By Scott Logie, MD, Insight at REaD Group
It’s been a turbulent few months for the UK retail sector – Debenhams and House of Fraser both recently announced multi-million pound losses. On the other hand, Tesco revealed a rise in their annual profits to £1.3bn and Sainsbury’s and Asda announced a ground-breaking merger to make a super-supermarket.
The level of competition between retailers is reaching fever-pitch. Amazon’s seemingly never ending reach, the growth of online brands such as ASOS and boohoo, and the general rise of the discount retailer have disrupted a sector that has been slow to respond. It is therefore vital for retailers to demonstrate their value to consumers and develop robust strategies to capture and retain customer attention and loyalty. A strategy that has proven highly effective in both the past and the present? Loyalty schemes.
Is the loyalty scheme on its way out?
While some have criticised loyalty schemes in recent years, they remain a powerful way of connecting and engaging with customers. In our recent Retail Trend Report we found that there is an intrinsic link between how long a loyalty scheme has been running and the level of customer loyalty. The research found that Tesco lead the way in supermarket retailers when it came to customer loyalty – the Tesco Clubcard was the first scheme to be launched (in 1995). Consequently, retailers with less mature loyalty schemes have lower levels of trust – Morrisons was ranked 10th for customer loyalty and only launched its scheme in 2014.
Some critics have insisted that the loyalty scheme is dying out, however, Tesco’s announcement earlier this year that they were going to downgrade their Clubcard programme was met with widespread backlash from customers. The demand is still there it would seem. Loyalty schemes offer a tangible value and benefits to the consumer, and many budget and plan accordingly to make the most of them. They may not necessarily attract new customers but certainly encourage more frequent purchases and customer retention. Loyalty schemes have become expected as part of the offering by consumers – gaining points rather than just lower prices.
Changing consumer landscapes
It has gotten to the stage where many consumers are experiencing ‘’offer fatigue’’; being bombarded with endless 2-for-1-deals, flash sales and coupons to the point where they become desensitised to all of it. Comparable prices are no longer the differentiator, consumers expect retailers to offer them deals that are suited to their individual shopping habits.
With discounting so rife, consumers are no longer prepared to buy full price products unless they absolutely have to, which has meant that supermarkets like Co-op have suffered for a number of years now. In order to break the cycle, retailers must renew their focus on their customer loyalty propositions to make it worth customers investing their time and money in selecting their chosen retailer’s products. But how exactly?
The Digital Shift
Facilitating an easier process for customers to access their rewards is one way of tackling this challenge. Customers are increasingly using contactless technology and phones to make payments, and the prospect of carrying a wallet bulging with loyalty cards is becoming an increasingly unattractive one. It is high time that retailers shift their loyalty card schemes to digital platforms.
Tesco recently set an example by launching a contactless version of their Clubcard last year, followed by a Tesco Clubcard app. Customers who are presented with wads of paper coupons after swiping a loyalty card are, more often than not, unlikely to retain these for a future purchase.
Personalisation is key
Saving money is no longer the only priority for customers – they have come to recognise the value of personalisation and appreciate receiving deals that have been intelligently tailored to their shopping habits. Retailers therefore need to make sure that they are segmenting their customer data and analysing it to ensure that they are building and engendering trust and anticipating customers’ needs.
Building customer trust is a gradual process and not an overnight fix; this makes loyalty schemes more significant than ever before. Retailers must ensure that they are clearly explaining the benefits of a data-value exchange to their customers and remaining as transparent and open as possible.
Brands must demonstrate through these retail loyalty schemes that customers that consent to share their data stand to be rewarded for their loyalty and custom. And for those brands with long standing schemes already in place – now is not the time to abandon them! They’re a key means of understanding customer habits and maintaining valuable patrons.
The recent implementation of GDPR has provided a welcome impetus for brands to take this initiative. All things considered, by introducing loyalty schemes and using segmentation to enrich customer understanding, brands should soon enjoy better communication with an increasing number of data-savvy consumers.
There was laughter, there were tears, some unexpected scrambling, a few blisters, a bit of chafing, sun burn and A LOT of sweat – but we all did it!
The sun was just rising over the picturesque Lake District hills when 29 intrepid REaD Group staff (and one trusty canine companion in Bella the dog!) set off on our 10 Peaks Challenge to raise much needed funds for MS Society.
The Challenge: Conquer 10 peaks in less than 10 hours
The Route: a 15ish (our various distance measuring devices couldn’t quite agree) mile route taking in some of the highest peaks and most spectacular views in the Lake District, including the mighty Scafell Pike
The Team: 29 REaD Group staff (30 if you count Bella the dog!)
There were highs….
Reaching the top of peak 10 in 6 hours – we totally rock!
The views – simply breath-taking!
The joy of cooling our burning feet (and in some cases whole bodies!) in The Stickle Tarn
Almost losing Adam T in a steaming bog (the muddy kind) – or should that be a low!?!
The bliss of the first sip of a cold pint/cup of tea at the official finish – the very welcome sight that is Wainrights’ Inn
Tucking into Chicken/Veg Tikka Masala and Lemon Meringue Pie (or 3 if you’re Tickers…) at the youth hostel
The sense of camaraderie and achievement – there’s really nothing like it!
And the lows?
Well none really – apart from THE SWEAT! With sunshine AND humidity, we were sweaty in places we didn’t know we had – ‘nough said! And being chased by an enormous thunder storm (which a least had the decency to wait till we had got to the pub).
Huge thanks must to our fantastic guides Matt, James, James and (yes) James from Lakeland Mountain Guides [https://www.lakelandmountainguides.co.uk] who made us laugh and kept us safe and also the lovely staff at YHA Langdale [https://www.yha.org.uk/hostel/yha-langdale]
A massive effort and achievement from everyone, and we are a few whiskers away from reaching our £10k fundraising target so any donations would be so much appreciated. Come on people!
Our JustGiving page will be live until 30th June: https://www.justgiving.com/fundraising/readgroup10in10