By Chris Gartside and Dr Mark Howland
With Waitrose ditching their signature ‘choose your offers’ idea (as well as the free coffee) earlier this year, and Sainsbury’s trialling new features with their Nectar programme, businesses are constantly trying to come up with the perfect loyalty scheme that will work to the advantage of the customer as well as the business.
But what does the perfect loyalty programme look like? What should it aim to do? Who should it serve? Starcount’s Chief Data Scientists, Chris Gartside and Dr Mark Howland, have come up with the 5 key elements any successful loyalty scheme should have.
Easy to use
How do you make it easy to get customers to participate? The idea of a loyalty programme should be about incentivising customers to take the easiest possible action to enable a swap: data for rewards. With that in mind, the amount of action needed is as important as the reward that a customer can get back.
Simple to understand
The number one rule of any loyalty programme is: if the person at the till can’t explain it in two sentences, then it is too complicated. The beauty of a successful loyalty scheme lies in its simplicity to understand. Too complicated, and customers will either be too confused about how to use it or not even bother because they don’t understand it.
One of the most important points of any loyalty scheme, from a customer perspective, is value. What do they get back and is it worth performing even the simple action of signing up to be a member or, if they already are, taking their loyalty card out at the till? Beyond this, the thresholds for achieving the value or rewards needs to be realistic. For example, consistently trying to bank air miles in the hope of receiving a free flight some years in the future can be off putting to many customers interested in participating in a loyalty scheme. Instead, creating a variety of reward options, some being more realistically achievable than others, can create greater value out of the scheme and be a better incentive for participating.
Improve the experience
In essence, a loyalty scheme is an exchange: the customer provides data in return for the promise of valuable rewards and a better, more personalised experience. While improving the experience is unlikely to be first in a customer’s mind, it is no less important. By creating a system that is personalised towards the customer, by offering them rewards on specific products they purchase, the business is helping to foster a sense of care, which can ultimately develop a feeling of loyalty from consumers. Sub-consciously, it is the improvement of the experience that can create the greatest sense of loyalty in a customer.
Utilising the data
The essential aim of any loyalty scheme should be this: to capture data and receive permission from customers to contact them. It might not sound glamourous but in the end, that is the fundamental desire of any business. Collecting and analysing this data enables a business to understand more about what their customers want, how best to provide the relevant services and products and how to offer personalised communication.
Of course, using data solely for communication will deliver a return, but the variety of uses is endless: ranging, pricing, promotions, strategy, product selection, store location and more. Collecting data and converting it into insight is the most crucial element of any loyalty programme and is the first building block in making sure the programme is effective.
By successfully installing a loyalty scheme that follows these five elements, businesses are creating valuable opportunities for both the business and the customer to interact, with positive consequences for both parties.
Chris Gartside and Dr Mark Howland are both Chief Data Scientists at Starcount. Starcount is expert in the science of purchase and intent, handing our clients the tools and power to take control of their data. For more information on how we can help transform your business, sign up for our newsletter or contact firstname.lastname@example.org.