Loyalty Schemes: it’s all in the Name

'In Conversation with Huw Thomas'

Our ‘In conversation with Huw Thomas’ series is written by blogger Bethan Williams, alongside PMC. Based on conversations with our Managing Director, Huw Thomas. Bethan is an anthropology graduate turned dance teacher turned blogger and writer. This series takes snippets of the conversations between Huw and Bethan, where their interests and areas of knowledge overlap, and turn them into pieces which are relevant to retail and business in general.

I’m following on from my previous post which looked at effective data management and analysis as a means of generating customer loyalty. CRM systems which collect customer information are great in the services sector but it’s a much bigger challenge in retail, particularly in-store, to gather relevant information and make up a customer database. How do retailers keep track of who buys what, when and why? Technology is still in development for creating an in-store service with all the personalisation of online shopping or service providers (see my post on Omni-Channel shopping or speak to Huw about their Store Enabler). One established way to stay in tune with customer habits is through loyalty schemes.

When a customer signs up to a loyalty scheme, their card or number is scanned each time they purchase goods and in return for coming back again and again, they get a reward. This could be points, freebies, exclusive offers or money off with each purchase. There’s something in it for the consumer; a reward for their loyalty. Meanwhile, the store is able to collect information about shopping habits, create a personalised consumer profile and feed data into their analysis systems. The problem of tracking purchases is resolved as each scan feeds into a database of consumer demographics and their shopping traits.

Collecting data in this way enables stores to ‘know their customers’ and this is the crux of generating loyalty:

  • The loyalty scheme collects data;
  • The data can be sliced in endless different ways to analyse consumer profiles;
  • Stores can work out what a good customer – a loyal customer – looks like;
  • Marketing campaigns can be designed to target them.

The cycle will continue because the loyal customers will influence the choices of the retailer when it comes to stock and advertising and more of the same people will be attracted to the outlet.

One of the first loyalty schemes I can remember being attracted to is the Boots Advantage Card. Everyone I know, even those like myself, who don’t shop on the High Street in a big way, have a Boots Advantage Card. The branding at Boots is great because having a loyalty card is just what you do; it’s highly ingrained in the minds of the shoppers. The rewards for customers are good. Advantage points relative to the amount you spend add up and can be cashed in when shopping in-store or online. The products are often necessities, therefore, people are loyal to the products as well as the store. It’s a winning combination. Happy customers with good rewards for their loyalty and a whole load of lovely customer data for the shop!

An interesting case study, and one Huw will be able to elaborate on, is Paperchase Treat Me. The stationery outlet, one of PMC’s clients, has developed a scheme which is drawing attention from other retailers for being innovative and particularly effective. The Treat Me scheme differs from the Boots Advantage Card in that it is “no points: just perks”. The rewards are not relative to a customer’s spending. Instead, being part of their loyalty scheme gives customers access to free click & collect, next day delivery and a £5 birthday present to spend in store.

With Paperchase, loyalty is generated by being part of their scheme, whereas Boots rewards customers for their existing and ongoing loyalty. It’s a subtle but interesting difference and it will be fascinating to see how these schemes change and develop as they move forward.

Loyalty Schemes are one-way stores are able to collect the data they need in order to know their customers better. This data allows them to analyse their consumer base and build marketing campaigns which are personalised and avoid the dreaded mass-produced email approach. Loyalty in business, I believe, is generated by the purposefulness and personable quality of a company’s connection with their customers. Loyalty schemes, which reward customer loyalty while generating customer loyalty, seem to be a win-win!

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