What’s the point? Tips for success in the new era of retail loyalty

Marketers need to rethink their approach to engaging and attracting increasingly savvy, cash-strapped shoppers, and get the most out of their marketing budget to build customer loyalty and boost revenues.

Antonella Tamburello, Client Strategy Director Go Inspire CX, explains how retail marketers can best adapt and optimise their programmes and data-gathering to shore up customer loyalty in the face of one of the biggest shifts in shopping behaviour in decades.

Change has come to some popular retail loyalty schemes in the early part of this year, meaning big shifts in the way millions of customers earn and spend points, and access discounts and offers.

This is perhaps unsurprising as our recent Retail Loyalty Unleashed study discovered more than a third (37%) of senior marketers have noticed a drop-off in brand loyalty as consumers shop around for deals to combat the cost-of-living crisis. A further 47% believe the changing behaviour of customers switching to rival items is price driven. As a consequence, many retailers have decided they must change tack to shore up loyalty.

Savvy consumers are well-versed in getting the best deals by signing up to the likes of Nectar, Boots Advantage and Tesco Clubcard. But as the cost of doing business rises for retailers and the brands they stock, they must continue to rethink their programmes and consider the approach that will work best to attract cash-strapped shoppers.

So, what can retailers do to boost revenues at a time when everyone, from marketers to the consumers buying their brands, is counting their pennies?

One data view to rule them all

Loyalty programmes are still a no-brainer; a great way to squeeze the most value out of your marketing budget. The more you know about a customer, the more you can target your offers and marketing spend towards things that will make an impact.

For example, Tesco Clubcard has always been about providing rewards that will resonate based on everything the retailer understands about the customer. But if the right data isn’t available, it’s difficult to target effectively. It can be easy to fall into the trap of wasting budget by throwing stuff at the wall and hoping it sticks.

Increasingly, brands are also aware that they need to know more about their customers than just their transactional behaviour. Not least, how habits are settling down after the pandemic. Do their customers prefer online or in-store shopping? (or both!) Which customer segments prefer one format over another? This means getting a grip on data assets: no more silos. Put everything in one place, a single customer view, so it can be leveraged.

Data is driving a new loyalty approach

There’s no question retailers are doubling down on harnessing data to drive engagement.

The emerging tactics are fascinating. Asda’s new scheme - Pounds, Not Points - is about aggressively offering price-based rewards. Tesco, too, is becoming more focussed on price differentiation rather than its long-standing Clubcard voucher approach.

But it’s difficult for all retailers to take bold steps in the current climate. Consumers may feel confused when premium brands start attacking price points to keep up with the Jones'. Brands must be credible, appreciate consumers are smarter and more cautious than ever and behave in a manner they've set up over the years of their own brand activity. Therefore, the programmes they choose must be rooted in their business strategy, rather than simply appearing to be a knee-jerk reaction to rising prices and brittle consumer confidence that is driving brand and retailer promiscuity among shoppers.

In a rapidly evolving landscape, many retailers will simply have to try different tactics, taking a test-and-learn approach as they fight for market share. In my view, during the current climate, anyone speaking to the shopper’s wallet is likely to at least make short-term gains.

Don’t discard data best practice

Retailers must also remember to demonstrate a value exchange when attempting to build loyalty scheme membership.

In exchange for letting companies into their lives, the customer needs to get enough in return. This includes feeling like they have access to offers and incentives that aren’t available to non-members.

Consumers continue to get savvier about their data. It seems like cyber-attacks on company databases are commonplace and, in the news, at least weekly, so it’s no wonder individuals are taking more interest in how businesses capture, store and use their precious personal details.

Some retailers have historically treated the act of gathering permissions as a secondary consideration, but that now needs to change in the modern opt-in landscape.

With access to more data comes greater responsibility. Retailers must ensure customer data is secure and commit to not spamming people with messages. Ultimately, consumers will regret giving data to unscrupulous brands that spam their inboxes.

Retailers need to up the ante and demonstrate they are using data in a secure way. But this also extends into ethical and moral responsibility. For example, you should only be promoting products that customers can afford.

It’s an era of compelling change for retail loyalty schemes, and it will be interesting to see what approaches emerge next - during the cost-of-living crisis but also after it ends and new consumer shopping habits have formed

The key is not to just view the data these programmes produce as a horde of information to be used as you see fit. The shopper must be the real winner, so they don’t begin to look at loyalty and wonder what the point of schemes is anymore.

By Antonella Tamburello

Client Strategy Director

Go Inspire CX