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To reward or not reward, that is the question

  • Opinion
  • September 20, 2016
  • Juanita Neville-Te Rito
To reward or not reward, that is the question
Image: Kerryn Smith

Truth be told I am a great shopper. An outstanding shopper. Some would say a world-class endurance shopper. I am also an avid loyalty programme member. I like to be in the know. I want to be treated like a VIP for my commitment, I want to know about special news, new releases, VIP-only information and in return I reward those retailers with my custom. Quid pro quo.

The New Zealand loyalty programme landscape is currently shifting the type of focus, engagement and currency interactions retailers are having with their shoppers. Some with success. Others not so much.

You might be a member of this programme or you may have seen the social media outcry as Farmers department store recently changed the currency and rewards foundation of their Farmers Club. They have copped a lashing from customers. I for one have written off the programme as too hard and have already started my cosmetic buying elsewhere (admittedly a place where I also get better advice). I also voted with my feet when BNZ Visa was no longer a Fly Buys partner.

Creating non-price differentiation is difficult in retail so it is not surprising that many retailers adopt loyalty programmes to develop a deeper, more meaningful relationship with their customers.

So what are the considerations before you jump in head first?

1) Do you have the stomach for this? What’s the plan?

This is a commitment to your customers and your team. You need to be clear you are entering on a journey that requires resources, investment, commitment, consistency and care. It’s not something you should “have a dabble in” (unless you have money and customers to burn).

This is an investment in your relationship with your customer base that needs to be worked through so you understand what the short, medium and long-term payoffs are.

The plan needs to cover all the components of the programme: timing, branding, value-proposition, incentives and rewards, loyalty currency (points, cash-back, discounts, coupons, etc), and marketing channels.

You must have a clear “when, where, why and what for” covered. If you can’t nail that, then do not pass go and do not collect $200.

2) Understand the roadmap of how you are going to get to know your customers.

In order to get the most out of the programme you need to be clear on your end game. At what level do you want to know your customers and how are you going to collect this information?

My local coffee shop simply wants to know your name and your order so they can get to know you. But at my supermarket, they will want to collect information on how often I shop, what I buy, how often I buy it and how much I am worth to them as a customer. Obviously from this level of data they will be able to understand which customers are worth investing in, rewarding, recognising and maintaining.

3) Ensure your engagement is compelling and relevant.

Understanding the type of relationship you want to have with your customer will drive the engagement you need to have with them.

Many of the loyalty programmes I am a member of have nothing to do with a tangible currency – they have more to do with how the retailer treats me. I get VIP offers and special releases, am invited to pre-sale activity and am kept in the know about stuff they know I will care about.

Remember also that loyalty is not just about “the more a customer buys.” The problem with these loyalty programmes that they don't incentivise customers to engage with a brand in a more meaningful way. Instead, ask customers to write reviews or share the good news. You want a relationship with a customer they feel proud of, and that they share with their friends and their family – their tribe.

4) Seamless, frictionless customer interactions.

Customers today do not want to have the hassle of having to carry around a plastic card or hand over a coupon to redeem their reward. I love Living Rewards (Life and Unichem Pharmacy) as I don’t have to carry around a piece of paper to redeem my reward. The sales assistant tells me at the till I have earned a $10 reward and asks if I would like to redeem it on that purchase.

Likewise, I don’t mind at my local coffee shop (they are a one-chain owner/operator) that they simply keep my coffee card at the counter and clip it every time I come in, until I earn my free coffee. It’s still simple and seamless for me.

Think about your customer and the interactions they have with you. It’s likely to be physical and virtual. In your world or mine. Can I access and be recognized however I choose to shop with you?

5) Be genuine and authentic.

Customers aren’t idiots. They know a dud offer when they see it and can ditch you quicker than you know by having a meaningless relationship.

Country Road and Witchery send me a reward for my birthday. It is not conditional on any purchase. It is a genuine thank you and celebration of me. This feels like authentic care in comparison with the other offers I get from VIP programmes, which offer me free fries with my burger or 20 percent off if I spend $100 or more. Really?

Ultimately, a loyalty programme should offer incentives for shoppers to reduce their store and brand switching by offering them better value. This value can comprise of many different aspects, which can range from reward and recognition of behaviours, to surprise and delights for being a part of the tribe. There is certainly a cost and commitment to these which you must have the stomach for. Once you start it is very, very difficult to stop without some significant customer implications (assuming your programme was outstanding). But if you are considered with your approach and authentic, you can be rewarded with insights and opportunities that far outstrip your competitors. Quid pro quo.

This story originally appeared in NZ Retail magazine issue 745 August/September 2016

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