When points don't always mean prizes

Everyone loves a giveaway. It’s been decades since the likes of Tesco, Boots and Sainsbury’s first landed on the loyalty leaf and started giving customers something back. Since then, a raft of retailers has followed suit. But what are we as consumers really getting from their schemes?

Such has been the rise of rewards programs since the turn of the millennium, customers expect to be given some sort of loyalty kickback. We’re surprised, if not disappointed, when a new store or brand doesn’t launch a loyalty scheme.

Yet we all know of programs that make empty promises. The local retailer that unveils a new card allowing you tot up points - only for it to transpire staff have no idea of the value of these rewards against items on sale.

Even the big brands are guilty of confusion. In one high-street chain last Christmas, shoppers reported being sent from one till to another to try to add points from old receipts, redeem in-store offers and add on vouchers they’d been sent in the post.

It all adds up to pointless points on offer from poorly run schemes. And, according to our latest loyalty research, that’s causing apathy and confusion among consumers.

For our report Loyalty 2020, which examines the future of loyalty, we polled 1,000 UK consumers. Across all age groups, less than two thirds (63%) told us loyalty schemes compel them to buy more. The figure was as low as 53% of baby boomers and 43% of Millennials. Overall, more than a third of people reported little or no effect on their purchasing habits - despite repeat purchase being the reason most programs exist.

We also spoke to marketers at a wide range of brands. They revealed the lack of a unified industry definition of what loyalty means, with responses ranging from creating stronger relationships between brand and customer, to creating allegiance with a brand versus the competition, or boosting repeat purchase.

Interesting findings for loyalty managers, especially when considered alongside our previous report, Redefining Loyalty, in which almost two thirds (65%) of loyalty scheme members stated they wouldn’t care if it no longer existed.

But it’s not too late. Points don’t have to be pointless. They just need to be linked more closely by brands and retailers to what consumers love about the products and stores through which they collect and redeem rewards.

A good starting point is understanding the difference in loyalty attitudes and behaviours that exist between generations. This was a key part of our research for Loyalty 2020. For instance, Gen Z consumers tell us loyalty schemes enhance their shopping experience but don’t make them feel special. Meanwhile, those in Gen X don’t generally feel schemes make them shop more.

Furthermore, our report shows brands need to consider customer behaviour and expectations to build loyalty as it’s no longer simply a transactional requirement. In fact, we identified quality as the most important factor in building trust and loyalty, ahead of price and customer service.

These subtle differences between generations matter, especially when taken in tandem with the wider beliefs of our panel about what’s important to them in a loyalty program.

To find out more about Rare’s research and how we can help you build a winning loyalty scheme, get in touch at hello@rare.consulting.

Rare: Consultancy