Embracing loyalty to economise

With an increasing focus on savvy shopping, UK consumers are seeking to stretch each pound, which has led to an increase in customers’ appetite for loyalty schemes and personalised recognition, says Aimia


As savvy consumers use loyalty currency to help them economise, collectors are looking to earn points whenever they can, with a third collecting more rewards now than they did before 2008.

Aimia, a global leader in loyalty and the company that runs Nectar, in its recent Loyalty Lens report, confirmed that 87 per cent of consumers participate in loyalty schemes. Since 2009 an additional three million members joined the programme and 44 per cent more Nectar points were issued.

Jan-Pieter Lips, president Europe, Middle East and Africa for Aimia, says: “With 87 per cent of consumers now participating in loyalty schemes it appears loyalty programmes play a key part in modern-day spending. Twenty years ago £1 in every £100 of household spending was linked to a loyalty scheme – today it is £1 in every £7.”

Findings from Aimia’s Loyalty Lens also indicate that it’s the wealthy or “thrifty” rich who are making the most of loyalty schemes. Those earning above £90,000 hold more than seven cards on average compared to those who earn below £30,000 who hold four.

While this research quantifies the strength of loyalty schemes in the UK, a number of findings indicate potential warnings business need to understand.

Customers understand exactly what data is being collected, who sees it and what value they receive in exchange for providing access to it, yet 73 per cent say companies are unclear about how they use their personal information.

Jeremy Henderson-Ross, Aimia’s global privacy officer, says: “Data is a growing industry and one that is no longer uniquely relevant to a niche group of professionals. Many businesses need to think about handling data responsibly while making sure that they generate appropriate commercial benefits from the information they hold on their customers. Key to this is being transparent with consumers about why and how you use their data.”

Twenty years ago £1 in every £100 of household spending was linked to a loyalty scheme – today it is £1 in every £7

Aimia has been helping businesses build better relationships with their customers for nearly 30 years. Over the course of their deep industry experience, they’ve identified three foundational elements of customer relationships critical to building sustained brand loyalty and customer value – trust, commitment and reciprocity.

“We make business personal by creating trusted relationships between our clients and their best customers” says Mr Lips.

This commitment to a customer-centric approach has enabled Aimia to help their partners design smarter promotions. By utilising a buy-two campaign, as opposed to a 50 per cent off sale, Aimia was able to lift SKU sales by 196 per cent, increase new customers by 23 per cent and, more importantly, increase the existing customer spend by 51 per cent.

While building true loyalty relies on a balance of art and science, brands seeking to build real relationships with the best customers should consider rallying around four core principles:

1. Place all your data efforts in service of customers. If you live by this principle, customers will reward you for it. Focus on seeking permission, using data transparently and rewarding your customers for voluntarily sharing personal information.

2. Start with transactions, add interactions. If you’re unsure where to start your data journey, begin with the transaction. As your analytical ability grows, start connecting the dots from the transaction to interactions.

3. Build relationships based on trust, commitment and reciprocity. Information is useful only if it provides insight that helps you strengthen relationship value. Data collected in service of relationships will pay dividends on the investment.

4. Don’t monetise your customers’ individual data directly. Hold yourself as the caretaker of your customers’ personal details and they will reward you for it.

It is by using customer-centric data in a manner that enables brands to develop deeper and more meaningful relationships with their best customers that merchants and retailers will realise the true value of loyalty and transform savvy shoppers into brand ambassadors.