Personalised customer loyalty schemes are ‘the route to retail success’ – case study

Shopping is so ingrained into our lives that we have all become familiar with a certain level of daily engagement from brands. Whether that is through email marketing, social media or the simple act of walking down a high street of stores. Yet, the likes of H&M, Marks & Spencer and Starbucks all face the same challenge in today’s retail landscape – securing the customer’s loyalty in an ever-changing industry.

Acquiring the customer’s long-term loyalty is something that is even more important, especially when the very notion of loyalty is becoming harder to secure. Although it’s evident that digital players such as Amazon have evolved the industry as a whole, they have also given traditional retailers a huge challenge to adjust to customers’ habits. For example, Amazon Prime introduced a quick and easy way for shoppers to acquire their favourite goods without having to wait for next-day delivery.

The impact of online, challenge of appealing to customers’ ever-changing traits and decrease in footfall are all issues that retailers must face head-on. This article will explain and analyse exactly how retailers can overcome these challenges, the future of loyalty schemes and true value of customer loyalty.

Personalised customer loyalty: keep it simple

Shoppers’ traits have constantly evolved because of the impact of online. However, some innovative, smarter retailers don’t shy away from digital services in retail but instead embrace the opportunity it presents. Wetherspoon’s introduced an ‘order & pay’ app designed to give customers an easy way to purchase their favourite food & drink, all without leaving their seat. Ubiquitous eatery Nandos is currently trialling delivery through its app in certain locations across the UK, in a bid to expand its already very popular offering. And Boots offers repeat shoppers personal, seasonal deals based on their purchasing habits. All three of these examples go hand-in-hand with the success of the respective retailers. It’s an indication of the type of service that customers now expect.

Tesco recently caused uproar when it announced changes to its loyalty scheme, ‘simplifying’ their points system but alienating a lot of customers. And Waitrose is taking a similar approach as their current scheme has been deemed “too confusing”. The move by Tesco was quickly delayed following strong customer backlash. However, the whole episode only proved that consumers are very much engaged in Tesco’s Clubcard scheme and that loyalty points are valued almost as a currency. And realistically, if Tesco is simplifying the scheme, it should be welcomed – many current solutions are far too complex with exclusions and caveats on what the vouchers can be redeemed against. A great loyalty scheme should attract and retain the customer’s interest, first and foremost.

True customer loyalty will be secured by the retailer that can provide it consistently

Tesco’s changes to its loyalty scheme have opened up an entirely new conversation about the concept of loyalty. For any retailer, large or small, one retailer’s loss can be another’s gain. Reputationally, Tesco faces the challenge of re-introducing its new scheme and reassuring shoppers that they are in fact getting the best deal. With the right kind of loyalty scheme that is highly targeted, relevant and – most importantly – consistent, independent smaller firms can play David to larger supermarkets’ Goliath.

Take the now famous store, York Roast. The food provider serves freshly roasted, hand-carved meat sandwiches across regions in the north of England. More commonly titled the Yorkshire pudding wrap, the food caused shockwaves, with a post on social media receiving more than 30,000 shares. Through the bespoke system ‘Love Roasts, Love Locals’, customers were given 300 points for free when they signed up – equivalent to £3. Building on the success of this loyalty platform that we implemented, the company was able to launch a delivery service via Deliveroo. The exponential growth of York Roast is a simple example of a smaller firm listening to the customers’ needs and providing an unbeatable service.

The customer backlash displayed through the Tesco fiasco shows that smaller retailers, grocers and similar local businesses can take advantage of disappointed shoppers. The retailer to react first and introduce and maintain a customer-first loyalty scheme will be the one to ultimately reap the rewards, regardless of what the bigger players do or don’t do.

What can retailers learn from York Roast?

York Roast managed to do something that certain larger chains struggle to (and may well never) achieve; build a target market that craved just their products on a consistent basis. Through its bespoke loyalty scheme, customers were given a personal touch with each and every interaction.

The loyalty scheme has now been rolled out across all branches and, in 2017 alone, saw more than 1,500 shoppers registered with a return purchase value of £44,262. The latter figure might seem somewhat insignificant, but to a smaller, burgeoning retailer it can make a huge difference. Take this one step further as well – imagine if Tesco or Sainsbury’s were able to generate the same buzz with customers but on their level. You can almost guarantee that both the shoppers registered and return value figures would be much much higher.

The retail sector is failing customers’ cravings for personalised deals

The success of such schemes is rightly being questioned in an age when more and more of the world is shifting to digital devices and online shopping. Although a study found that 89% of people polled in the UK says they have at least one loyalty card, only 51% said that they are more likely to shop with a retailer that has a loyalty scheme than one without. What this shows is that UK shoppers value loyalty schemes, but the schemes themselves aren’t properly catering to the customer’s needs. If customers aren’t using their loyalty cards, retailers must take on the onus of creating a service worth engaging with.

Yes, traditional retailers face the challenge of combatting online players, but the lack of rewards is an even starker problem to address. Most schemes are either points-led or discount-led, with little personalisation. This has to change. Customer loyalty is the Holy Grail of retailing – and creating bespoke, personalised schemes that suit a modern audience is the only way to build valuable relationships with the customer.

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