How to build loyalty programmes retail customers actually want

Colin Neil, Adyen’s SVP of Business Development spoke to me recently for Adyen’s latest podcast series, Retail Reawakened. On the show, we discussed the future of retail and spoke about the brands getting loyalty right.

The discussion got me thinking: who is getting it right, and why?

Consumers are switching brands at an escalating rate. Increasing sensitivity around expenditure following the pandemic has made them more selective about how they spend and what they spend it on.

And, according to McKinsey, over 75% of shoppers will continue this behaviour beyond the pandemic.

This uncertainty acts as a reminder that customers hold all the power and it must serve as a wake up call for brands to evaluate existing value propositions and foster loyalty among customers.

The importance of loyalty in today’s consumerist world

The internet has transformed how we shop and empowered today’s savvy customers. Convenience is king so brands have to work extremely hard to create those paths of least resistance and high value experiences that keep customers coming back.

The impact of these efforts will be measured through effective loyalty programmes: how often are customers coming back. Loyal customers spend roughly 33% more than new prospects and are easier to keep than winning new ones.

This is particularly acute in retail where millions get spent on PPC and SEO optimisation every year, fighting for customer attention when customers have multiple options to choose from.

So what’s wrong with your existing loyalty program?

The average customer is enrolled in more than 15 schemes but only actively uses 6.

And when you view those numbers through the prism of increasing uncertainty and switching, the outlook is bleak.

What’s worse is that very few say they are satisfied with the types of rewards they receive.

Clearly, there is a huge gap between what consumers want from a loyalty programme and what they actually receive. And that’s the problem.

The vast majority of us are open to brands monitoring our purchase activity if it leads to personalised rewards and a good chunk of us are even willing to pay for a better loyalty programme.

Amazon Prime is a fantastic example of an enhanced loyalty program that delivers tangible value back to the customer while ensuring repeat custom.

There is an appetite for a loyalty or rewards programme that works well and delivers real value. Are you confident yours do that? And are you in a position to implement one that can give customers more of what they want? 

Now is the perfect opportunity to reinvent your loyalty programme (and more)

Truthfully, there aren’t many brands that get it right. Too many focus on the points or the rewards, but forget the overall experience of the programme and brand engagement.

And experience counts. But to deliver the kinds of experiences customers want and to add value each time they engage, you need a deeper understanding and a 360-customer view.

To achieve it, data is critical. The more validated sources you collect from the better. But the key to it all is that it's collated into a unified platform and easily accessible.

Which should immediately call into question the digital maturity of your operation. Is digital an afterthought or instrumental to your strategy? Is your e-commerce platform an ‘add-on’ or a focal point of your digital ecosystem?

Retailers must move beyond a siloed view of acquisition channels and consider more vertically integrated technology stacks, prioritising customer data and delivering exceptional experiences.

Retailers need to build a digital estate that all works well together - not deploy a collection of technology configured to handle individual channels or processes.

What the pandemic told us about the current state of retail

According to the Adyen research, the pandemic was ruthless in weeding out those retailers too slow to adopt a digital proposition or that simply lacked the agility required to switch to an online-only model when footfall disappeared into global lockdown.

It’s worth noting, that the first engagement with your brand is probably through digital channels. Have you tried mystery shopping your own digital estate and evaluating the performance? 

Right now, you can design digital loyalty programmes that integrate across platforms and follow consumers around through better use of data. We know because we’ve done it.

Now is the time to start thinking about what else you could do with your loyalty pass because integrated platforms introduce a world of possibilities. Think personalisation, transaction histories, memberships, seamless checkout, subscription models, balance sheet liability and so much more.

You need to apply next-generation thinking.

Building loyalty programmes

A prime example of this is the work we’ve done with Nando’s, transforming its loyalty and rewards programme from a plastic card into a truly pioneering digital scheme.

Leveraging the latest developments in iPhone/Android digital wallets and NFC (Near-field communication), Red Badger worked with Nando’s to create an end-to-end digital loyalty programme that automatically collects rewards for customers, whenever they buy a meal.

The beauty of this development is in its simplicity for the user. Nando’s solved frustrating challenges for its customers and introduced a new programme that makes it as easy as possible to earn points towards getting a free meal.

The other great benefit of moving into the digital realm and building a more vertically integrated technology stack was the oversight and ownership of customer data. It moves Nando’s closer to a singular view of the truth and the holy grail of deeper insight into what customers are buying and how to incentivise them.

Be open-minded and inquisitive: you can’t do everything ‘off the shelf’

What Nando’s did well was recognise it could deliver its loyalty programme more intelligently. It would’ve been easier to keep going as it was, kicking the proverbial ‘loyalty can’ down the road since it wasn’t technically broken.

Instead, it took the challenge head-on and enlisted the help of experts with differing viewpoints and expertise to introduce the necessary cognitive diversity to solve it.

The organisation recognised that to give customers what they wanted, they would have to build something new. It isn’t possible to do exceptional branded digital loyalty off the shelf. Exceptional, branded and unique is in direct opposition to a standard or commoditised product.

Open API architecture is now a standard for nearly all applications. Highly-skilled development teams can leverage them to great effect to streamline workflows, accelerate data transfer and eliminate some of the complexity your customers face and your internal teams hate.

Stay in touch with developments in your field, trust your colleagues to inform you of new tools and be interested in new solutions.

Focus on what matters for your customers

And while it is important to review new tools and technologies, don’t be blinded by features. Listen to your customers’ needs, involve them in the development of new solutions (if you can) and focus on what matters to them.