Loyalty Programmes: The Good, The Bad and The Ugly! Part 3: What have we learned from this?

We always advise our clients to first understand their High Value Customers (HVC) and then design personalised offers that will appeal to them. Traditionally in retail your top 3% of customers will give you 20% of your revenue, and your top 20% will provide 80% of your income. These are the customers to whom your programmes and offers should be geared. In the gaming industry the top 4% provide 58% of the income. Do you think the casinos understand those 4%? Do you think they know what they eat, drink, wear, etc.? You bet they do!

Get your metrics in place and get up to speed on gathering the data that you need. You can’t measure your engagement or analyse your customers’ interests and expectations without it. Then be sure of how to use your data insights to give your customers the experience they’re seeking and to change their behaviour.

We need to turn the loyalty story around. Instead of prompting loyalty from their customers, brands should first become loyal to what their customers want. The connotation of ‘loyalty’ has been that we would like our customers to become loyal to us. But actually our customers would like us to be loyal to them and put their needs first. Instead of thinking ‘loyalty’, we should rather be thinking ‘commitment’ to our customers. Consumers are most likely to be loyal to brands that are genuinely committed to serving their best interests and meeting their expectations.

In South Africa we have a huge number of low income customers. While you don’t want to exclude any consumer, you have to tailor your loyalty programme to the market sector you want to target. At the same time your programme should have the flexibility to attract new customers or adapt to changing market conditions, as in South Africa circumstances change very quickly.

Consumer perception is that loyalty programmes are not personalised. And this is true of many programmes. For instance, swiping a card to get your discount points is not as emotionally rewarding as a personal acknowledgement via email or text message, or in person from someone at the point of sale. Also, the emotional experience is paramount. It’s not only about savings and special offers; it’s also about the feel-good touch points. Give your customers a good time. Let them feel that you have made an effort to personally connect with them, offer them an experience that is pleasurable and memorable, and ensure that they feel considered and appreciated.

This is crucial for deciding whether or not to go the loyalty route. What is the projected rate of growth? What is the basket of benefits? Have you tiered the concept from simple to complex and determined how far your resources will stretch? Will the business increase be enough to fund both the cost of the loyalty programme and the cost of the ensuing natural growth? FYI, 6% is considered to be a good increase in sales with a successful loyalty programme. But never forget, a loyalty programme is more about retaining customers than generating more sales.

In essence, loyalty is all about the customer experience (CX) – ensure that your customers expectations are constantly being exceeded and they will be your customer for life.

Torque Communications thanks the speakers and hosts at Marketing Mix Conferences for sharing their insights and learnings on Loyalty Programmes.