What you can learn from the success of the Boots Loyalty Scheme
Many organisations have used loyalty schemes as a sort of quick fix, promotional tool. Whilst loyalty schemes can act as a form of promotion to a degree, it can be an expensive way of doing so. However, the real benefit of loyalty schemes can be seen in the rich data, this blog will discuss the benefits of loyalty schemes and suggestions on how other brands can obtain such consumer insight, with a focus on the Boots Advantage Card.
In our most recent Reimagining Loyalty report, we revealed that out of 854 respondents living in the UK, 77% of females and 70% of males stated that they own a points-based reward account as part of a brand loyalty program. But how do you create a strong consumer relationship with a brand? Brands need to find new and innovative ways to create long-lasting customer loyalty, one way of doing so is to deeply try to understand consumer needs and consistently deliver to those needs. One does not simply incentivise or bribe true loyalty, instead, loyalty programs can act as an effective prompt for a repeat purchase.
Case Study: Boots
The Boots Advantage card is an example of one of the most successful loyalty programs in the UK, due its use of customer data to personalise rewards for each customer.
First launched in 1997, the Boots Advantage Card has become so popular over the years as it understands the sensitive nature of customer information and therefore uses it carefully. For example, the loyalty card aims to avoid the promotion of products based on the average basket of any consumer as this can lead customers being offered irrelevant items based on a one-off purchase.
These kinds of offers only serve to make a brand seem intrusive and can turn away potential customers. Boots has taken a stance away from traditional offers and instead, aims to look at the complete behaviour of their consumers to try and understand what they genuinely find valuable. Hence, getting to know your own customers and their motivations is a great way to encourage loyalty.
Boots Loyalty Scheme Framework Example
Along with a physical rewards card, Boots also launched their ‘My Offers’ app in 2014, which allows customers to receive personalised offers and extra points, which they can easily load onto their cards to instantly redeem in store.
The introduction of the Boots rewards app is due to ever-evolving technology and the fact that consumers prefer to use apps over paper and cards. Customers can redeem offers using the app whenever it suits them, read reviews for new products and view specially selected deals. This allows Boots to collect valuable data and consumer insights to further develop and improve the customer experience.
Key takeaways for brands
The Boots Advantage card is a primary example of how other brands can take advantage of customer insights obtained from loyalty schemes. For example, the Boots Rewards app revealed that the majority (83%) of their customers are female aged 20-45 which allowed them to create bespoke offers to target this specific demographic. This has led to a better, personalised service and increases the possibility that consumers will redeem the offer due to its relevance.
Here are just a few suggestions on how to plan a loyalty scheme strategically:
Budget
The whole idea of a loyalty scheme is to invest in marketing on existing customers to keep them happy and loyal to any given brand. The great thing about rewarding customers is that the full retail costs do not exceed what you’re giving out.
Loyalty Points
There is no rule to this, but it's always good to aim to be as creative as possible so that customers focus their attention on earning rewards instead of spending money. For example:
Redeeming a £5 Reward: £500 spent = 1,500 point = £5 reward
Cost of Reward: £500 spent = 1,500 point = £5 reward = £2.50 cost
Percentage of Revenue: 0.005%
Reward Tiers
Every reward tier should be planned like a pyramid where the rewards get better and better the more points the customer has, this is so that customers can immediately see the benefits of the loyalty scheme the moment they join. The initial reward should be something that doesn’t cost much and can be received almost immediately (e.g. a free drink).
Conclusion and final thoughts
“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” - Henry Ford.
With the Boots Advantage Card, one point equals one penny, customers have the ability to rack up big rewards if they are regular consumers of Boots’ products. Boots has proven to be a great example of how a loyalty scheme can deliver a strong ROI and help to create loyal customers, an example which other brands should follow in pursuit.
