In the US, consumers hold 3.8 billion memberships in customer loyalty programmes. Closer to home, the average number of loyalty programmes which South Africans belong to has increased to almost nine following the disruption caused by the COVID-19 pandemic. Clearly, loyalty programmes provide a compelling value proposition, but how should consumers go about selecting ‘the right one’ for their needs?
“Judging by some of the local research done, the most successful programmes are the ones where members get rewarded by not having to change their buying habits, for instance swiping a card and just going about their business. That being said, a well-functioning rewards system forms the foundation of guaranteeing customer loyalty and increasing revenue through repeated purchases,” says Nic Roets, International consultant at customer loyalty specialists, LoyaltyPlus.
Given that about 50% of all consumers leave their loyalty programmes inactive with many discounts going unclaimed, much of what constitutes a successful initiative centre more on building emotional engagement as opposed to accumulating points and rewards. Of course, that is not to say that points programmes are ineffective. It is just that they cannot be the only incentive for registering and using the programme.
Spend-based programmes help especially when it comes to keeping buying behaviour the same. By recognising high-value spenders, brands can engage deeper with them while giving them automated rewards. Managing a successful loyalty programme is difficult – but the rewards to be had are clear – the long-term customer retention benefits are significant, not to mention that those members who are active on loyalty programmes spend 67% more than those who are not.
As McKinsey found, customer loyalty is the new battleground for marketing-led growth. The consumer decision journey when it comes to identifying the right loyalty programme consists of four pillars. Firstly, it is the initial consideration followed by the second pillar which is actively evaluating whether they want to join or not. The following pillar revolves around the moment of purchase and the final pillar is the decision to keep making purchases from that brand.
“The digital world is providing a wealth of choices for consumers when it comes to what to buy from which brands. Getting repeat business becomes more critical now than ever. Therefore, brands must assess how they structure their programmes and how they create an emotional connection with a consumer. For the customer it is less about saving a few Rands than it is about whether the brand understands their needs and can provide them with products and services that meet their requirements,” says Roets.
