I moved back to the UK last week having spent just over a year in Tokyo.
Japan, for all its technology and efficiency, is a place where people prize physical things. Consumers of all ages still purchase the latest music on CD, most in-store payments are still done in cash, renting a movie out on DVD remains a popular activity and mobile banking hasn’t taken off in the slightest (many people still carry printed Passbooks to keep track of their money).
Since coming home I’ve become reacquainted with all the loyalty cards I left behind in a drawer – Nectar, Tesco Clubcard, myWaitrose, my John Lewis, Boots Advantage Card and the Superdrug Beautycard. Out of habit I stuff them back into my purse for future use. I remember my Japanese acquaintances back in Tokyo saying how much they liked their rewards cards and how fun it was collecting points. For me I find the whole thing pretty cumbersome.
A Marketing Week article from 2016 states that although “89% of Britons are a member of a loyalty scheme” only 51% would buy from a retailer which offered one. In recent years brands have been waking up to the fact that consumers simply aren’t as interested in loyalty programmes as they used to be. They clearly need an overhaul but why and how?
In Deloitte’s 2017 Consumer Review it is said that “the majority of consumers consider being rewarded for their loyalty as the norm and not a differentiator. The research demonstrates that while participation rates to loyalty schemes are relatively high, the reward offered is not seen as differentiating for the brand, it is expected rather than prized or valued.”
How have consumers’ expectations of brands changed? In our technology-flooded world we often choose to shop with those that offer us the quickest and easiest way to get what we want, when we want it. It’s the customer’s overall experience of shopping that matters as they “will remember their experience with a brand long after they have forgotten receiving a discount.” As a result businesses need to focus on making the journey as frictionless as possible, not just look at rewarding customers for purchases.
E-commerce businesses in the UK are king when it comes to the customer experience. As a result they accounted for a 19 percent share of total business turnover in the UK in 2015. Thinking back to my time in Japan the opposite is true. While e-commerce is growing, the majority of people still choose bricks-and-mortar over online shopping as human interaction and customer service are still prized nationwide.
An e-commerce brand that I love to go back to time and time again is ASOS. Many women find sizing an issue when shopping for clothes online and will purchase items in several sizes, in order to try them on at home and send them back for free. ASOS has introduced a simple tool where customers input their height and weight so you can see the sizes that customers similar to you have purchased for that item. It’s this type of user-friendliness that keeps me coming back to the website, not the successful loyalty programme they launched over a year ago.
A brand I really want to try but won’t as it sadly doesn’t target females is Dollar Shave Club (although Billie, the razor subscription for women, has finally launched).
Data shows that Dollar Shave Club’s efforts to make the customer experience as comfortable as possible for its subscribers has had a great impact on its customer retention numbers (around a quarter of users are still subscribed in month 48). From the beginning customers are made to feel welcome and reassured they are making the right choice, being recommended a simple Starter Kit without any need to commit long-term. Each month customers receive items in a box that carries the brand’s witty tone of voice. Sharing pictures of your kit on social media gives you the chance to win gifts.
You can easily customise boxes with additional products, amend delivery dates, select different levels of replacement blades and go on the Not So Hairy plan, which sends you a box every other month instead. All the elements of a DSC subscription are designed to be seamless and enjoyable, not just affordable.
Over the years consumers have become loyal to brands that make the experience of shopping with them rewarding, regardless of whether or not they have a loyalty programme. But what changes are we seeing in loyalty programmes themselves?
In our recent issue of SpotTable we looked at some brands we think are running loyalty programmes with a difference. We mentioned IKEA because it recognises the power of experiences, rewarding its Family members with exclusive events, not just money-off at the till. HSBC is harnessing Artificial Intelligence to hyper-personalise rewards to individual credit card customers. REI looks at how a loyalty programme can do so much more than just offer a financial reward – it empowers its lifetime members to make changes within the company itself. And cosmetics brand, Tarte, sees customers’ social behaviours as the key to unlocking points.
These examples highlight some interesting ways traditional loyalty programmes are evolving beyond the transactional, a subject which was explored in our Trends for 2018 under the macro trend, EXCITE. Consumers want more everyday rewards but these can be delivered in other ways not necessarily connected to discounts or free items. Personalisation and ease of use, e.g. a slick mobile experience, will continue to be important things for brands to consider when updating or creating their rewards schemes in the coming years. You could say Starbucks is the perfect example of a brand that has used technology to not just reward points but making a far better customer experience from start to finish.
We’re mid-way through the year and the majority of well-known loyalty schemes still feel old hat although some major retailers are undergoing plans to overhaul theirs. In the meantime we will be keeping an eye out for brands that continue to do good work in the realm of customer experience.
-Kei Lawford, Futurologist