How Loyalty Campaigns are Stepping up a Gear
14 Feb 2022
Although it's only been a few months since we last looked at loyalty dynamics in the UK retail and hospitality sector,
there has been no let-up in the rate of innovation and, if anything, the activity of retailers and hospitality providers looking to deepen their relationship with customers has only intensified.
Alongside a spate of new initiatives, there have also been some significant actions in terms of improving pre-existing loyalty mechanisms. Discover how a number of companies are looking to enhance their loyalty activities with further nods to sustainability, charity and community, seeking to provide additional emotional engagement alongside more traditional and transactional aspects such as vouchers and discounts.
Once again, digitalisation is an important theme, with a number of operators launching digital-only initiatives or augmenting their apps to complement card-based loyalty schemes. Indeed, this trend is one of many reasons that TCC has joined forces with Loyal Guru to boost customer loyalty by creating personalised blended omnichannel experiences (digital and physical loyalty campaigns) that the consumer desires, while gaining a wealth of actionable insights to further attract and retain customers. Here is an example on how this could work.
New Schemes Hit the Ground Running
In the grocery sector, the most important recent initiative has been the trial launch of ‘Asda Rewards’. Loyalty endeavours had never previously expanded beyond pilot phases at Asda, thanks to Walmart’s deep-seated opposition to loyalty as a distraction from its core Everyday Low Price proposition. Now under new ownership, however, Asda has had its hands untied in terms of evaluating opportunities in loyalty.
The launch of its innovative reward scheme which rewards particular shopper missions or category participation, has seemingly landed well with shoppers. Recent activity from Asda's HR department suggests that a significant number of new hires are coming on board in 2022 to oversee the nationwide rollout of the scheme beyond this limited pilot. Providing the same generosity of rewards are maintained as the scheme goes nationwide, we'd expect this to be a success as the app benefits from a gamified experience with frequent changes in terms of new challenges and missions.
Asda's launch means that only Aldi and Ocado remain among the major grocers as having no formal loyalty scheme. Aldi might feel compelled to launch something to compete with Lidl, as its German competitor continues to enhance the Lidl plus app. As well as its regular array of vouchers and rewards for frequent shoppers, the scheme was enhanced in January 2022 with the launch of contests that could see shoppers win a variety of prizes such as cash and holidays.
Elsewhere in grocery, both Tesco and Sainsbury's continue to press ahead with their loyalty-exclusive pricing initiatives. Clubcard Prices continues to be a resounding success for Tesco, although a number of critics have suggested that the Sainsbury's scheme remains to labour-intensive, as it requires shoppers to sign in for particular discounts and conduct self-scanning on their shopping trips to access other savings.
Further Moves in Hospitality
Other recent launches have been in the adjacent restaurant space, with both Pret and McDonald's launching their own digitally-based reward schemes. Building on a successful launch in its domestic American market, the pilot of the MyMcDonald's Rewards scheme at around 60 restaurants in the North West of the country is reportedly progressing well. The new scheme sees customers collect points on purchases, with the ability to redeem them for menu items or make a donation to charity, in this case the BBC's Children in Need.
There are tiered rewards related directly to spend with customers earning 100 points for every single pound they spend. For example, for 1,500 points customers can redeem a small fries or coffee, or can donate £1.50 to McDonald's nominated charity. This level of spend and reward ascends through a tiered structure, meaning that the more a customer spends, the better the menu items they can redeem, or the more valuable their donation to charity will become.
Fellow hospitality player Pret, which has been in the headlines recently thanks to the launch of a coffee subscription service and the fact that its business has been hammered by the lack of office workers in major city centres, has sought to counter the drop-off in trade via the launch of its Pret Perks loyalty programme. By scanning QR codes via the app when using stores or click and collect, Pret customers accumulate stars: when they reach 10 stars, they can redeem these points for a perk such as free food or drinks. Certain products can enable customers to generate additional stars and the retailer is also promising to give certain customers surprise perks every now and then.
Boots Follows the Supermarkets
Another significant move has been from health & beauty market leader Boots. While it has undergone a difficult period of patchy trading, negative commentary around the state of some of its stores, and a potential change in ownership as it is put up for sale by parent company Walgreens, the Boots Advantage loyalty scheme still enjoys a very strong reputation as it is one of the more generous card-based loyalty schemes in the broader retail market.
Boots piloted a Price Advantage programme in 2021, offering Advantage Card holders the opportunity to access lower prices on a broad variety of products. After a trial which lasted perhaps a month, the scheme was withdrawn but has been permanently resurrected in January 2022, with a pledge that the Price Advantage mechanism will be expanded across a growing number of products and categories as the year progresses.
Some of the offers contained in the scheme represents superb value for money. Bulldog moisturiser, for example, declines in price from £6.40 to £4.25 for Advantage Card holders, compared to a price of £6 to be found in most supermarkets. This represents very decent value and should encourage take up of the scheme, both in terms of general Advantage Card membership and participation in the Price Advantage initiative.
Sustainability – Unlocking Emotional Loyalty
While the allure of treats, perks and financial rewards is all well and good, there are growing signs that shoppers are also attracted by retailers and service providers that reward more sustainable behaviours.
Global fashion leader H&M has seen some success in this regard, adding ‘Conscious Points’ to its regular spend-based rewards architecture, providing extra rewards to customers who recycle items of clothing (20 points), bring a reusable bag to stores (three points) or purchase more sustainable items (one point for each £1 spent). The points are transformed into bonus vouchers that can be redeemed against future purchases.
A similar initiative has been underway from Boots, with the retailer rewarding customers who recycle five empty packages at stores when they spend £10 with 250 Advantage Card points, an attempt to stimulate recycling among its loyalty customer base.
So, what are the main learnings that we can take from this recent flurry of activity in the loyalty space?
Digitisation – there is nothing wrong with plastic cards, ink stamps or stickers on a piece of card, but the implementation of app-based loyalty programmes offers significant operational benefits to both retailer and shopper, plus richer data and enhanced personalisation.
Sustainability – As evidenced by the likes of Boots and H&M, consumers want to do the right thing for the planet, so smart retailers rewarding sustainable behaviours seems like a great move from all angles
Immediacy – there is a sense that always-on points collection might be becoming slightly jaded. It is notable how many loyalty initiatives are now offering immediate rewards and discounts
Surprise & delight – playing a part in the programme from Pret, for example, surprise gifts, rewards and acknowledgements of birthdays etc. are always a successful way of strengthening brand affection and loyalty
Integration – the last thing that customers need is complexity, so it’s important that, where possible, loyalty programmes should be integrated into a single app that also includes other functions like e-commerce, payment and ordering.
The future and opportunity of your loyalty strategy is more than a transactional platform. It should be an effective tool for communication and building stronger relationships with your shoppers. With technology and consumer expectations changing at lightning speed, the ability to better understand and quickly respond to customer needs will be paramount this year and the years ahead. Effective loyalty and reward campaigns should add value to your brand and your shoppers. Those who are willing to unlock the true power of rewards will not only differentiate their brand but connect deeper with the shopper to drive a bigger commercial advantage.