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Is loyalty going the way of the dodo?

As a retailer, getting your customers to be loyal to your brand is the holy grail. However, in an increasingly mobile centric world that has fundamentally changed the way consumers shop, does the traditional points scheme still tick the boxes or is loyalty dead? At a recent Essential Retail breakfast briefing hosted by Datalogic, this is exactly the topic that was discussed by retailers and loyalty experts.

According to research conducted by Deloitte in 2017, 54% of consumers claim to like points-based loyalty schemes and the average consumer is enrolled in over 14 different loyalty schemes. This number alone would suggest that loyalty is alive and well, however the same research reported that most consumers consider being rewarded for their loyalty to be ‘the norm’ or even an expectation but not a differentiator. 42% suggested that they needed more than points to shop with a brand and liking the brand’s loyalty scheme didn’t make the top five when participants were asked what factors encouraged their loyalty to a particular brand.

These findings were echoed by the panel of experts, who shared not only their professional but also their personal views of loyalty. The discussion indicated that there is a great desire and a need to move away from traditional scheme structures which offer rebates to customers, after they have purchased goods or services. It was also suggested that typically, there is too much focus on the mechanics of the individual scheme and in some cases, this has led to the creation of programmes that are far too complicated. It was also clear as the debate evolved that the majority of people, especially millennials and generation Z, are not concerned about the collection of data and are happy to give it as long as they see something in return.

Successful future schemes need to focus more on how to add value for the customer at the front end. As one of our participants said, “make shopping rewarding, don’t reward me for shopping”.

The constant evolution of the competitive landscape is making a paradigm shift in loyalty schemes increasingly necessary. Shopping is becoming a binary experience, meaning that many of the products that consumers purchase can be bought from a multitude of different vendors. With a mobile phone in the hand of nearly every consumer, access to product information, reviews and price comparisons is readily available.

It was also contested that Amazon has changed the fundamentals of retail and everyone is now competing with the online retail giant in some form. Case in point, is the success of its loyalty programme, Amazon Prime. It doesn’t offer any money off in relation to spend, yet an estimated eight million of us across the UK are willing to pay £79 per year to be a member of the scheme. Why? Because consumers perceive value in the additional benefits that are received, which include free next-day delivery and access to its media streaming service.

There is a lot that can be learnt from Amazon’s approach and its methodology is supported by Deloitte’s aforementioned research, which states that the three biggest drivers of loyalty are value for money, trust and quality. In addition, customer service, convenience and shopping experience are all regarded as more important than the brand’s loyalty scheme.

So, is loyalty dead? The evidence is stacking up that securing customer loyalty needs to go beyond having a points-based scheme and our panel were in complete agreement, expressing that future schemes need to have the customer front and centre. The key takeaway for retailers is that the data collected via existing programmes is still undeniably valuable and provides a treasure trove of information that brands can and should leverage to add value to the consumer experience. Technology, including our own point of sale barcode scanners and mobile computers are a vital enabler, but it is what brands do with this data that holds the key to preserving the future of loyalty.

Over 40 retailers joined Essential Retail and Datalogic at the Ivy in March 2018 to listen to a panel of experts discuss whether loyalty is dead. If you are interested in hosting a similar event, please contact simon.phillips@reedexpo.co.uk