Back to basics: Loyalty
With prices rising, the spotlight is firmly on the role of brand loyalty & value and how to build trust with your customers.
WHY THIS TREND, WHY NOW?
As inflation rises, customers want to ‘buy now, pay less’. With any period of uncertainty there’s a risk that innovation can flatline, but as this trend proves, it’s how you reinvent the familiar to create renewed interest that matters. It’s down to retailers to get creative and innovative with their approach to customer loyalty. In 2019, 20% of customer loyalty cards went unused. Something had to change. According to a KPMG survey 96% of consumers said they wanted loyalty schemes to do more.
It’s no longer an exercise in collecting points, as antiquated loyalty programmes have made way for smarter and personalised solutions. Loyalty schemes can unlock serious tailored discounts and one-of-a-kind rewards which is good news for customers and retailers alike. Keeping customers loyal will be crucial in coming months.
Those relatively financially cushioned throughout the pandemic found themselves sticking with familiar and trusted brands, even as the price gap widened between the own label equivalent. “In response, several retailers offered significant [own label] promotions and discounts especially in the period covering Q4 of 2020 and Q1 of 2021 to no avail.” – Ananda Roy, senior vice president, IRI. This all looks to change as the effects of inflation begin to take hold and a more significant difference in cost becomes too large to ignore for customers.
“96% of consumers said they wanted loyalty schemes to do more.”
STIFF COMPETITION
Offering your customer a seamless, cardless interface is not only better for the environment, it’s more convenient. Few of us leave the house without a phone, so customers will always have access to an in-app loyalty scheme when on the move.
Our client, Winn-Dixie, have rooted their entire holiday campaign with their award-winning loyalty scheme at the centre. It’s made a real impact with customer, especially at a time when saving is front of mind for customers during the festive season.
Meanwhile, back in the UK, lower grocery prices are protected behind a loyalty wall. Both Tesco and Sainsburys have their own schemes, Clubcard Prices and My Nectar Prices, which offer those loyal customers who have downloaded and engaged with the app a better deal on popular grocery items. Of the two Tesco communicate this better, with a clear benefit to the customer and point-of-sale graphics in store reminding shoppers how much they can save as prices are slashed before their eyes. The loyalty scheme has received mass uplift since it’s revamp in 2020 – 20 million people have signed up to Clubcard, with 6.6 million of those being regular users. It’s no wonder their Tesco’s CEO, Ken Murphy described Clubcard as one of the brand’s ‘unique advantages’. Loyalty is big business.
My Nectar Prices
Tesco Clubcard Prices
“Retailers who offer digitised, frictionless programmes and rewards that genuinely make customers’ lives easier are leading the charge in the loyalty scheme battle.”
With the cost of groceries set to rise this year, it’ll be interesting to see how brands can further leverage these schemes – especially to appeal to those who shop around – and convert some of those savings shoppers into long term loyal customers.
HOW TO MAKE VALUE WORK
The market is constantly being disrupted by big discount brands who continue to expand, giving shoppers greater choice on low priced groceries. It’s getting increasingly difficult to entice customers with pricing alone, retailers need to give customers other reasons to believe they’re better value than the competition.
Educating customers will be key in the price wars – not only offering better value but explaining how and why as shoppers increasingly question provenance and fairness to suppliers. Having a clear message about value throughout the year and communicating it effectively (and consistently) will be the difference in losing customers to the churn. We’ve seen the rise of own label product popularity throughout the pandemic as customers looked for less expensive alternatives to items on their grocery list. What can really set brands apart is having a core own brand offering that is truly unique, provides good value and looks great on the shelf.
For several years, we worked with Winn-Dixie to define and develop their own loyalty programme, making it simple, enticing, relevant and meaningful. Creating a bold brand identity along with bright, upbeat customer communication campaigns certainly paid off. It was awarded America’s Best Loyalty Program in 2021.
THE TICKETY BOO VIEW
On the flip side to the local and independent trend, after such an uncertain time, there’s a yearning to return to the steady and familiar. Supermarkets especially have understood the importance of getting the basics right during the pandemic. As life resumes some of its normalcy it’s those retailers who can offer added value beyond keeping shelves stocked that will come out on top. Customers crave value – through enhanced offers and personalised promotions, certainly, but also a renewed interest in own label products. This is a real opportunity for brands to whip their private label offering into shape. What’s more, customers love to be rewarded for their loyalty. Revamped loyalty programmes with incentives and sophisticated interfaces have become the expectation. How brands leverage these to encourage long term loyalty remains to be seen but we’re loving the healthy competition.
WINNING AT LOYALTY. OUR TOP TIPS
#1 Make it personal, tailor offers to each user
#2 Use simple, straightforward pricing
#3 Make own label your hero
#4 Consider ‘members only’ prices
#5 Educate customers – show them why you’re the smart choice
Sources
https://home.kpmg/xx/en/home/insights/2019/11/customer-loyalty-survey.html