The variety and breadth of brand loyalty schemes has expanded enormously. Once the preserve of supermarket giants, initiatives have now been implemented across a number of industries. From independent coffee shops to national department stores and car franchises – customer incentives continue to be big business.
The obvious benefit of a successful loyalty programme is the increased income generated by repeat custom. However, if executed properly – a good loyalty scheme can also offer brands a rare and detailed insight into customer behaviour. One of the most challenging parts of the process is creating a programme that has the longevity to sustain the interest and commitment of the consumer. This is where market research comes in: utilising the right market research tools can help brands to offer incentives that resonate with target audiences and improve the user experience.
A recent report revealed that the majority of brands are preparing to increase budgets for the development of new loyalty programmes. This suggests that brands are enjoying a positive reaction from consumers. Traditionally, retailers launched systems that relied on a simple ‘points and rewards’ concept. Brands are now working to offer more. It’s not enough to merely offer rewards – the best brands are exploring new technologies and creative possibilities to design the most engaging retention systems.
Consumer loyalty is complicated and based on a number of factors. A strong and meaningful connection to a brand can be stimulated emotionally or rationally. Rational loyalty is founded on a conscious, practical experience. A consumer will calculate the value of the brand and knowingly form a decision about the brand they are choosing to shop with. The financial benefits of a simple loyalty incentive should be enough to secure a rational loyalty to a brand.
Emotional loyalty isn’t always quite as simple as it depends on preference and attachment. Clever incentives can support this, but ultimately survey sampling can be a more efficient way to get to grips with how more specific demographics feel about brands. The opportunity to directly ask respondents what it is that encourages them to develop an emotional attachment with a brand provides insights that can inspire successful loyalty campaigns and programmes.
The popularity of mobile loyalty applications is expected to increase dramatically over the next five years and gamification is set to be a significant part of this. It doesn’t always mean creating interactive games - although some companies have experimented with this. Rather, the simple addition of gaming elements as a way of boosting online engagement. The idea is to add interest and encourage members to succumb to competitive instincts. This supports the construction of an emotional attachment to a brand.
Big brands are testing this already. A major American florist has reported an increased conversion rate of 92% following the addition of a gamification element to its loyaltyinitiative. Simply rewarding customers who engage on social media could be enough to build a more emotional connection. Additionally, a leading interiors brand launched a competition that asked consumers to collate a number of products within a theme. The participant with the best selection then won the contents of their bundle. Following the success of popular pinning site Pinterest, the opportunity to publically showcase personal choices and taste proved hugely successful.
However, brands must be mindful of striking the delicate balance between an engaging process and a complicated process. The accessibility of gaming apps has made playing on-the-go a part of everyday life for millions of people. According to research, 81% of retailers questioned plan to use gamification as part of loyalty strategies next year. So, we can expect to see more of this in the near future.
By Morten Strand, chief executive of Cint.
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