“Plastic Population” (MW April 24) raised many valid issues relating to loyalty schemes.
However, when it comes to maximising the lifetime value of a customer, loyalty schemes and discount offers never work in isolation. Loyalty is a behaviour built over time and is largely dependent on customer service. If the shopping experience is dreadful, the level of customer service is low and the shelves aren’t stacked with products customers want, it doesn’t matter how many points they have, customers will turn their allegiance elsewhere.
Modern consumers have extremely short attention spans: they are overwhelmed by offers and incentives. The choices are endless and everything is in over-supply. Successful loyalty schemes need to be about differentiation in a crowded market; about giving consumers something that adds value and holds their attention.
Differentiation by quality of service and experience is often much more valuable than loyalty schemes and some traditional sales promotion techniques – just look at First Direct. Before investing in a large-scale loyalty programme, brands need to make sure their product proposition is correct and there are no problems in terms of service delivery. There is a limit to the amount of polish you can add!