Contemporary loyalty programmes are all but unrecognisable from the methods retailers first used to promote loyalty and repeat spending. More than 300 years ago businesses realised that handing out tokens (which could be used for future purchases) was an effective strategy for retaining customers. Through the years this method has evolved; in the late 1800s stamps were switched for tokens, and by the 1990s, loyalty cards had been introduced.
It’s not just the methods used for customer retention that have changed. It’s the customers and brands too. Thirty years ago, consumers acted as spectators. They were driven to purchase by the competitive value of products, something which was reflected in the success of slogans like “That’s Asda Price” and “Every Little Helps”. Their loyalty was built on the foundation of ‘value for money’.
Fast forward and those spectators have rapidly become participants and then dictators. Far from sitting back and watching, customers are taking an active role in determining the products and services that their preferred brands release. Product quality is essential, as if the ethical behaviour of a brand.
This switch in roles has led to a change in shopping behaviours and the ways in which customers engage with brands. Cheap products and a stamp card alone are rarely enough to win and retain customer loyalty. Consumers want to ensure that they are getting a worthwhile return from their earnings, as well as how they redeem.
Enter the digital loyalty programme. Existing purely online, and tied to a customer’s personal account, digital has put an end to the need for any physical exchange in return for repeat business. Digital programmes can be adapted to meet consumer demand and include multiple formats, as we’re about to see:
Digital stamp cards
Taking the wallet-stored stamp card online, digital cards offer customers more convenience and greater flexibility. Unlike physical cards, digital ones are tied to a customer account, gathering data that can be used by brands to generate greater levels of customer personalisation down the line.
From the brand’s point of view, digital cards are far more flexible. The offers tied to them can be changed in second – for instance, how much spend is needed to earn a stamp – or what item should be bought to earn one, and what value the completed card has for the customer.
Points, like stamps, are gathered by customers through qualifying purchases, however, unlike cards, the points can usually be earned without committing to a minimum spend. A common scenario is that a customer earns one point for every pound/dollar spent and those points have an equivalent monetary value that can be spent in store, i.e. 100 points equals one pound/dollar.
Points can be used to push certain products on customers. For instance, if there’s a push to sell a new latte flavour one week, then customers buying that product might be eligible for double points.
Gift cards are an ideal way for brands to improve cash flow and attract fresh custom. By promoting cards to existing customers as presents for friends and loved ones, they have the potential to reach consumers that have not previously interacted with a brand. Plus, with credit on the card, it’s quite likely that the recipient will make one if not repeat purchases. If they don’t, the fact that the card is paid for up front, means that no money is lost on the transaction.
While gift cards are traditionally a physical item, they can be sent digitally, and can also be redeemed online during checkout or within or order and pay app.
Promotion codes can be used by brands to attract first-time or repeat purchases; encouraging them to try a product or service and build the first steps towards customer loyalty. Discounts can be widely distributed, or can be tied into specific promotions, events and partnerships.
One of the most famous examples of this was the Orange Wednesdays promotion run via cinemas. The partnered promotion was only available to customers on Orange phone contracts, that one day of the week, and allowed customers to get cut price entry to the cinema. Similar partnerships and timed promotions can easily be created with food and drink businesses – think gyms and healthy food brands.
Personlised offers take promotion codes a step further, using data to creating discounts and offers that appeal to individuals rather than wider, generic customer groups. Each time a customer makes a purchase online or through an ordering app, information about them and their ordering preferences is collected. That data can be analysed and used to segment customers by their likes and dislikes, preferences and average spend. Personalised offers can then be created and sent to the relevant customers, making the offers far more enticing and helping the customers to feel that their favoured brands really understand them and care about their loyalty.
The same data can be used to identify sleeping customers and ones whose loyalty is waning. Should a previously regular customer reduce the frequency of their spend, personalised offers can be used to attract them back to the business.
There’s no reason why a brand should stick to offering just one of these loyalty programmes at a time. One of the great benefits of digital loyalty is the customer can house and interact with everything in one place – their phone. There’s no need to keep cards in wallets or store tokens in pockets. Every customer is different, and every brand has its own consumer niche. Businesses should pay attention to their audience’s persona and build a loyalty programme that meets their specific wants and needs.
QikServe’s platform features loyalty and marketing solutions including promotion codes and a digital stamp card. It further integrates with industry leading marketing and loyalty providers – to find out all the options available, contact us today.