What does the Covid-19 pandemic mean for Loyalty? / How is “Loyalty” changing? These are problems considered by Loyalty Magazine Awards judge and knowledgeable albeit “ranty” (his word) loyalty practitioner Crawford Davidson in a “letter to readers”.
Dear reader, please forgive me, at my worst I can be quite “ranty”, at best a bit evangelical about customer loyalty. This letter is addressed to the cynics who seek to tell me that “loyalty programmes were dead a long time ago”. In the face of a global pandemic with huge social and economic impact, it is easy to understand why some and possibly many may feel that loyalty programmes are less relevant, however I am not one of those.
- I have seen the hundreds of thousands of customer applications that the major UK loyalty programmes are still getting each year: Tesco Clubcard, Nectar, Boots Advantage Card.
- I believe that loyalty programmes are evolving and becoming more important than ever:
- Rationally – with the loss of 3rdparty cookies on many digital platforms, and the enforcement of PECR rules, the access and permissions that loyalty programmes bring are essential.
- Emotionally – loyalty programmes are a “fan club”#, brands must either get ever closer to their customers or find themselves marginalised@.
I have seen a change in loyalty programmes over my 30 year career in marketing and an even sharper change over the last 4 years as a judge on the Loyalty Awards. Loyalty programmes are evolving, and yes, some major loyalty programmes need to evolve more rapidly. I see two big buckets of change:
- Strategic: programmes are becoming more emotional, more community orientated, they are dialling up creativity (because they need to do so to cut-through). Some are beginning to truly address community issues and environmental concerns, (“truly” = more than “green-wash”).
- Tactical: there are fewer new programmes with points or fixed “base-rewards” and more with a flexible or variable proposition, or even a foundation in engagement rather than the transaction. This is great because we humans all too quickly take for granted things that stay the same. Over investing in such stuff is not a way to stay relevant for ever.
Before one looks forward it is useful to take stock of where we are and where we have come from:
When most people look at Loyalty programmes they see the very rational and transactional nature of most of the big Loyalty programmes. I have led several such programmes, Boots Advantage Card, Tesco Clubcard and the Morrisons programme, each of which could reasonably be summed up as, “spend more, get more points”.
However, if you drill down there is always more going on, because the core participants of each and every programme I have seen, are the brand advocates, the real fans#. They are the 20% that drive 80% of revenue. They participate in more channels, respond to more CRM, do more of everything, including complain more!
Being tough on myself, and other Loyalty industry professionals, these “best customers”, were already “best customers” before the loyalty programme existed. However, we didn’t know who they were, or where they lived, nor had a means or permission to communicate with them in direct marketing.
When I launched and relaunched the above programmes, in each I saw a significant sales uplift, between 1% in a relaunch, going up to 4% in a new launch. These uplifts were measured by many fairly sceptical accountants in these multi-billion pound retailers. We also saw a strong NPS uplifts, and the brand metrics all going in the right direction. Such results are not a coincidence: I have seen this many times, as the client, and as the agency helping clients. I have seen it in trials versus control as well as full scale launches. I hear of similar and even better results from my fellow Loyalty Awards judges. I have the privilege of reading about many examples each years as a judge on the Loyalty Magazine Awards.
Loyalty programmes, don’t create loyalty, however they can amplify what is already there by making customers better recognise their affinity for a brand, this happens through the process of “joining”. Better still, the resulting customer data and insight the programme creates, can be used to hone the overall customer proposition, year after year, to make it more and more attractive for these loyal customers. This cannot be done nearly as well with anonymous sales data, because the average behaviour of all customers brings, at best, average insight.
Loyalty programmes give the access and permission for CRM to bring proposition advances to the attention of customers: cutting through the broadcast marketing clutter like a whistle at a football match. (Sounds simple?…. not quite or I would be out of a job.)
Covid-19 is only one of the major issues society is facing society but perhaps not the biggest:
- Social inequality which is being amplified by globalisation, felt the most by the groups who already experience the greatest discrimination: sexism and racism being the two most prevalent.
- The environment emergency, which again amplifies the above social in-equality
- The Covid-19 pandemic/ economic recession, yet again appears to amplify social in-equality
These issues are driving change, social media and the immediacy and transparency of communication makes it harder for brands to stand by the side-lines as they once would have done. Organisations are being forced to reconsider their reasons to exist. Many economists and thought leaders are challenging the sole focus of businesses on shareholder value, demanding that organisations begin to balance the needs of all stakeholders: Shareholders / Staff / Consumers / Society (& wider community including suppliers and their staff). Hence brands must either get ever closer to their customers, and more aligned with their perspectives on life, or find themselves marginalised. In this the two beautiful ideas at the heart of the best loyalty programmes can help:
- Communities of like-minded people joining and acting together for their mutual benefit
- Consumers benefiting in proportion to their participation: be more “loyal” get more reward
Great commercial organisations (and brands) are in a position to become part of the solution, joining in a shared perspective on life and society with their best customers, as a community, and through this grow consumer loyalty. Who is already doing this?
- The Coop in the UK are for one, and have been on this agenda for a very long time, which is why they are a winner of the Organisation of the Year at this year’s Loyalty Magazine Awards..
- Vans Family is another, designed to recognize, reward and celebrate fans for who they are and what they like to do, a community of likeminded people (another Loyalty Magazine Award winner)
- Pets at Home give more than 2% of their profits to charity each year, the pet charities their members direct the value to (a serial past Loyalty Magazine Award winner).
Like an awards thank you speech
Like the thank you speech at any Awards ceremony my list could go on and on, including many of this year’s winners or past winners of the Loyalty Magazine Awards, where we see loyalty at its best.
Loyalty programmes are not dead: whilst the Coop programme may have been going since 1844, in the mainstream world of commerce and more globally, loyalty programmes are only in their early thirties and just finding out who they really are, and what it is all about.
Loyalty is so much more than a marketing programme: it is a set of principles and values, a way of doing business. Some tactics can become outdated, but being closer and aligned with your customers perspectives is an enduring strategy.