| Anyone who has spent any time in the UK over the last few
years will be aware of Loyalty Cards. Seemingly every store has their own
scheme, offering discounts or product after a number of purchases. Some
schemes are highly computerised point of sale systems with bar codes and
plastic cards like Fly Buys, but others are simpler stamp the card
affairs. Tesco (the UK's number 1 grocer) started the ball rolling and was
credited with pulling off a master stroke.
However recently there has been a trend against the schemes with a
number of Retailers including Safeways UK ditching their cards. Consumers
simply collected every card and continued shopping on price, service and
convenience. So what are the lessons?
- Loyalty does not come cheap.
A loyalty scheme alone can not replace excellent customer service,
good value pricing and superb locations in keeping customers coming
back.
- It has to be worthwhile.
Tesco's cite the way Safeways' loyalty scheme was run as the main
reason for its failure. The rewards were not great enough to ensure that
the scheme was well used. The scheme also has to work for the retailer. On
top of customer loyalty valuable information can be gained into their
characteristics, age, income, home location, shopping preferences as part
of the registration or redemption process. Plus there is also the
opportunity to build a customer database for direct marketing.
3 It has to be easy to use and understand.
Schemes that involve the minimum input from the customer, are quick to
administer at point of sale and have simple straight forward rules and
rewards work. Make it complicated or give tokens which get lost and you'll
lose your advantage.
- It has to be maintained and promoted.
Staff must be aware of the scheme and actively promote it in-store.
Your database has to be regularly mailed to ensure that any "goneaway"
addresses are removed.
- It has to be analysed.
Use the information you collect. Your scheme does not have to be a
sophisticated plastic card and scanner type to gain useful insights into
your customers. Simply asking them to complete a simple survey when the
redeem their points or enroll in the first place can unlock valuable
information. Often this can contain information that Customers don’t
readily share. Compare this to the store's catchment area profile to
identify any trends. For example if 30% of your promotion responders are
aged 25-35 and your www.RetailLocations.com.au Population and Housing
report shows that this age band makes up 15% of the catchment then you are
twice as likely to attract this age band. You can then use your free map
to identify areas with more of this type of customer.
Loyalty schemes can provide valuable insights into customer
transactions, characteristics and help you precisely define your catchment
area. You can build a marketing database and use direct mail to continue
your relationship. And you incentivise repeat purchases. However, if the
UK is any guide then customers are fickle. No amount of incentives will
replace excellent customer service, value for money and convenient
location.
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