58% of European loyalty cards have never been activated. Experiences, not incentives, are essential to winning consumer loyalty. Check out which methods are most effective for acquiring customer data and encouraging them to make another purchase!
There was a time when offering customers a branded piece of plastic to collect points in exchange for their data was enough to build a loyalty program. But as technology advanced, that solution stopped being effective.
Although the United Kingdom ranks second, just behind Finland, in terms of the number of people who are most likely to hold a loyalty card (3.6 per person), it is also a market where customers are least willing to use them. Moreover, only half (51%) said they would be willing to buy from a brand just because they hold its loyalty card. This statistic is supported by the Norwegian Business School, which found that across Europe 58% of loyalty cards are never activated, let alone used.
What can brands do?
According to recent research conducted by Adobe and Goldsmiths University, “Reinventing Loyalty: Understanding Consumer Behaviour in the Experience Era,” the key is the awareness that the consumer experience is everything. To succeed, companies must stand out with original retail experiences and personalized offers reaching customers through digital channels.
Hackett's experience
Hackett's experience
Hackett, a British menswear retailer, through its loyalty program developed with the help of the marketing agency ICLP, gained much better insight into its customer database than with commonly used loyalty methods. Its success was helped, among other things, by offers to create free monograms on the brand's products.
“We will often have a promotion where we tell someone at the point of sale that they will receive a free tie with this shirt, which is a lovely surprise; there are also regular opportunities to win a cash prize,” describes Hackett's marketing director.
How does it work?
How does it work?
Shoppers register online or their data is recorded in a given physical store. Hackett employees are equipped with iPhones to collect customer information for this program. The same data is also collected online when users register with an email address.
Such information allows store staff to learn what type of person a particular customer is, what they like, what they wear, and what they avoid. Such details are helpful in making further sales decisions. In addition, segmentation soon affects the type of email marketing that each type of customer receives.
“Thanks to the new technology, we are able to offer our customer, for example, a set of cufflinks that they like,” said Blenkinsop. “Right now we can identify the customer and suggest what would match previous purchases. This way the process automatically sparks consumer interest.”
Personalized bonuses as an effective incentive
Personalized bonuses
Personalization is an important point for Rachel Aldighieri, managing director at the American Direct Marketing Association. Although there is no doubt that customers base loyalty around experience, actual rewards are still welcome. Provided they are personalized. In fact, recent DMA research showed that nearly three in four consumers (72%) identified “personalized rewards” as the main incentive for their loyalty.
“Loyalty is associated with being helpful, which for most consumers means offering excellent customer service that is personalized,” explains Rachel Aldighieri.
Offers and rewards that are tailored to individual needs are definitely the biggest trend we are seeing. An excellent example is the approach of the brand “Marks and Spencer,” which uses its card to tailor offers to what people choose. As a result, consumers feel that the system is built around them.
Artificial intelligence is expected to make personalizing customer activities much easier. With so much data moving at high speed, AI is predicted to become a tool that helps understand each consumer's habits. This will make it possible to match rewards and abandon ineffective generic offers, which most often look impersonal and, consequently, discourage loyalty.
Summary
Effective loyalty no longer relies on plastic points cards, but on personalization and building experiences. Brands such as Hackett collect customer data in stores and online to offer tailored rewards — from free monograms to cufflink recommendations. Research shows that 72% of consumers point to personalized bonuses as the main incentive for loyalty. The future is expected to be artificial intelligence, which will help analyze shopping habits and eliminate impersonal generic offers.
