April 5, 2017

Future of Customer Loyalty

5 minute read

As demonstrated in our ‘History of customer loyalty’ infographic, customer reward schemes have come a long way. Customer needs, wants and preferences never stay the same for long. Businesses that want to keep their customers loyal need to always have their finger on the pulse, using available data to understand what customers are looking for now. In short, they need to adapt and to deliver.

While the infographic took us on a historical journey, illustrating some of the ways in which loyalty programmes have changed over the last few years, here we are looking to the future. Combining current trends with insight from our own experts here are the top themes we believe businesses need to be factoring into their plans in order to survive in these competitive times:

Context, location, real-time

Big data manifested early in the life of the loyalty card, giving companies such as Tesco a massive tactical advantage in launching their Clubcard scheme as it allowed them to specifically target customers with the products they wanted.

Now, the focus for big data has to be delivering unique  customer experiences. Businesses have shifted to deliver benefits without using a loyalty card, for example O2’s Priority scheme uses data to make relevant offers to customers: not only “in the moment”, but pushing out exclusive promotions based on individual location, interests and behaviour.

The key, however, lies in the ability to engage customers in real time: not difficult, if you are a single location retailer, speaking directly to customers on your premises; far harder to react as personally, and with the same agility, when your primary channel of communication is electronic.

Or at least it was until the advent of game-changing new digital technology, including smartphones, beacons, geofencing, and analytics. These, combined with cloud-based big-data, now provide businesses with real-time capabilities to move them on to the next level.

Social Integration

Businesses can turbo-charge existing loyalty programmes by integrating social sharing into their loyalty schemes and engaging customers across all channels.

Nike’s PhotoiD is a great example of a mobile app leveraging social media. For not only does it allow users to design a pair of personalised Nike iD trainers based on an Instagram photo of their choice, the same app also enables sharing. The result is that no sooner is the image created than it is out there, inspiring comment and interest within a cohort of individuals highly likely to be prime targets for the Nike product.  Their main rival Adidas are also using personalisation to great effect. The sportwear giant has recently launched a pop-up shop in Berlin where customers can come and get a custom sweater made for them on the day. High tech sensors scan the body to make the fit as unique as the person buying it. The customer can then customise the design and it’ll be made in store ready for collection in just four hours. At the moment this only a temporary offering but Adidas say they will be monitoring customer feedback and may look to roll the concept out into other countries.

Use of mobile is increasingly the key to success, while delivery of marketing messages needs to be omnichannel: integrating all channels in one seamless symphony that includes online, physical, or smartphone, as opposed to traditional marketing, which tends to focus on single-channel.

Connected touch points mean services – and benefits – obtained through one channel can be accessed, seamlessly, through multiple other channels. John Lewis, which has historically used loyalty cards, has shifted into the use of apps, allowing customers to access the same benefits using their mobile device as a gateway. Their most recent development for ‘My John Lewis’ loyalty card customers is Kitchen Drawer – an online facility which stocks a customers’ receipts and guarantees for easy future reference.

Continual innovation

In response to the ever-evolving consumer, businesses are having to both reimagine and innovate in order to retain engagement.

Gamification typically employs elements of gaming in a non-game context, in order to encourage brand interaction. This concept is most obviously typified by the McDonalds’ annual Monopoly campaign, which has worked wonders for the ongoing popularity of the fast food chain. However, the challenge for businesses now is to integrate gamification into the overall loyalty strategy in order to entice frequent engagement.

Big data has also allowed businesses to leverage factors such as immediacy, ease, surprise and delight. IKEA’s Swipe a Surprise is a great example of this and guarantees holders of the IKEA Family card with a prize each time they swipe during any Swipe a Surprise promotion period. Meanwhile, loyalty start-up Kiip has taken surprise and delight to the next level. By integrating with other smartphone apps, Kiip can send offers based on personal information and behaviour in real time, when they’re most pertinent. By adopting this approach to gamification, Kiip aims to reward customers “for everyday life”, for example, if you log your run for the day in MapMyRun, you can get a reward from PepsiCo’s Propel Zero brand posted out to you. Currently Kiip is giving away five rewards a second across 120 apps with 30 million users.

Co-creation

Co-creation is what happens when a business works with its stakeholders – not just customers, but employees, and even local community members – in the design, development and deployment of products and services.

Lego have long seen the benefit of co-creation and in 2008 launched the website ‘Lego Ideas’. The site allows fans to upload their own ideas for future sets. If an idea gets over 10,000 likes by other users Lego will review the idea and determine if it should be made into a set and sold worldwide. The original designer then gets 1% of the royalties.

Another co-creation success story has been New Look, whose MyLook programme became the basis for engaging customers in business decisions and, through incentives, encouraged them to become brand ambassadors. Businesses must now recognise that social media has given the consumer a powerful voice, and that engagement must be rewarded.

Aspiration and personal fulfilment

Demonstrating that loyalty will take you to places you only otherwise dream, and encouraging people to aspire to reach that goal, is a major benefit to Generation Z, who value discounts and money off vouchers far less than upgrades and the opportunity to sample treats they would never normally be able to afford. It is a tactic that hotels and airlines are eagerly promoting through their loyalty programmes and have done for many years with great success. For example, the Avios scheme uses words such as ‘inspirational spending options’ when talking about how customers can redeem their acquired points, emphasising that these rewards give you something you won’t get elsewhere.

Overall, it’s clear there are a number of new and emerging trends being utilised within customer loyalty programmes and, no doubt, there are many more inventive ways to come. As customers ever increasingly have choice over how to shop, businesses are increasingly having choice over how to try to retain that custom.

However, customer loyalty is far from over and what we can see evidenced here is that it is being continually re-invented utilising the latest digital access points, hyper personalisation and instant gratification for a new breed of consumer.

If you want to improve your customer loyalty offering then get in touch with us today. Call our Director of Client Services, Elena, on 07532 173 603 or email elenaz@quantmarketing.com.

Posted by Pinar Dost

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Future of Customer Loyalty

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