Loyalty scheme vs customer loyalty
Brands everywhere are rolling out new loyalty schemes in an attempt to engage customers, acquire data, and drive sales.
However, in a challenging economy, the expense of cashback or points schemes will either be too much of a burden for the retailer, or drive price inflation for consumers.
As a result, brands are jumping on the concept of ‘new loyalty’ programmes that include a variety of service-level enhancements rather than cashback. These cost the retailer less but can still offer customers value and incentivise increased spend.
Unfortunately, customers can only split their attention and wallet in so many ways, and the sheer number of schemes,especially paid schemes like subscription savers, means that adoption rates(and therefore retailer benefits) will be limited.
Veriteer’s unique combination of strategy, brand and experience consultancy lets us see the big picture. And our advice is for brands to see loyalty as the outcome of their overall customer value proposition, rather than a collection of gimmicks and incentives.
Focus on building Loyalty with a big L, rather than launching just another loyalty scheme.
Loyalty is an outcome, not just a scheme.
The consultancy & agency echo chamber is currently advising all brands to launch loyalty schemes, retail media platforms and explore Gen AI solutions.The reality is that these are all lucrative and fun projects for agencies, but they are not always the right thing for the brand.
In pursuit of differentiation, brands are jumping into an increasingly saturated space, where everyone looks the same, but now have a heavier cost base.
To help counter this risk, our loyalty strategies are based on six simple principles.
- Think of loyalty as an outcome, not just a scheme. A blinkered focus on a loyalty scheme can cause brands to miss broader opportunities in their core customer value proposition.
- Before doing anything, align on a clear loyalty strategy. Out-of-the-boxloyalty schemes can be attractive, but they are unlikely to address fundamental issues. Start with a clear strategy.
- Measure loyalty as spend over time. Loyalty is very simple: more customers will spend more with you for longer. Don’t be distracted by vanity metrics like advocacy.
- Only use loyalty levers that are aligned to your values. Using tactics and incentives that are not consistent with your core offer can turn customers off.
- Establish a strong customer feedback loop. Understanding builds trust: loyalty strategies must be informed by a strong voice-of-the-customer.
- Be transparent and responsible with customer data. Fair value exchanges cover more than just cash-for-product. Open and appropriate sharing of data is essential to build trust.
The Customer ContractTM
All in all, sustainably loyal customers are built by fair value exchanges with a brand over an extended period. This is better, but sometimes harder, than implementing a Loyalty scheme. At Veriteer, we have an approach that helps brands define and execute these fair value exchanges consistently, across all markets and propositions. We call this the Customer ContractTM.
Get in touch to find out how you can establish your Customer Contract and make Loyalty with a big L the default across your whole business.
