Many loyalty programmes offered to consumers suffer from one simple problem – they lack the day-to-day relevance that makes them a compelling proposition for the consumer. Many times retailers and service providers devise loyalty schemes that appear to be attractive but simply fail to hook their customers into a regular purchasing cycle.
The past 10 years has seen the introduction of ‘coalition loyalty schemes’ where organisations interested in consumer purchases come together to offer a rewards proposition that brings about a sea change in relevance to the consumer. Typically retailers and service providers have joined forces to offer the consumer the opportunity to consolidate their loyalty potential through one scheme that rewards them with a common loyalty currency in return for their purchasing within the loyalty coalition of retailers. Such schemes have seen tremendous success as they provide the consumer with convenience, simplicity and most importantly relevance.
There are several golden rules to be observed when developing a winning customer loyalty proposition. But before proposition development there must be customer understanding. It is most important to gain a real appreciation of the audience for whom the proposition is intended. Beyond the customer socio demographic profile, we will explore some of the following:
- Will the customers engage with a recognition system, a reward strategy or both?
- How do they want to be recognised and/or rewarded?
- Is the sought after desirable customer behaviour attainable, even with the recognition/reward?
- What will be the best approach to effective but economically viable customer communications?
Customer alignment with a loyalty proposition is critical to its overall success. Whilst this is manifestly obvious, in many cases it is not given the requisite attention it deserves and is a source of underperformance and in many cases programme failure.
Many organisations use the cost to the organisation as their starting point when developing the customer loyalty proposition – organisational alignment with the proposition. Costs are most often justified with unrealistic forecasts of compliant customers delivering sustained and in some cases incremental revenue streams. Another source of internal motivation is the obsession to either reward only the ‘best customers’ or to ignore them in preference for customer acquisition. Furthermore, most large organisations are not ‘joined up’ around their customer. This is where LCUK can deliver exceptional value as customer loyalty practitioners, agents of change and/or the people not afraid to ask the hard questions that internally never get asked as the customer is often shared across the organisation resulting in a very disjointed customer experience.
One of our key learnings is that, above all, a loyalty proposition for the consumer has to be simple to understand and easy to engage with. This however is often complicated by the need to deliver consumer relevance to a diverse set of customers. LCUK has worked for a number of clients helping them to deliver the required simplicity and diversity within a proposition that in turn delivers very effective results.