Big change is afoot in customer loyalty. M&S has launched its Sparks card, Tesco is scrapping the double Clubcard points scheme and Sainsbury’s has turned Nectar on its head. What does this mean for smaller retailers looking to foster loyalty; are cards the way to go? We speak to IT specialist Wincor Nixdorf’s retail MD Craig Bevan…
A loyalty card scheme can appeal because it’s cheap to implement and manage. However in today’s fast-paced environment, retailers that can offer customers instant gratification are much more likely to win a sale than those that have a more traditional card-based loyalty card scheme.
Yes, loyalty cards can be an incentive. Yes, they are a good way of measuring how many times a customer visits and yes, they can be used to gather data about the customer base. But this alone isn’t enough.
To inspire loyalty, retailers need to satisfy the consumer desire for a personalised experience. That means putting the individual first, targeting customers with relevant offers on the most relevant device for them – before, during and after their visit to the store – and then making the purchase easy via the use of intuitive systems.
Loyalty cards alone are simply not able to do this, and I’d strongly recommend that retailers invest in connecting any loyalty programme to their instore digital environment if they are to arouse customer loyalty of any kind
Loyalty cards ‘will soon be dead’
Traditional loyalty is a thing of the past, so the traditional loyalty card will soon be dead. Instant gratification is beginning to far outweigh loyalty as a business driver, and the sooner retailers begin to understand this, the sooner they will be able to put technologies in place to make their retail experience quick, convenient, personal and satisfying for customers.
So if retailers are going to launch a loyalty scheme of any kind, it shouldn’t simply be a physical card. Sixty per cent of consumers in the UK now own a smartphone and we take them everywhere with us. The successful launch of mobile payments such as Apple Pay is also proof that combining retail with mobile technology is the epitome of convenient shopping. It stands to reason that the ‘loyalty’ schemes of the future will be a compelling mix of smartphone applications and instore digital facilities, designed to make the user journey more personal and flexible than ever before.
Consumers aren’t loyal to retailers anymore. So the onus has to be on making products relevant, and the purchasing journey easy and convenient. Micro stores, as an example, are the height of ‘instant gratification.’ They are somewhere we go when the supermarket is closed, or when you need something quickly. Right now the micro stores are where the big supermarket chains are being the most competitive – and not on price, or even on loyalty, but on location and purchasing convenience.
To get the balance right, retailers need to understand their customers and then integrate technology to provide a flexible and convenient omnichannel purchasing journey. In fact, for convenience stores competing against out-of-town supermarkets, technology can be a secret weapon. Small retailers can’t compete with the giants on price, so producing an individualised service can become their unique selling point and become a great business leveller. They’re also able to implement technology faster because they aren’t weighed down with operating multiple stores.
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