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Great Loyalty Debate Seminar Key Insights

With Sainsbury’s in the news with changes to its Nectar programme, the issue of loyalty is high on the agenda. IPM managing director Jodie Hopperton recently chaired a seminar on the subject, with contributions from Clive Humby of DunnHumby, Steve Mader of Kantar Retail and more. Here are her key learnings from the morning...

1. We need to redefine our definition of Loyalty

Have we been distracted by our short term financial goals be it personal or to corporate shareholders?   

Clive Humby spelled the main challenge out when he told the audience that 60% of fmcg sales are through price promotion, which, he argues, is far too much of a reliance on one promotional mechanic, particularly one which erodes brand value. By definition, loyalty is long term, not short term.  

It was also made clear that fmcg marketers and retailers need to find other ways of promoting products which add value to them and build brand equity – an argument which the IPM fully endorses.   

Loyalty isn’t something that customer owe retailers or brands – it’s something retailers and brands owe their customers. At its simplest, loyalty is about saying thank you to your shoppers for supporting you and encouraging them to stick with your brand.     

2. Surprise and Delight   

It seems that consumers have become conditioned to expect a certain level of reward through points based schemes.   

Instead, marketers need to inject some ‘surprise and delight’ into their loyalty programmes – an idea that I love. It moves us away from that feeling of entitlement and expectation.     

For example, rather than a consumer having a ‘loyalty’ card, collecting stamps each time they have a coffee and getting their 10th one free (an expectation), why not give a coffee shop’s manager the discretion to give away a percentage of coffees every day for free? It reintroduces some excitement into the relationship.    

3. Take Back Ownership of Your Brand   

Many products are out there on sites on websites like Amazon with price points that are far removed from what the brands would like them to be. Amazon are successful because they make the path of purchase easy, and brands are often becoming one or two steps removed. Both Clive Humby and Steve Mader from Kantar encouraged brands to explore ways to take ownership of their brands back by having direct relationships with online retailers and by using loyalty schemes to drive shoppers to their official sites, and then reward them for remaining loyal.   

Linked to this, there was a clear message about the need to link sales and marketing better. Often, marketers don’t have any control over price, which is craziness… price is one of the fundamental 4 Ps, after all!   

4. Personalise     

Loyalty is not just about data. We talk a lot about ‘big data’ but what is actually needed are those small nuggets of real consumer insight amongst all the noise.   

Data needs to be contextualized around an individual shopper – through a loyalty scheme or from ePos records by marrying it up with their activities on social media – to create a real, valuable picture of their purchase paths. Look at what they love and share, and build your rewards offering around that core understanding. Data is wonderful – use it wisely.     

5. What Comes Next?   

Shoppers may get fed up carrying around a wallet full of loyalty cards, let alone being bombarded with messages from a range of different loyalty schemes in various forms of media. We need to be smart about how and where we target. Can we use mobile phones more effectively? I, for one, don’t necessarily want to exchange a card for an app, but I’m open to integration in some way.

Consumers want rewards which are relevant to them and to their relationship with a particular brand or retailer, and they want to be excited by what they get offered.   

As yet, the Great Loyalty Debate suggests, nobody has cracked this particular brave new world although it doesn't seem we are far off. Should we start bets on who will get there first?

The Great Loyalty Debate was organised by IPM member company Hive, which specialises in online loyalty platforms and unique code generation and use. Edited highlights of the discussion will be available from Hive soon.