Retailers need to personalise their loyalty schemes, says research

While loyalty schemes are a widely used strategy by retailers to reward their customers, they need to be reformatted to meet changing consumer expectations and work more efficiently, says a new research by Deloitte.

Customer service, convenience and the overall shopping experience have more impact on brand loyalty than a traditional loyalty scheme, the report found - Photo: Wikimedia Commons

A survey of 2,000 UK consumers found that 41% of consumers use brand loyalty schemes once a month or less, with 14% of respondents ‘never’ using them. Additionally, more than a fifth of UK shoppers have unused loyalty points.

“Traditional loyalty schemes need a rethink not only because of changing consumer expectations but also because they have become expensive to run and difficult to unwind,” says Ben Perkins, head of consumer business research at Deloitte.

“They still have some appeal, one in five of consumers would stop shopping with a brand if they were to end their loyalty scheme. However, for the majority of customers these schemes are too generic and loyalty should be about more than collecting points.”

Points-based loyalty schemes remain highly popular with 54% of those surveyed saying they like them, but only 47% of shoppers always redeem all of their points.

The younger generation – those aged between 18 and 24 years old - is even less likely to redeem points, despite a higher percentage than average enjoying a points-based loyalty scheme. According to Deloitte, this points out to schemes being designed for older generations and now need to reflect consumers’ growing appetite for personalisation and experience.

Furthermore, the research found that customer service, convenience and the overall shopping experience have more impact on brand loyalty than a traditional loyalty scheme. And when it comes to rewards, 32% of consumers want a scheme that “better reflects my lifestyle, such as offering freebies.”

“Consumers want to be recognised and rewarded as individuals, not as faceless points collectors. A decade on from the introduction of the first smartphone, today’s savvy consumer also expects brands to be more relevant in the way they communicate and engage with them,” continues Perkins.

“Retailers and consumer businesses should consider smartphone apps, coupon scanning, data profiling tools and connected stores. These may help evolve a traditional loyalty scheme into a custom-built ‘smart’ loyalty programme that engages consumers at a personal level.” 

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