Loyalty is not enough

Everyone knows that customers want a personalised service and this is now easy for retailers to achieve. Loyalty programmes are adept at capturing past purchases and tailoring offers. But to work effectively for customers, loyalty must be humanised.

Consumers these days require the same thing from a brand that they require from their human relationships: devotion. There’s nothing quite like the barista knowing just how you like your flat white or the florist remembering the type of lily you prefer.

Any old retailer can get to know their customers’ likes and dislikes, but not everyone knows how to use that knowledge effectively. Mass affluent research* discovered that the affluent middle class is motivated by different things.

For example, 53 per cent would be encouraged to spend more or shop more frequently if they got free named-day delivery and 27 per cent would for real-time, location-based offers to smartphones. Meanwhile, 25 per cent said they would be likely to spend more if store staff recognised them or knew their name.

Retailers already know that consumers are promiscuous, particularly now they have the ability to compare prices at the touch of a button. If they’re not able to get the service or product they need there and then, and at a price they are comfortable paying, they feel no qualms about going elsewhere. This means retailers must make even more effort to deepen their relationship with their customers to avoid them “straying” to the competition.

Mignon Buckingham Managing director of global loyalty agency ICLP

Mignon Buckingham
Managing director of global loyalty agency ICLP

The desire to have a highly customised experience has always been more prevalent among customers within high-end retail. Mignon Buckingham, managing director of loyalty agency ICLP, says: “These retailers have always had their little black books, but as consumers are shopping across multiple channels, they’re moving towards a high-touch recognition approach.”

Other brands that have previously focused on discounts to keep customers returning are wising up and trying to give customers other, more experiential reasons to come back into the store. These kinds of rewards also have a place on the high street.

Personal stylist and personal shopping used to be exclusive to luxury stores, but brands such as Topshop now offer an accessible service where, in exchange for pledging to spend a modest amount, customers can fill out a design brief and seek guidance from a personal assistant on what to buy in a VIP room while drinking champagne.

It’s about distinguishing between a transactional state of loyalty which is fleeting and the emotional state of devotion which lasts

Topshop know exactly what they are doing; this type of reward may not drive huge incremental spending at the individual level, but it will certainly drive an avalanche of “likes” and brand admiration across a myriad of social media platforms. In addition, adding value to customers’ lives in a way which reflects how well they understand their deepest desires will drive the devoted state necessary to make their customers return to them again and again.

Whether it’s excelling at helping customers in-store or online, the retailer’s challenge is to understand when and where to interact in everyday life. Digital customers are now being empowered with flexible shopping experiences, such as order tracking and multiple delivery options.

This positive online shopping experience is translating into the store with innovations such as connected walls, digital mirrors, use of QR codes to make the trying-on process easier, apps to speed up queuing and the ability to save wish lists straight to their phones for access later when they are online.

“However, over and above making them feel ‘valued’, retailers should be making consumers feel like a somebody, using big data to dig deep into their individual rational and emotional needs, uncovering aspects of their customers that even they don’t know about themselves,” says Ms Buckingham. Building a relationship on this understanding gives users a personalised experience, where every interaction engages, excites, surprises and delights.

For retailers, driving brand devotion is about every employee living and breathing it, from front of house to fulfilment warehouses

As Ms Buckingham explains: “It’s about turning the brand-consumer relationship into something almost akin to the relationships we have with our loved ones. It’s about distinguishing between a transactional state of loyalty which is fleeting and the emotional state of devotion which lasts.

“Higher-end brands already focus on an excellent customer experience and increasingly use data to provide contextual rewards and experiences, such as welcoming in a high-value returning customer with a glass of champagne or offering a free scarf to match a blouse they’ve previously purchased.”

This, of course, is what inspires the customer to buy more and become an advocate among family and friends, and in their social media communities.

But securing this level of devotion belongs to every department within the organisation, says Ms Buckingham. It’s not enough to take customer data, turn it over to a loyalty programme and be done with it. “For retailers, driving brand devotion is about every employee living and breathing it, from front of house to fulfilment warehouses,” she says.

Yet still this isn’t enough. We know millennials want to buy from retailers who share their values and beliefs, and they are more likely to become advocates for brands they believe in. Brands who are driving great devotion are not just those who offer great experiences in exchange for loyalty, but those who personalise them to each of their customers.

Space NK’s n.dulge scheme, for example, not only offers loyal customers discounts on their birthday, but also sends out complimentary samples as a present. Innovative ideas like these make VIPs feel exclusive with experiences that money can’t buy. These successful programmes directly reflect the brand and drive the customer even deeper therein.

Ms Buckingham believes the loyalty programme of the future will move from points and prizes to more experiential rewards. Brands will use data more judiciously and we may even see many opening the doors to customers in terms of giving them the ability to access their own purchasing data, as they have started to do in the travel space.

Ultimately, we will see an increase in the development of tight brand communities, something that is already happening in fashion retail with the likes of Instagram, she says.

Devoted customers are less price sensitive. They want value, but value that comes from a better, more personal experience and that’s something they are prepared to pay a little bit more for. The leaders will be those that combine in-store experiences with mobile and e-commerce channels to bring customers well-timed, relevant surprises.

In the age of the empowered customer, retailers need to stand out from the crowd and realise that loyalty is not enough.

*Mass affluent research undertaken by SSI across 6,125 global consumers, on behalf of ICLP’s parent company Collinson Group, February 2016

Learn more about driving devoted customer relationships at www.iclployalty.com