Loyalty scheme apathy: can you ever win back lost customers?
Why are people turning away from loyalty programmes? We’re hearing from businesses we work with — ranging from a premium supermarket to a low-cost gym group — that customers are becoming less interested.
Although nine out of ten people in Britain are signed up to at least one scheme, and 82% of us have a supermarket card, those big numbers don’t reflect the true and changing story.
In every area — whether it’s supermarkets, coffee shops, beauty brands or leisure venues — the number of people with a loyalty card is decreasing.* Loyalty apathy is creeping in.
Irrelevant rewards, subscription fees and points that are too hard to obtain are the top three reasons people stop using a loyalty scheme or don’t sign up for new ones.
You may have your own research into your own customers’ behaviour and their reasons (and if you don’t, we can help you). For example, our work with a major supermarket showed that its high-priority customers are buying less (the greatest decline in average basket size) and customers who shop elsewhere are more likely to lapse as they see other, more beneficial loyalty schemes.
So what’s the future for loyalty programmes?
We’ve been thinking about how you can reverse the trend, attract new sign-ups and win disinterested people back. Through research into what customers want, we’ve developed four areas for supermarket loyalty innovation, focusing on enhancing their shopping experience and convenience:
Hyper-personalisation
AI-powered recommendations. A loyalty app that knows the customer’s dietary needs and preferences, suggests recipes and creates meal plans tailored to the person’s schedule and upcoming events.
Predictive shopping. The app anticipates shoppers’ needs, sets reminders to replenish staples and suggests ingredients for planned meals.
Smooth technology and channel integration
Frictionless shopping. Scan-and-go and automated checkout for scheme members, with loyalty data integrated to personalised offers and recommendations that enhance their shopping journey.
Technology to engage the senses. Augmented reality to view detailed information about a product’s origin and nutritional value and see recipe suggestions while browsing the aisles.
Experiences that add value
Exclusive access. Access to exclusive events such as cooking classes with renowned chefs, wine-tasting evenings or curated food tours.
Partnerships and perks. For luxury brands, exclusive benefits for top customers, such as hotel stays or tickets to cultural events.
Reinforce sustainability and social impact
Rewards and incentives for ethical choices. This is more than just reusable bags: it’s choosing locally sourced products or sustainable packaging.
Community engagement. A platform for community building and social impact e.g. members participating in food drives or supporting local farmers.
Bringing loyalty back: our stories
We’ve worked on a number of loyalty propositions, including helping John Lewis and Bupa Dental map their customer experiences to better understand the moments that matter. For a leading business insurer, we explored a mix of loyalty, benefits and rewards propositions for its UK customers. We fast-tracked the team’s research, ideation and prototyping, developing 80 ideas and building out three final concepts. This gave them a validated proposition to take to the board and they got approval for a large-scale pilot programme that’s currently under way.
The Big Issue — the UK’s number one street paper and social enterprise — challenged us to develop an engaging membership and loyalty scheme. They wanted new ways to engage both loyal and new customers who want to improve their local communities. With evidence-led, customer-centric propositions, we made a roadmap to validation that used lean prototyping and testing to prove desirability and viability at scale.
We also created a premium loyalty proposition for one of Britain’s best-loved retailers:
Our challenge: How could one of the high street’s biggest heritage brands create a viable, premium loyalty programme?
Over 12 weeks, we collaborated with the retailer’s Loyalty Team to design, launch, test and validate a new proposition. We embedded our designers and together we carried out experiments, including meeting customers in store to test our proposition. Our live 1,000-person trial achieved a 25% conversion rate. The defined proposition included revenue for the business, with a monthly subscription, and value for the customer, such as stylist appointments and unlimited deliveries. We proved desirability, designed the brand and implemented the digital infrastructure for the trial.
Results proved value for both the business and customers and the proposition was soft launched to test feasibility. We’ve also supported and grown the retailer’s digital personalisation team, to help them address new white space opportunities.
To hear more about these stories and discuss your customer loyalty challenges, contact Jen Jeng on jen.jeng@wearemagnetic.com
Source: What Britons want out of loyalty programmes (YouGov research)