During a recent work trip I was asked to join the Radisson Blu Rewards programme. Normally I think 'urgh, not another programme' but when they offered two complementary bottles of water in exchange for joining, it got me to thinking… when did we start bribing customers to join loyalty programmes?
This is by no means the only example. Later that month I received a GDPR email from Sheridan offering 20% off to re-opt-in to their weekly newsletter. I’m all for a good value exchange but both of these ‘exchanges’ felt a little more like coercion.
Instead, Mintel’s latest Customer Loyalty & Reward Schemes report suggests that 'retailers need to increasingly evolve their loyalty schemes so that they are not just focused on points and monetary rewards, but on engaging emotionally with customers by offering them unique experiences or services'.
The times are changing so if bribing customers is no longer the best option, what is?
1. There's no better incentive than an amazing customer experience
It goes without saying that great customer experience makes or breaks a brand. It’s no surprise then that to acquire new loyalty programme members (and keep them) it’s important to offer an amazing customer experience that makes them feel special and want to return again…and again. While some brands separate 'special' customers from others (think: airline VIP queues), others simply offer great experiences for loyal customers that sit alongside their everyday great offerings. It’s not a case of 'so so' for the average Joe and exceptional for the top of the top (we’re looking at you Barclays); it’s about a 'great' customer experience for all and extra-ordinary for the regulars.
Who’s doing this well? Paid subscription and delivery pass schemes stand out from the crowd (and yes, these are loyalty schemes - even Mintel says so) not least because they offer great every day experiences on top of extra-special experiences for paid members. Free delivery, extra delivery options and better delivery times (read: better convenience) means paid members get what they want, faster and at the most convenient time of day for them. It might be paid for but for many, better convenience is priceless.
2. Truly personalised offers make being a member really worth it
If you’re like me, you’re still waiting for truly personalised offers. Brands like Sainsbury’s, M&S and Waitrose have dabbled in personalised offers but extra points or discounts on things you already buy is not true personalisation (that’s just collecting data and repeating it back). And if customers were going to buy the product anyway, it’s not an optimal way to drive business value either. With 'just 22% of shoppers satisfied with the level of personalisation they currently receive…a large number of brands are failing to create experiences that actually inspire consumers to make a purchase'.
Big technology though has the capability to change everything. Machine learning, AI and RPA (Robotic Process Automation – robots that do menial tasks you don’t want to) all have the potential to do the hard work for us: reading, analysing, and interpreting data to automate personalisation at an individual level. Something which humans and most algorithms are incapable of. While social media brands are already experimenting with these (including Pinterest’s content curation, Facebook’s chatbots and Twitter‘s curated timelines), the path to success is still largely undefined. But then again, nothing worth doing is ever easy!
3. Innovation keeps them interested
Free delivery and better delivery slots are great, but they’ll only get you so far. The promise of more is what keeps customers engaged and is the basis for Amazon Prime’s continued success. Since its introduction it’s continued to remain fresh with the introduction of Amazon Prime Video, Amazon Music Unlimited, Kindle Books and Amazon Fresh. Word even has it that Prime Video is a close second in preference to free delivery – what started off as a delivery pass scheme is now VIP access to great content.
The My John Lewis programme is another brand that keeps getting things right. Their free coffee and cake initiative was considered revolutionary at its launch, but new initiatives continually breathe life into the programme. Like the Personal Style Studio at Westfield White City that promises a new way to clothes shop. Or the personal stylist app that lets customers stay in touch with their stylist after their personal styling session enabling continued recommendations and re-visits. If this isn’t department-store innovation, I don’t know what is!
The verdict: Not to bribe
While acquiring a customer with a good discount may bring you short-term results; extraordinary loyalty programmes instil the three principles outlined here to keep customers for the long-term. They’re principles of good customer engagement so it’s no surprise they work for loyalty programmes too. Joining is one thing, but staying, engaging and recommending is quite another. Our verdict: bribery is so last year; now it’s all about customer experience, personalisation and innovation.
Belinda Clark is senior strategist at RAPP UK