Loyalty Schemes: do they really work?


Loyalty Cards

As we near the peak of the festive season, there are a number of annual rituals that I look forward to undertaking. Once presents have been opened and copious amounts of food and drink consumed, I settle in to the relative calm of the five days that separate Christmas and New Year. I have often looked forward to these days as a way of ‘clearing the decks’ ahead of another twelve months.

One ritual I generally tend to undertake at this time is the annual clear out of my wallet. The clear out has nothing to do with hard cash I am afraid – that happens well in advance of the holiday season! The clear out has everything to do with the plethora of credit card sized plastic I collect throughout a year. The picture at the head of this post is a ‘collage’ of plastic I removed today from my wallet – you will also notice additional pieces of plastic that are also attached to my keys.

These pieces of plastic are all to do with loyalty schemes – coffee shops; retailers; hotels – and this is not all of them!!! I have a number of other cards sitting in my ‘man drawer’ and receive at least five emails a week from schemes I have supposedly signed up to in the past. We will all be in the same situation. The lovely Mrs Golding is in desperate need of a new purse this year (I hope you are reading this Santa) due to the excessive bulging being caused by cards from loyalty schemes. Our pockets are not big enough to contain our keys and the ever increasing amounts of plastic being added to them. When will it ever end?!

For a while now I have pondered over the genuine success of loyalty schemes. Do they really work? Is providing the consumer with a credit card style piece of plastic really a valid way of maintaining a relationship between company and customer?

The quick answer to the question is yes – they CAN work. The undoubted success of the Tesco Clubcard is demonstration enough to show what is possible with a loyalty scheme. However, in many cases, not only do I believe they do NOT work, but I also feel they only serve to make the customer experience worse rather than better. Let me explain what I mean.

1. What is the point?

The Golding family have had a Tesco Clubcard for many years. Initially we used the ‘rewards’ to get small sums of money off our shopping. A few years ago, we discovered that you could convert your points into vouchers to use in restaurants. If you did this, you received 4 times the value of the voucher – a real result. The fact it took a few years to realise this is one of the first issues that I have with loyalty schemes. It is not always obvious what benefits you do get from being a member. What actually is the point. I have had a nectar card in my wallet for many years. To this day, other than redeeming a few ‘money off’ vouchers in Sainsburys, I have never understood what the point of the nectar card is!

Maybe I should take the time to go online and investigate – the truth is, I cannot be bothered. That leads me nicely to my second point.

2. I cannot be bothered!

Joining loyalty schemes and then redeeming the benefits is not always that simple. Every time I book a flight I am asked to enter my loyalty scheme number – what loyalty scheme number?! It is never made obvious how I can join a scheme quickly and easily. I therefore end up ‘not being bothered’ to join. The result is that the loyalty scheme is therefore completely lost on me – and I know I am not alone.

It happens to me a lot – it is just too complicated – and I’ll only get another plastic card to add to the collection anyway!!!

3. Keep it simple

Some loyalty schemes are very simple. The Costa coffee loyalty card does what it says on the tin. Once you have the card, you scan it every time you order a coffee and the benefits rack up. The Starbucks scheme on the other hand is painfully awkward. With Starbucks you have to ‘load up the card’ with cash, so you can then order with it and start to earn benefits. I do not want to put my hard earned cash on a Starbucks card! Maybe I mis-understood when it was first given to me – whatever the case, I will now choose Costa over Starbucks any day.

Sticking with coffee shops, this particular industry does demonstrate that pieces of plastic may not be necessary at all to drive loyalty. Apart from the fact that many (such as Cafe Nero) simply stamp a small piece of card, if you are a regular and recognised customer of Pret a Manger, they will reward you ‘off the cuff’ – no need for paper or plastic of any kind!!! What could be simpler than that?

4. It is not all bad

I do not want you to think that I am anti loyalty scheme – quite the contrary. I am a committed member of the IHG (International Hotels Group) loyalty scheme and will do everything I can to stay in a Holiday Inn or Holiday Inn Express so I can see my reward status continually improve. The scheme is easy to join and easy to maintain. They did not need to send me a bit of plastic though (in my opinion!!). I also loved the simplicity of the Morrisons fuel voucher – earn a £5 voucher for collecting points filling up on their fuel. They have changed the scheme recently to include store purchases – as long as it remains as simple, I will remain a fan.

So in conclusion, I do think that loyalty schemes can work. However…… and it is a big however……. they must be made simpler in my opinion to keep consumers linked in with them. Why weigh us down in plastic when it is not necessary any more? Make registration as simple as any other transaction. Make it completely obvious and complex free for customers to understand the point of being a member.

It all links nicely to the three components that make any experience:

FUNCTIONAL – does the loyalty scheme work?

ACCESSIBLE – is the loyalty scheme easy to join, use and redeem?

EMOTIONAL – does the loyalty scheme leave us feeling as though we want to keep transacting with the company?

I will not be putting some of the plastic cards back in my wallet this year. I urge you to do the same. The organisations that make the loyalty scheme experience as simple as possible in 2015 are the ones who are likely to win me over as a fan.


 

May I take this opportunity to wish all readers of ijgolding.com a very happy holiday!

5 thoughts on “Loyalty Schemes: do they really work?

  1. Loyalty cards work best where they reinforce your existing spending habits rather than persuading you to do something entirely different. A card for a restaurant that you use three times a year may well end up getting forgotten, but if Tesco send me a voucher for £6 off if I spend £40 it will encourage me to do more of my Christmas shopping there.

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  2. Yes, there are loyalty programs that seem to be schemes – more marketing programs than actual loyalty programs. Just because you issue a card to a customer, doesn’t make them loyal. However it works both ways. If they have accepted your invitation to carry your card, give them a reason to keep carrying it.

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