - and that of course has been massively affected by lockdown.   

 The first thing we are likely to see is brands who have done well during this time, rushing to launch loyalty programmes. Brands have realised (or should have realised) that more than ever before they need to build connections with customers, not just to keep them loyal, but to show that loyalty in return. The brands who have done particularly well will now have a huge number of customers that they need to work on retaining. To do this, they will have to ensure they do not just go back to their old ways. A loyalty programme (or initiative) is one way of doing this, so we’re likely to see newer brands start to dabble in loyalty.  

And so they should! Research has found that 39% of global consumers purchased from new brands during lockdown, and 88% (a huge 4 out of 5) will continue to buy from those brands in the future.  But are these stats to be believed? Have consumers just become more confident in switching brands? Does this mean that they will stay loyal to these new brands they’ve discovered, or switch again now they know how easy it is? 

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Newer brands launching loyalty programmes or initiatives should trigger established brands to consider whether they are doing enough. Are their loyalty programmes still relevant to today’s 2021 consumer? Is the loyalty programme there to paper over the cracks of some product or service failings? Is the loyalty programme strong enough to win back customers who have strayed elsewhere recently? 

"What," you might ask, "should loyalty programmes look like, in order to remain relevant to today’s consumers?" This of course is a huge question, and very brand dependent, but I would propose:

1) Genuine contribution to the “greater good.

2) Solve customer problems rather than being a “cherry on top”, and

3) Create human connections, whether that be between brand and customer, or between customers themselves.  

Contribution to the greater good should mirror the brand purpose. Does the brand believe in something that the loyalty programme can also support? Can they use the loyalty programme to prove they’re doing something for the greater good? For example, Lush Cosmetics give customers a free mask in return for returning their empty packaging. It’s not a loyalty programme, but it fits their brand purpose perfectly and surely keeps customers coming back for more. Other brands striving to contribute to the greater good with their loyalty programmes are Shell, who offset the carbon footprint for all fuel purchases tracked on their loyalty app, and H&M who reward more conscious choices. This by no means eliminates areas of the business that may not be making positive contributions to our planet, however, for the case of this article, it is good to recognise how these brands are connecting with their customers on a new, more sustainable level.  

 

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 Solving problems and enhancing customer experience is something that airline loyalty programmes have always been amazing at, and more recently, retailers have started stepping up to as well. The perks in higher travel tiers aren’t just nice to have, they make customers lives easier and are something they’d genuinely miss if they stopped, so they strive to stay in those top tiers. Amazon Prime isn’t necessarily classified as a loyalty programme, as it’s paid for through a subscription, but to me it’s one of the strongest loyalty initiatives out there – if people stopped “being loyal” to Amazon (stopped paying for Prime) they would genuinely miss the heightened service they’re used to receiving. I think we are seeing more of a move towards the the subscription model, and  I believe more loyalty programmes should be used to add real value to the service they offer.  

Creating human connections is pretty broad, but when referring to it in this article I mean two things. Firstly, seeing and treating customers as people. Saying thanks, asking what they value, surprising them when you feel they deserve it. (An obvious plug here for handwritten notes). The second thing I mean is community. Putting customers in touch with other customers, and showing them the value they can add to one another, is huge. The value of this is often missed as a way of achieving loyalty.  Customer generated content, forums, and the influence they have over one another, encourages customers not to just be loyal to the brand, but also to the community they feel a part of. Sweaty Betty uses their Insiders programme for exactly that, with groups for members to share fitness tips, workouts and just generally support one another. Waitrose and Coop are lovely examples of loyalty initiatives that connect customers in a joint goal, with rewards going to the local community.  

There are always cynics out there who say “loyalty is dead”, and would use brand switching during lockdown as an example of this. But I can think of so many examples that show loyalty is well and truly alive. The brands people are choosing to be loyal to and their reasons for loyalty may have changed. However, loyalty is certainly not dead. One of the first things I heard from avid travellers at the start of lockdown was “what’s going to happen to my tier now I can’t travel?”

There was social buzz around staying loyal to small, local businesses; Tesco have listed loyalty as one of their key three focus areas this year to drive growth; and H&M have seen huge growth in their loyalty programme, which they’re now banking on to turn around their losses. So, all in all, some pretty strong signs that loyalty is still in fact alive, kicking and more important than ever. 

Jeannine Rafferty, Chief Customer Officer, Inkpact. 

jeannine

 

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