Transferring loyalty from the football pitch to the shop floor
Brand loyalty has long been proclaimed the ultimate goal of marketing. Getting consumers to commit to purchasing a brand on a long term basis is every marketers dream. But when it comes to the crunch, no matter how much a consumer likes a brand, are they really loyal to it? 
Loyalty in every other sense is linked to passion, commitment and having a true connection with something or someone. Most people would call themselves loyal to a friend or a sporting team, but very few (if any) feel passionate about a brand. So is it possible for retailers to make consumers feel the same level of loyalty towards their brand as they do towards their favourite sporting team? Gavin Dein, founder and CEO of Reward discusses…
The number of loyalty programmes operating in the UK has increased by more than two and a half times over the last 10 years, according to a regular survey of the marketplace by GI Insight. The survey also found that over 41 percent of the top retailers now operate a loyalty programme. Despite an ever increasing number of retailers entering into loyalty programmes a large number of these fail.
The initial enthusiasm experienced by consumers to join loyalty programmes has decreased and the market is entering a period of loyalty fatigue. As more and more loyalty programmes appear on the market retailers can no longer use these as a differentiator. Despite the fact that recent consumer research undertaken by online reward company Pigsback.com found that 98 percent of consumers have a loyalty card and 65 percent have three or more cards in their wallet, the initial consumer drive of ‘getting something for nothing’ has well and truly worn off. With such high numbers of retailers with loyalty programmes in place, retailers need to offer something more if they want to change consumer buying behaviour.
One of the main reasons loyalty programmes are not resonating with consumers is that retailers are not taking into consideration what the consumer really wants when they design their loyalty programmes. The research from Pigsback.com found that over half of consumers (56 percent) believe it takes too long to earn meaningful reward points and only 25 percent think the redeemable items are worthwhile. Recent news reports revealed that the average shopper is owed £314 in unclaimed loyalty and gift points, reinforcing the fact that consumers don’t believe the rewards offered by loyalty programmes are worthwhile.
For loyalty programmes to be effective they need to make it easy for consumers to gain points and the rewards need to be of real value. More often than not loyalty programmes fail to create a unique or compelling reward for the target audience or set the threshold to achieve rewards too high or create unnecessary barriers to redemption. This results in consumer indifference to the programme and therefore little or no desire to change their buying behaviour.
For loyalty programmes to be effective they need to make it easy for consumers to gain points and the rewards need to be of real value. This is where passion based loyalty becomes relevant. Passion based loyalty is a concept where a loyalty programme is designed with the consumer’s wants and needs at the forefront. Essentially the idea is that a consumer can have their passion paid for (as long as it’s legal) by altering their shopping habits.
For example, a consumer might be a massive football fan and spends money every year supporting their club. If this consumer chooses to participate in a passion based loyalty programme, they can allocate any reward points they earn towards reducing the cost of football goodies including match tickets, kit and merchandise. By creating a programme that allows consumers to reduce the cost of paying for their passion retailers are able to transfer the loyalty the consumer feels towards their club to the participating retailers.
The future of loyalty isn’t about complication, it’s about simplicity. The easier collection becomes, the more likely it is that consumers will want to take part, which is great for consumers and for retailers. The passion loyalty concept also means that consumers can redeem items and experiences that they really value, making them much more likely to participate.
Despite the fact that many loyalty programmes are continuing to fail and consumers are becoming more and more disillusioned with loyalty programmes in general, the loyalty industry still has potential to grow. Loyalty is one of the few industries that thrive in a time of economic downturn and if retailers adapt their loyalty programmes to centre on consumer wants and needs then the industry will experience phenomenal growth over the next few years.