Loyalty programs need to offer more than points

Internet Retailing

17th Oct 2016

Consumer interest in innovative loyalty programs is high and many shoppers take into account the loyalty offering when considering their preferred retailers, according to a new report.

The study, which was commissioned by the Collinson Group, examined affluent consumers’ attitudes towards brand loyalty in Hong Kong.

While the survey found that loyalty offerings can be very effective sales drivers – 41 per cent of respondents said they would be likely to spend more if a brand had a loyalty program – it suggests that retailers need to offer more than just points-based loyalty programs to experience the full benefits.

For instance, 41 per cent of affluent consumers expect offers that are personalized and relevant to them when they walk into a store. And 42 per cent of respondents said they would spend more if they could get free delivery on a day of their choosing. Discounts on future purchases was most important for 48 per cent of shoppers.

Meanwhile, recommendations based on past purchases would drive loyalty for 25 per cent of respondents, and the ability to receive receipts via email would lead 23 per cent of people to shop more frequently with the retailer.

The instore shopping experience also has an impact on purchase decisions, with 19 per cent willing to spend more with retailers that greet them by name and 15 per cent more loyal to brands that offer a stylist.

And there is an increasing desire for unique and exclusive experiences among consumers, with 15 per cent saying they would choose retailers that offer money-can’t-buy experiences and 13 per cent saying the same for invitations to special VIP events.

“Retail continues to evolve at a rapid rate, with brands both online and offline battling for loyalty in an increasingly crowded space. A smart loyalty strategy is crucial for any brands looking to engage, retain and nurture their customers,” Mary English, general manager at ICLP, a Collision Group company, said.

“While we see there is an increased emphasis on shared experiences rather than individual incentives, it is particularly important to understand and predict customer behaviour across channels.

“This will continue to be a significant factor in further defining a loyalty strategy as the shift towards real-time intelligence will accelerate over the next five years.

“Gone are the days when a loyalty card alone would encourage consumers to choose a particular retailer above all others – the stakes are much higher now.

“Effective loyalty programs need to recognise and cater to what customers value, such as being greeted by name when entering a store, personalised offers or VIP events, in order to drive brand engagement and devotion.”