Back to the future for loyalty

Loyalty schemes were supposedly dead. The consensus was that they served little purpose when all the focus of shoppers and retailers was firmly on delivering the cheapest possible prices. Nothing was deemed worthy of distracting them from this mission.

Such was the downbeat mood music around loyalty programmes that Tesco had its insight division Dunnhumby on the block for some time before recently pulling its sale.

But maybe loyalty schemes were simply an easy target because they have been largely misunderstood over the years by many people in the industry. They should be a mechanic to help collect data that could then be used to deliver insight, which could ultimately change shopper’s behaviours. Instead, for many retailers they were badly conceived schemes that simply gave margin away in return for customers collected points.

As the dust has – very slightly – settled on the unprecedented growth of the discounters and value-focused players over recent years there is a something of a reassessment of loyalty taking place in the sector. Even Lidl has been trialling a loyalty scheme in Scotland through its ‘smarter shopping’ card.

Recognising that loyalty has had a bad rap in recent years Marks & Spencer has launched Sparks, which it calls a members club that is about building a relationship with customers – it prefers not to call it a loyalty programme even though it looks exactly like one. Points are collected and offers can be unlocked as well as invites received to previews and events.

An interesting aspect is the two-way element of the programme whereby members can select their own tailored offers and are also rewarded for sharing their views.

This sharing aspect is a key part of the new loyalty models that are emerging and which are moving things onto much more of a digital footing. This is definitely the case with Asos that recently announced it is to roll-out a loyalty scheme – Asos Rewards – after an initial experiment was extremely well received by its customers.

The objective of Asos’ Rewards is to encourage interaction with the brand that it reckons will lead to greater sales. Rather than simply acquiring points for buying goods members of the programme are rewarded for engaging in different ways such as posting pictures of themselves on social media. Such activity earns rewards such as discounts on goods and free delivery.

These might not necessarily be loyalty programmes as we know them but they are definitely loyalty programmes to my mind: loyalty 2.0 possibly.

Glynn Davis, editor of Retail Insider

K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.