The document discusses loyalty challenges and opportunities across different sectors including grocery/supermarkets, technology/appliance retailers, consumer insurance, and travel retailers. It notes that traditional loyalty programs are becoming less effective and brands are looking to leverage customer data to build more personalized loyalty strategies. Successful approaches discussed include using data insights to provide superior customer service, deliver additional value beyond price, and integrate technology to improve the customer experience at every touchpoint. The document advocates that truly loyal customer relationships require consistently interpreting data to understand customer behavior and needs.
2. G E T L O Y A L T Y S M A R T
Sectors of Opportunity
The traditional card-based loyalty programme is losing its appeal: these schemes are now
costing significantly more to companies, and delivering significantly less to consumers. So
in order to reclaim the value that is slipping through the cracks of inefficient legacy
programmes, brands are starting to rethink what loyalty means for their customers — and
for many brands, this stems from the potential gold mine of customer data. As we are
increasingly able to collect detailed knowledge on consumers’ actions, brands have an
opportunity to use this insight to build a brand that speaks directly to customer needs,
behaviour and aspirations.
Understanding consumer motivations is a key component in developing an effective
loyalty scheme, but it is also critically important in aligning the brand proposition.
“Companies that don’t know who their customers are, or what their customers are buying,
are at a competitive disadvantage,” says loyalty expert Keith Mills, founder of the Air Miles
and Nectar loyalty schemes1.
Brands like Amazon have adapted their loyalty offering in such a way that consumers
actually pay to be in the retailers’ premium scheme, Amazon Prime. The data intensive
programme offers hyper-personalisation and genuine utility, as well as an emphasis on
adaptability to personal priorities.
“The nuances of consumer behaviour mean loyalty
programmes must be more flexible and responsive than ever,
especially as loyalty translates differently according to sector
and brand.”2
Yet loyalty is considerably easier to muster in some sectors than others. As we see basic
loyalty initiatives developing into more sophisticated strategies, here we look at a few
sectors in which loyalty is facing some tough challenges, and the strategies which they are
adopting.
UNDERSTANDING BEHAVIOUR: GROCERY/SUPERMARKETS
Loyalty offers grocery retailers an opportunity to break away from the downward spiral of
price wars, and the overwhelming driver of loyalty in this sector is superior service and
making the customer feel valued. Retailers must be constantly aware of what their
1
Marketing Week: Why brands need to approach loyalty like Amazon, 2017
2
Marketing Week: Why brands need to approach loyalty like Amazon, 2017
3. G E T L O Y A L T Y S M A R T
Sectors of Opportunity
customers’ value beyond purely price, and address this on a personalised level, leading
towards a more Amazon-like relationship with customers.
In an era where personalisation is being pursued by brands across every sector, the
answer lies in using data-driven insights to replicate the one-to-one experience that
shopkeepers offered their customers in the 1950s, except now on a mass scale. A key
tactic for brands is to foster loyalty by using digital engagement to bind all touch points
together, in order to get a more complete picture of customer behaviour. Grocery
retailers should be looking to connect with shoppers on the things that matter to them as
individuals, and to provide them with satisfying experiences that will keep them coming
back.
3
SUPERIOR EXPERIENCES: TECHNOLOGY & APPLIANCE RETAILERS
The overall electronics retail industry is in flux and, as loyalty is already a challenge in this
specific sector, technology retailers are being forced to adjust their strategies. Since
electronics and appliances tend to be less frequent and more considered purchases, price
is hugely important but consumers also often shop around to find the latest features and
the best overall customer experience and product quality.
Beyond the product in the box, consumers are also demanding outstanding customer
service. The fast and flexible delivery options that online retailers offer have been a major
selling point for consumers and many are willing to pay more to have their electronics
delivered quickly or at their convenience, and to have their old appliances taken away.
While offering competitive delivery is key, traditional retailers have the opportunity to
further build upon the in-store customer experience, for example by transforming their
stores into advice centres and places where consumers can try before they buy, creating
a more valuable relationship.
4
The silver lining of this challenging loyalty landscape is that
shoppers of electronics and appliances are more likely to recommend a manufacturer or
retailer than customers in other industries - so if done right, there is huge potential.
5
ADDED VALUE: CONSUMER INSURANCE
Insurers are increasingly aware that a business built around customer loyalty and
advocacy can yield substantial long-term benefits. However, loyalty remains tough for
many insurers to come by, partly as insurers have far fewer interactions with customers
than other providers in the sector, for example retail banks. In some markets, interactions
3
Marketing Week: Why brands need to approach loyalty like Amazon, 2017
4
K3Retail: Customer Loyalty in the Consumer Electronics Sector: Is it Really Possible?
5
Accenture, 2016
4. G E T L O Y A L T Y S M A R T
Sectors of Opportunity
are dwindling further, with the rise of online comparison sites degrading the relationship
to a simple transaction, often based on cost.
Many of the leaders in loyalty in the sector have found ways to generate more meaningful
interactions by redefining what it means to be a provider. Customers tend to trust insurers
to serve them beyond basic coverage, as providers of platforms offering additional
services related to car, home, health and life - these services range from auto sales and
leasing sites to fitness club memberships and flood monitoring in home basements, and
many involve dedicated partnerships with third parties. These efforts seem to be effective
as recent studies found that most customers would willingly share their health, financial
and other personal data with insurers, a critical tool in building tailored value into the
relationship.
6
INTEGRATING TECHNOLOGY: TRAVEL RETAILERS
For many consumers today, the ease and reliability of websites and apps play a more
determinant role than brand loyalty when purchasing travel. Additionally, online ratings
and reviews further undermine brand affinity and disrupt the ability of suppliers to control
their own marketing, making brand loyalty difficult to foster. As consumers increasingly
expect these multifaceted transactions to be reduced to a couple of swipes and they
begin to want more personalised content throughout their travel journey, players in the
industry will need to respond with broad collaborations for aggregating, processing and
harnessing the big data involved to improve the customer experience and breed loyalty.
DRIVING LOYALTY
Using data to drive loyalty seems to be a theme across sectors, however, it’s the
interpretation of data to understand behaviour, create value, implement technology and
improve the customer experience that is the path to a truly loyal relationship. A robust
loyalty programme without this thread of consistency is meaningless. Instead brands need
to focus on doing a range of things well to develop a continuous dialogue with
consumers.
6
Bain, Customer Behavior and Loyalty in Insurance: Global Edition 2016
