RETHINKING
LOYALTY
SCHEMES
Enhanced relevance
THE BENEFITS ARE CLEAR
Get the ingredients right and the rewards are priceless
Personalisation
Emotional brand connections
OFFERS &
REWARDS
Reciprocity & motivation
FEEL-GOOD FACTOR
Touch point data to better target and predict behaviour & communicate more
BETTER VALUE
Improved brand perceptions
INTERACTION
despite all the benefits
we need to confront the uncomfortable reality of loyalty schemes
THE CONSUMER REALITIES
Most loyalty schemes reward those already loyal
Spending time and money for people who are already pretty loyal rather than truly incentivise those to become more loyal
Most lack any real differentiation or anything disruptive
With many schemes all using the same promo formats and loyalty mechanics, it can be hard to create something that stands out and gives regular reasons to engage
People often forget in the moment
Unless you’ve already established habitual usages, customers will need regular reminders and reasons to engage with the scheme. The greater the perceived effort, or limited appeal to redeem rewards, the more people will forget
Unattainable or boring / irrelevant rewards
Things that feel low value compared to customers’ investment of money and time will have limited appeal. As will competitions where Wendy from Wigan gets to go on her 4th holiday of a lifetime and 99.9% of customers get nothing
Timeliness
Lack of timed offers or sense of urgency to achieve outcomes in a set period
Enshittification
When brands go from using the data to enhance customer experiences and truly reward behaviour, to using the customer data as additional revenue streams or to push other agendas. (E.g. sending customers offers for another brand of shampoo even though you know they are loyal to a certain brand)
THE COMMERCIAL REALITIES
A big investment for big assumptions
Loyalty schemes can be expensive. Badly planned and executed schemes can cost more than they give back due to low reach and relevance, limiting the impact. Many businesses thrive without a scheme, and a scheme badly done can cause more damage if you need to scale back or pull the plug completely.
KEY INGREDIENTS FOR SUCCESS
How to make a loyalty scheme count...
#1
Different, distinctive & outright disruptive
Leverage our 3Ds model to work out what will stand out and engage
DISTINCTIVE
Attention-grabbing and linked to the brand, with clarity of purpose
DIFFERENT
Offer a scheme that is unique with different rewards or mechanics vs competitors
DISRUPTIVE
Challenge conventions of loyalty schemes to reward different behaviours, or offer everyone a trip of a lifetime prize!
#2
THE RIGHT MECHANISMS
& REWARDS
Mix and match the right levers of loyalty
INSTANT GRATIFICATION
Surprise and delight your customers e.g. Pret’s random free coffee
PERSONALISATION & STATUS
e.g. Avios & airlines through the lever of tier status
COLLECT-SPEND RATIO
The more you buy, the more you get e.g. Boots Advantage card
PARTNER OFFERS
Rewards linked to rewards from other companies e.g. Amex
PRICE OFFERS
Reduced price, discount or exclusive offers (e.g. Tesco Clubcard / Nectar)
GAMIFICATION
By including sweepstakes, challenges & leaderboards e.g. GameStop PowerUp, Hilton Honors
EXPERIENTIAL & EVENTS
Nike+ which doesn’t offer points but has exclusive workouts and apps that encourage physical activity
SUBSCRIPTION
Lock customers in like Amazon
Prime with offers, TV and free delivery
CSR / SUSTAINABILITY & CHARITY
E.g. Patagonia Action Works, connecting customers to local causes they care about
AUTONOMY
Empower customers with the autonomy to choose their own ways to be rewarded E.g. Waitrose pick your offers
#3
COMMUNICATE AND MAKE IT EASY TO EARN AND REDEEM
Frustration can easily build if technical barriers / pain points between earning and redeeming are part of the system. If customers aren’t aware of the benefits or any timelines, or there are just too many steps in the way, then frustration can build...
STAGES OF INCREASED LOYALTY
MAKE IT EASY PEASY
A simple journey to sign up and use, with as few steps as possible between earning and redemption
THE COMMS
Ensuring comms across touch points stand out, have clear and compelling messaging, and tap into key behavioural science nudges
THE FOUNDATIONS
The right mix of loyalty rewards, benefits and scheme mechanics
#4
EVOLVE
TO STAY FRESH
Blend the big data and the bold opinions
The product journey of enlightenment
Market trends and UX development
Customers and categories change as expectations evolve and competitors do their best to steal market share from you. Finding ways to constantly evolve schemes, without ripping the heart and soul out of them, is vital to ensure long-term value and relevance
Don’t rely on customer data alone to determine what they want. Ensure feedback loops and ask customers what they really think to shape new ideas and iterations
Point customers towards new products and services that will add genuine value and enhance their loyalty (not just because you have things you can flog them)
Monitor market trends, consumer perspective, and competitor schemes to learn and develop based on changing expectations and real disruptive thinking
SO WHERE NEXT FOR LOYALTY SCHEMES...?
Some of the traditional models are at risk depending on the size and mix of benefit types that can be offered
- The pure value play (through offers and price reductions) isn’t sustainable or practical for most schemes unless customers are purchasing in volume / frequently (e.g. supermarkets)
- Competitions and gamification won’t be enough to maintain differentiation and stand out without longer term benefits
- True personalisation opens up real potential to deliver value - but lots of data and insight are needed for this. With increased personalisation also comes the risk of increased customer expectations to deliver against
- Very few people really want cards cluttering their purses and wallets, but not all customers are digital natives - any scheme needs to be easily accessible for all and seamlessly digitally connected
EXPERIENTIAL
- Tangible rewards mixed with moments of delight can be important to create emotional connections
A market gap?
Opportunity for more schemes to reward experiences that will make a real emotional impact
Where should you focus your loyalty scheme?
Scheme focused on partners of experiences e.g. Vitality Insurance
O2 Priority
PRICE
THE DANGEROUS MIDDLE GROUND
BIG & BROAD
FOCUSED
Supermarket schemes e.g. Clubcard & Nectar
Local coffee shops
Direction of travel
Want to discover the right ingredients for loyalty?
Give us a shout at
hello@disrupt-insight.com
Disruptive thinking
Reframing problems and challenging the status quo to identify new ways to drive behaviour change
Innovative solutions
Combining our expert consultancy and global qual and quant robust insight solutions
Distinctive delivery
Outputs with impact designed to engage and tell the real human and commercial stories
(C) Disrupt Insight 2024