Loyalty schemes — winning customers in a digital era
Knowing the owners of the shops just around the corner and being truly loyal to specific businesses seems to be something from the “old days”… something that would happen to our parents and grandparents, not to us… not anymore.
In a digital era like ours, it’s not uncommon for companies to question their approach to customer loyalty. Reach PLC is no exception, and as a company that offers news to millions of users every day (having reached 40m unique visitors in a single month across our network, in October 2019), we are constantly looking to improve the engagement of our readership.
The question we need to ask is simple: are digital users any different from “real” (flesh and blood) customers when it comes to loyalty? Are their motivations and frustrations that dissimilar to what we’ve always experienced in the past?
We conducted some research into loyalty schemes, which was split into two parts:
1 — Understand what types of loyalty programmes exist (we considered schemes used by both physical and online businesses);
2 — Conduct a series of interviews to better understand what makes people join loyalty schemes, then what deters or makes them stop using them after they’ve been part of one. In broad terms, we wanted to understand what makes people loyal to a business or a brand. For this, we interviewed a total of 12 people, who shared information about their shopping habits and their thoughts about loyalty programmes. This article will focus on the second part of the research.
This was a qualitative study, with the following caveats to the results:
- it shows that a certain behaviour occurs, not how often it occurs;
- it shows the existence of certain loyalty schemes, not that some are more popular or relevant than others
- it is not demographically representative and does not provide enough data to conclude that people of a certain age, gender or place of residence make specific choices
Following these interviews, we have analysed the collected information and categorised both the motivators and the deterrents (frustrations and issues in general):
The main motivators identified
- Money: getting money off weekly shopping, points that can be converted to discounts and free things. A few people had a common perception: “Getting something for nothing”
- Values: helping a cause and supporting companies that share the same values. These motivators are highly related to altruism and an eminent desire of belonging;
- Status: showing off what is perceived as high status and being part of an exclusive group of people;
- Convenience: getting access to things which help in their daily lives: free shipping, next day delivery and access to special buying conditions were a few examples mentioned.
The most relevant frustrations
- Money: people feel their efforts are not properly rewarded (“points take too long to accumulate and it’s not obvious what the benefits are”);
- Values: if people do not agree with the company’s values, they are not likely to join a loyalty scheme or even buy from the company, unless they do not have other options. A few participants mentioned the position of companies owners regarding Brexit affected their decisions.
- Convenience: Data leaks, too much spam and having a long sign up form to fill in were some of the main concerns when it comes to joining a scheme. Having to carry a physical card (or often forgetting it) and not having a digital way to keep track of points and rewards were reasons mentioned to quit a loyalty programme they had joined. “Too much effort for little rewards” was also a pain point.
The underlying motivator
One of the main conclusions from this research is that trust is the ultimate motivator for many people and one that is often overlooked.
People who mentioned having joined a value-based programme (the kind that encourages a close relationship between the business and its customers, based on common values, e.g. animal welfare, climate change, poverty…) also considered themselves loyal to brands that do not have a loyalty scheme, purely because they share the same values.
One of the main concerns when it comes to online loyalty schemes is related to personal data: the vast majority of participants mentioned they get “worried about receiving too much SPAM” and they are especially wary of their data being passed on to third parties.
This is where trust comes into play, and probably the most critical point to tackle when thinking how to generate loyal users.
According to research by Salesforce,
“(…) 95% of customers say trusting a company increases their loyalty. What’s more, research shows that 91% of customers say their trust in a company makes them more likely to buy more frequently.”
We can’t say what percentage of people rationalise their trust in a brand when they shop. However, we can surely say that even when our customers are digital users, we must remember there is a human behind that screen that has needs, fears and motivations that trigger certain behaviours.
So if you’re aiming to boost loyalty amongst your users, there is some homework to be done:
- Evaluate the trust levels in your business/brand;
- Know your users: it’s the only way to give them exactly what they are looking for;
- See how others perform: not just your competitors, but any other business that successfully created trust. It might give you good ideas;
- Be creative: loyalty schemes are not the only way to increase loyalty and engagement. Is there anything you can change in the overall experience?
