Loyalty Lessons from the High Street
Explicit loyalty mechanics are part of everyday life on the high street, but how well are some of the UK’s most popular schemes meeting customer expectations?
The Rare: Loyalty Experience Index (RXI) indicates that Starbucks and Amazon Prime are two of the strongest loyalty propositions in the UK.
Their RXI scores have been calculated based on respondents’ claims about the brand they’re most loyal to. Each score is based on their agreement to four key experience metrics: ease of use, sales experience, delivery on promise, personalisation. These criteria are essential to the overall success of a loyalty programme. After all, rewarding customers more than often means giving them something back, providing them with a better experience, or removing some of the hassle of shopping for them.
The overall scores indicate that many of the UK’s better known loyalty programmes under perform in delivering on key metrics of the loyalty experience.
Personalisation is key… but so is trust.
In the context of retail loyalty schemes, the results indicate that personalisation is key to success for creating a compelling customer experience. This is consistent with Marketing Week’s findings in 2015, which claim personalisation should be the main focus of retailers’ loyalty strategies and is important to their overall success.
The common purpose of a brand’s loyalty scheme is to collect personal information about customers and to stimulate behaviours that encourage retention. This hasn't changed, but is the information they collect being used to create truly personal experiences for users?
With so much data being gathered about who are customers are, what they buy, how they buy it and when, why is it that most retailers revert to standard card-based points mechanics? We are seeing a lot of innovation in other areas of personalisation, like real-time contextual targeting, predictive analysis, and new approaches to customer preferences, but the marketing community have made it clear that it can be expensive and complicated. In the end, however, a truly personalised experience will likely be far more meaningful.
The results also show that most of the better known loyalty schemes also underperform in delivering on their promise. And we know from the research that consistency is key (26% mentioned it as an important element of brand loyalty) as it helps to create a bond between customer and brand by meeting expectations.
The following table identifies which loyalty programmes performed best across all criteria:
Do loyalty schemes add value?
One of the most significant findings in this section is that 65% of loyalty scheme members would still shop with the brand if the loyalty programme no longer existed. This reveals an important distinction: for the majority of people a loyalty proposition would not affect their intention to purchase, but for one in three people it’s a vital ingredient to their relationship with the brand.
So if loyalty programmes don’t drive loyalty for the majority, then what does? We surveyed 1071 consumers in the UK to uncover the true drivers or customer loyalty and found that brand likeability, brand trust and perceived quality where the three biggest influencing factors on customer loyalty.
To understand more about the drivers to loyalty and to see our framework for developing loyalty, download our full research paper.