Loyalty is earned, not bought. It is a relationship; a two way street between brand and consumer. Gone are the days when loyalty was defined by the number of times a customer shopped with a particular brand, or whether they would recommend a brand to a friend. Today, loyalty extends to the commitment brands are willing to make to their customers.
The inspiration for this blog stems from my initial research for the article “Another One Bites The Dust: BHS”. Following the news that BHS had gone into administration I set about identifying how the retailer could possibly have been saved if they had only opened their eyes to the opportunities that digital outlets create,
The more I read about BHS’ s**tuation, the more I became aware that the retailer had a blatant ignorance towards the needs of their customers. They failed to attract, engage and thus retain customers…. Not only had they failed with marketing, they had also failed with loyalty.
The first warning sign was the absence of a loyalty scheme. Unlike its retail counterparts such as John Lewis and Next, BHS did not operate its own loyalty scheme. When you take into account that loyal customers spend 10 times more than new ones, the decision whether to operate a loyalty scheme or not, is, well, not even a decision!
In their defence, BHS did partner with Barclaycard Freedom Rewards; a scheme that enabled users to collect points from a range of retailers, a list which includes direct competitors Debenhams and M&S. Working on a simple 3 tiered points system, Freedom Reward customers rack up the points in exchange for in-store vouchers. Wow. Innovative right? Five, maybe even three years ago this would have been an acceptable loyalty strategy, but loyalty today is so much more than this!
Loyalty is a high personal phenomena. The era of points equalising prizes is old hat. Loyalty is about making sure the customer knows that you understand them. That you know what matters to them, what turns them on and that most of all you value them.
BHS’ decision not to operate its own loyalty scheme is a blatant missed opportunity. In an increasingly digital world, the number and variety of touchpoints to collect data about customers is increasing every day. And it is this data which harnesses the golden nugget to achieving loyalty. The pool of data collated through loyalty schemes allows businesses to forge more intelligent communications, interaction and thus relationships with their customers.
Case Study: B&Q Club
Following an analysis of their customers, B&Q identified that an increasing number of customers were engaging with the brand through mobile. Whether this be viewing email marketing, searching for local store opening hours or ordering products. Armed with this information, B&Q embarked on the digital transformation of their loyalty scheme.
The bold decision to implement a 100% digital loyalty scheme. Waving goodbye to physical cards (well, almost) B&Q set about allocating unique membership numbers / codes via mobile, which customers scanned every time they shopped.
The new look B&Q Club also encompassed a range of new features including a supporting app, digital receipts and a personalised reward programme.
Despite a reluctant uptake by customers (let’s face it no one likes change!), the scheme has transformed the business. In its first year the B&Q Club enjoyed 1 million sign ups.
Away from the figures, one of the most valuable takeaways has been the wealth of data the scheme has provided. Through the increased use of in-store mobile scanners, each time a customer checks out at the till, B&Q are able to build up a unique profile of the customer. The collection of data doesn’t stop in-store either, as a customer shop online the data keeps on rolling; all powering B&Q with the ability to create a seamless, multichannel experience.
By being privy to this exclusive information, B&Q have been able to improve customer communications; ensuring they are contacting customers at the right time, on the right channel and with topics that are of real interest to them.
B&Q plan to further the success of its club scheme through continued data collection allowing their offerings to become personalised at the most granular level. Vicky Garfitt, Digital Marketing Manager explains;
“We realise the power of brand advocates and, rather than chasing after too many followers, B&Q will continue to put its efforts into a loyalty scheme that focuses on building quality, long-term relationships with customers.”
By choosing not to operate a loyalty scheme, BHS automatically prevented themselves from access to this treasure chest of information. They knew nothing about their customers and this were unable to offer customers what they wanted. In reality, they never stood a chance.
If you think your relationship with your customers could be nearing breakup, then give us a call. Customer acquisition can cost 5-10 times more than customer retention … the question is; can you afford not to keep your customers?!