Loyalty reimagined: give customer loyalty a new lease of life
With the festive season fast approaching, consumers are primed and ready to get spending. But how can retailers best capitalise on this opportunity to build loyal relationships with their customers? Kirsty Morris, Managing Director of Specialist Sales, Barclaycard explains that when it comes to offering great service and enhancing the customer experience, the answer is digital.
How often do customers come in-store and realise that they’ve forgotten their loyalty card or left a voucher or special-offer coupon at home? Or when online, struggle to find their loyalty details and choose not to enter them?
It’s frustrating for the customer and they can feel like they’re losing out, even if it can be rectified later. For the merchant, it can erode customer loyalty and slow down the in-store point-of-sale process, as well as potentially leading to a less complete picture of their customers.
With the pandemic accelerating digitisation trends and raising consumer expectations around shopping and checkout experiences, it’s become more important than ever that merchants maximise customer loyalty through seamless customer loyalty schemes that mirror the shift to intuitive online experiences.
From flyers in the post to cardboard or plastic cards within a wallet, retail loyalty schemes have long remained in an analogue form. But there’s a growing problem with this, not least the cost to businesses and the environment to keep producing plastic cards. It’s also out of tune with how customers shop against a backdrop of rising contactless and phone-based payments.
And why should customers have to carry something with them, or hand out additional details, in order to make a purchase and claim what they see as their rightful rewards? Think about the growing tendency for customers to go out armed only with their phone as a payment method. I do this myself – whereas a couple of years ago, I wouldn’t have felt complete without my purse! Now, many of us want everything to be connected – mirroring the online environment itself – for maximum ease and convenience.
The digitisation of loyalty has the potential to reimagine how loyalty schemes work. And, with the critical months leading up to Christmas including Black Friday and Cyber Monday, it could also help retailers drive up customer engagement and sales.
The retail golden quarter
The all-important end-of-year period is now upon us. Last year some £6bn was spent online on Black Friday alone1, while the Bank of England estimates that the typical household spends £740 more in December than other months2: the potential prize for retailers is huge.
As always, value for money will remain a key determinant for many customers, but if consumers are generally prepared to spend then retailers have an opportunity to capture market share through service and personalisation.
These are aspects that good loyalty schemes can help to drive. By highlighting the most relevant offers, using targeted recommendations and offering tailored services such as inclusive delivery, retailers have an opportunity to connect loyalty with customers’ real preferences and interests.
There’s no doubt that loyalty schemes generate multiple benefits, for customer and retailer alike. 85% of customers believe that a loyalty scheme is a key factor in making their purchasing decisions3.
However, loyalty schemes currently leave a lot of value untapped. In fact, it’s been estimated that there is around £6bn in dormant rewards in the UK alone, adding up to £47 unspent loyalty cash per person4. This represents a huge opportunity for retailers to convert.
Introducing Digital Loyalty
A key to unlocking greater engagement from customers is digital innovation – allowing customers to link loyalty schemes to their payment card. An example is Digital Loyalty, where customers can choose to link their card to a retailer’s loyalty scheme within the Barclays app or through the merchant’s own digital channels. This ultimately turns their payment card into a loyalty card.
The benefits to the customer are obvious: Digital Loyalty automatically ensures they receive the points and offers they’re entitled to, while also being extremely convenient – they can say goodbye to wallets clogged with plastic cards and paper coupons, and access loyalty rewards in one simple step. It’s a frictionless process.
For merchants, this improved experience means that customers are more likely to come back, and research shows it pays to get it right. A recent survey found that 96% of people think customer loyalty programmes can be improved, and 75% of all consumers say they would switch brands for a better loyalty programme5.
Not only this, but Digital Loyalty prevents retailers from spending time crunching data to produce vouchers a month after a customer has made a purchase. Instead, retailers can use spending data in real time to offer customers instant rewards – both pre- and post-purchase.
But it’s not just about securing repeat business. Digital Loyalty unlocks more customer data, offering merchants the potential to tailor their loyalty schemes with personalised offers for the customer, increasing their appeal. We already see this on a fledgling scale with some small retailers, such as local coffee shops that have in-app schemes that enable them to create individualised offers – they know what a customer bought last time and therefore know what will incentivise them to come back.
Another compelling feature of Digital Loyalty from the merchant’s point of view is that sign-ups can also be driven by the bank, alongside their own efforts and outreach. Through the Barclays app, for example, millions of active users can connect their payment card to loyalty schemes and check their points balances and rewards. Merchant and banking apps can run in parallel to create a double hit: twice the opportunity to lead consumers to engage with the brand.
Tap to win
Digital Loyalty is an opportunity to make retailers’ loyalty schemes easier for customers to maximise the benefits from. It’s beautifully simple: if a customer has their payment device, they don’t need anything else. The customer won’t miss out on points or rewards again, and the retailer won’t miss out on engaging with them and securing repeat custom.
It certainly solves that age-old problem of the customer leaving their loyalty card at home – with just a tap of their phone or payment card, all the rewards are added. The customer wins and so does the retailer – knowing that their loyalty scheme is being fully utilised and customers are benefiting from the rewards they’re offering. Delivered through the power of digital banking technology, it’s the next evolution of modern loyalty.