2018 was an interesting year in loyalty, as we saw a lot of moves towards and away from loyalty programmes. And, we’re already predicting that 2019 will be no different. Simon looks at three moves that caught the eye in 2018, and that may help to shape thinking for other brands…
Asos drop loyalty programme after three years
In October 2018, Asos dropped their ‘A-List’ loyalty programme, after a three year excursion into the loyalty arena. The scheme seemingly failed to engage with customers – perhaps no surprise given that rivals such as Missguided, Zalando and Boohoo do not operate loyalty schemes.
The end of A-List clearly didn’t impact business, as at the same time as pulling the scheme, Asos were reporting 18 million active customers and an increase on sales of 26% year on year. Asos claimed that they withdrew from A List to enable them to work on better ways to reward their loyal customers, which could suggest their focus was on improving the customer experience and service for everyone.
Pizza Hut introduce new loyalty scheme
While Asos were ending their A-List scheme, Pizza Hut were launching their first loyalty programme. Hut Rewards gives perks to customers who order online or via the app. Users earn ‘slices’ for every £10 that they spend, and these slices are redeemable for free pizzas and sides.
What appeals most about this is that the loyalty programme is designed around a consumer insight to make it simple. It’s not a surprise during research that customers wanted a programme that was easy to sign up to, earn and redeem. Whilst this programme is in its infancy, I think a lot of food delivery markets will be watching this one closely.
Sky launches ‘VIP’ loyalty programme
The launch of the Sky VIP scheme is a first in the sector, and focuses on rewarding customers based on tenure.
It’s clear to see that their challenge is with churn as competition from the likes of BT and Netflix starts to bite, so this feels a very logical move for Sky. It also is based on a factor that most consumers would appreciate, as we’ve all moaned about new customers getting better deals than existing customers in many sectors!
From personal experience as a Sky VIP I’ve been impressed with the programme; however there is one area where they could have improved. Having invested heavily in the programme, I only found out about it when I called up to leave! Despite all the great work they have done, not communicating this to customers is a bit of an ‘own goal’ from Sky, and it left me with a slightly tainted perception of the programme.
This is a factor that all brands should give careful consideration to. Being proactive with their loyalty programmes and reaching out to customers, rather than using them as part of the ‘final negotiation’, can sometimes have a greater impact than the reward.
The questions you must answer before moving into loyalty
These examples show that before moving into loyalty, there are two fundamental questions that businesses need to ask themselves.
Firstly: do we even need a loyalty programme? Some brands are creating programmes to gain loyalty, when focusing on improving and making the customer experience excellent for everyone would be far more effective.
If the answer is that a loyalty or rewards programme is needed, then the second question is: how would the audience view their loyalty?
Commercial objectives will steer the second question and, of course, data will influence this too. There’s no point designing a programme where gathering the data is not easy. In many cases, loyalty programmes will be used to try and gather deeper insights into customers and their behaviours, but uptake will be limited if this is not a simple process for the audience.
However, in planning any programme, an understanding of how the customer views their loyalty is a critical consideration. Taking the Sky example: there’s no point designing a scheme to get me to spend more, as I already buy the services that I am interested in. What’s more important is to ensure that I remain a customer – and keep spending my money with Sky – by offering me perks based on my tenure.
Once the audience viewpoint on loyalty is mapped against the commercial objectives, it should be clear on how loyalty can be determined. From that point it comes down to simplicity of the experience and being part of the programme. We’ve all got countless loyalty programmes in our wallets, from free coffee to supermarkets and beyond. So, to win in this space a business needs to not only have a programme that resonates with their customers, but also one that is easy to engage with.