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Many wrongly assume that a ‘loyalty’ scheme and a ‘rewards’ scheme basically serve the same purpose – to repay customers for their continued patronage.
While both types of scheme offer benefits such as points, discounts and freebies, the payback is significantly different. The basic reward scheme (such as a coffee punch card programme) entices customers to continue buying, but loyalty schemes are really all about the customer insight extracted from the tracking of customers, which provides far more value.
Big Data and omni-channel customer engagement are exciting marketers worldwide – so it comes as no surprise that they are turning to loyalty schemes to provide a wealth of actionable data. Yes, on the surface it does appear that the key to building bonds with customers through a scheme would be to provide attractive rewards, but a far deeper customer relationship than one built simply on a few blanket promos is the real achievement of the modern loyalty programme.
Indeed, the real secret lies in the detailed personal information yielded. So a full loyalty scheme provides a comprehensive platform for companies to both gather and apply the resulting insight in a way, enabling the brand to more effectively interact with customers across a range of touch-points.
The analysis of data generated from a loyalty scheme is critical to understanding customers’ needs, personal circumstances and preferences. Collecting buying data arms you with the customer intelligence necessary to segment buyers groups and tailor personalised offers and other benefits that not only entice them to keep coming back, but to spend more and to buy more frequently.
Big data and your most loyal customers
The Big Data element of a true loyalty scheme will highlight who your most loyal and valuable customers are – as well as providing a frame of reference for prospects who fit the same profile – so that you can focus on these consumers, crafting individualised offers that demonstrate to them your understanding of their spending habits and interests.
Latest research from GI Insight (a survey of more than 1,000 UK consumers) confirms that well-managed schemes do in fact foster loyalty, while simultaneously equipping brands to elicit greater spend. Having detailed insight on customers ensures you can send out targeted offers which are in tune with customer expectations and needs. What’s more, customers have no qualms about taking their business to another brand if they feel they will get more out of its loyalty scheme.
The survey revealed that 87% of consumers say that when a company has had a good loyalty scheme in place they have continued purchasing from that brand and 33% have even switched allegiances to another brand because of the appeal of the loyalty scheme.
When loyalty scheme members feel that their data is being used in a personalised way and that the company actually understands them, then there is a significant amount of trust which has formed between the brand and the customers. In fact, 76% of the consumers surveyed say they only feel comfortable handing over their data to a company that has a ‘proper loyalty scheme’ in place.
The research also shows that customers are happy for their personal details to be captured and retained as long as they continue to benefit from their relationship with a brand and that any communications coming from the brand continue to be pertinent. The survey showed that 64% of consumers were happy for a company to use their data as long as they were sending them ‘relevant and timely offers and communications’.
According to an earlier GI Insight survey, conducted in 2014, 94% of UK consumers belong to at least one loyalty scheme with many belonging to multiple programmes. What is critical for brands operating these schemes is not to focus on the rewards, but on the data.
The fact that many consumers leave reward points unused is often seen as a failure, but as long as they continue to collect points and remain active in the scheme is what really matters. Most will eventually claim their rewards. Even those not using their points may still find other benefits such as tailored discount vouchers at the till, free in-store coffees and snacks, personalised offers or exclusive deals for members only are the real attraction of scheme.
It is absolutely vital for companies to keep in mind that, from their perspective, what really matters is the fact that the consumer is sharing data, is engaged with the brand and feels they are deriving some benefit from belonging to the scheme. It is then up to the company to use the customer data information to make sure that offers and benefits really resonate with the best customers.
The purpose of a loyalty scheme is to forge an on-going relationship with customers that transcends marketing and purchasing channels. In today’s multi-channel environment, the infrastructure of the loyalty scheme can even extend beyond the offline analysis of long-term transactional, geo-demographic and lifestyle data to encompass a real-time digital view, so that businesses can respond immediately to online customer interactions.
Having a well-established loyalty scheme means the company has the tools to see who their most profitable customers are and work towards keeping them. The secret behind a successful loyalty scheme is to effectively capture, analyse and use the resulting insight that comes out of the Big Data which has been generated from the scheme.
Click here for research from GI Insight on the omni-channel approach and how customers react to it.
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