Search News

Results: 1-10 of 1048


Start again

22 Mar 2024

Rob Brown, co-director of Dalby Forest Cycle Hub, a not-for-profit hire scheme has been nominated for the Tourism Superstar 2024 award, run by VisitEngland.

21 Mar 2024

ACS (The Association of Convenience Stores) and the Federation of Independent Retailers (The Fed) have both welcomed a new report published by the Association of Police and Crime...

21 Mar 2024

As reported by Healthstores UK, new data contained in the 2024 Soil Association Organic Market report shows that independent retailers delivered an impressive 10% growth in 2023, with...

21 Mar 2024

An independent bottle shop and bar in Cheltenham has been named as the UK's Independent Beer and Wine Retailer of the Year 2024 at the Drinks Retailing Awards. 

21 Mar 2024

A number of organisations, including Bira (the British Independent Retailers’ Association), other trade associations, BIDs and unions have met with officials from the Welsh Government to...

21 Mar 2024

The British Independent Retailers’ Association (Bira) has reacted to data released by PwC and the Local Data Company exploring the state of the UK retail landscape.

8 Mar 2024

Daniel Blackham, editor of industry magazine BikeBiz, has been writing about his experience of completing the Cytech technical one qualification at training provider Spokes People in Milton...

6 Mar 2024

Cytech partner Activate Cycle Academy, the largest and most recognised training provider of bike maintenance and technical training courses to the UK’s cycle industry, recently welcomed a...

6 Mar 2024

The Greeting Card Association has reacted to a BBC Panorama programme lifting the lid on Royal Mail management prioritising parcel delivery over letters, which it says are in contradiction of...

4 Mar 2024

Pop star Kate Bush has been announced as an ambassador for this year's Record Store Day, on 20 April.

Back to news menu

Loyalty scheme myths discouraging retailers

Posted on in Business News , Cycles News , Creative News, Outdoor News

Many retailers are missing out on the benefits of loyalty programmes because they are too focused on issues, such as cost of setting them up and running them rather than on what they can bring to the business.

Andy Wood, managing director of GI Insight, has aimed to dispel some of the myths around loyalty programmes including the view that digital will replace their physical aspects like cards and vouchers.

Although loyalty apps are much more fashionable than plastic cards Wood warns retailers: "Do not choose the mechanic for fashion reasons, use the most effective one that will help you achieve the core objective of linking as many customers as possible to your transactions."

Tesco has recently announced that it is to introduce digital vouchers, which is a good idea says Wood as it also intends to retain its paper-based versions: "Make sure all the bases are covered. There will be a shift from cards to apps but not fully for 15 years. Not everyone will have a smart-phone and most EPoS systems do not allow the scanning of barcodes from phones. Replacing these tills with ones with new scanners will take some time."

The longevity of paper vouchers is also linked to the ongoing appeal of direct mail, according to Wood, who says digital has its value but it does not drive the level of physical footfall of paper. "Direct mail outperforms email every time. Next Directory is online so why does it still bother with a catalogue? The mix of direct mail could change but we'll never see paper vouchers go away because it drives spend," he says.

Also, counter-intuitively, Wood believes the paper alternative is particularly attractive to younger - digital natives - because: "It's new to them. Very few retailers talk to them via direct mail. Led by the agencies, retailers have been told that they must get into social media. But it's the one place where people will not be sold to!"

He suggests the best communicational channels to use by each retailer should be determined by what their data is telling them. "We don't have a torch for any specific channel. It's all about the data," says Wood.

Another misunderstanding of loyalty programmes is that they are expensive to run. Wood says that when the costs are stripped back to cost-per-customer-per-annum then it can be around £6-8 per year: "How much does the customer spend with you? If it is £200 per year then it is worth having a conversation about running a loyalty programme to grow or defend sales. Finance directors understand this conversation as it's more understandable than talking about above-the-line advertising."

David Standing, commercial director of Associated Independent Stores, says: "Affordability is one of the biggest barriers for [retailers implementing] loyalty schemes because there is a strong leaning towards costs rather than benefits. They all look at the cost and not the reward and so they don't do it."

He acknowledges that the upside of them can be seen as a "leap of faith" but he argues that there is a lot of evidence of customers that sign-up to such programmes do change their behaviour - thereby spending more and visiting the stores more often.

Although sceptics would argue that it is invariably the best customers who would join a scheme Standing says there is always an opportunity to drive greater spending from these customers. "Even the best customers will not be spending 100% of their wallet with that one retailer," he says, adding that it could be the case that the best leverage is with the middle group of customers rather than the top-spenders.

With all programmes it is about modeling out the level of rewards needed to be given out in order to change a customers' behavior before the levels of returns start to diminish. These rewards can be relatively modest, he argues, citing that he has known garden centres that have merely given away free tea and coffee and that this has led to customers flocking in to their shops.

In fact Standing says changing behavior might not even require a reward at all as it could simply be about the retailer talking to its customers about things that interest them: "You do not need to give monetary values of say 5% to 10%, just talk to them."

As well as focusing too much on affordability he says retailers also too often overlook the benefits they will derive from the rich data that loyalty programmes produce. "There are still retailers that do not recognise the value of the data. You can profile the customer base to find out who they are, what they like and how to reach more of them," explains Standing.

This latter point highlights that loyalty programmes can be as effective at finding new customers as they are at increasing the spending of the existing base of shoppers.

Why focus on customer loyalty?

  • 88% of businesses with a loyalty programme are more profitable than their competitors without one
  • 64% of customers visit a business with a loyalty programme more frequently
  • A 2% increase in customer retention has the same effect as decreasing costs by 10%
  • It's 6 to 8 times more expensive to acquire a new customer than it is to retain an existing one
  • 65% of customers say they would recommend a business because of a rewards program

Have you considered a multi-channel approach to loyalty? However you decide to implement loyalty schemes within your business, ActSmart have the solution. The Experts cards offer an easy, low cost solution to engage with your audience bringing in new customers as well as encouraging repeat visits to your business.

Click on the links below to find out more: 

Experts Cards - create bespoke gift, loyalty, savings and promotional programmes - all on one card


 

 

Back to news menu

Useful links

If you have any other queries please contact us.