It’s not the first time loyalty schemes have been deemed unnecessary. Grocers in particular are often criticised for spending money rewarding customers who would probably have been loyal regardless.
However, we must remember a few key benefits – first, this research follows at least 15 years of customers actively participating in loyalty schemes. Loyalty cards are now common currency, and behaviour today will have been influenced by a long, sustained loyalty push.
Second, halo benefits mean that schemes that set out with loyalty objectives often also tend to increase penetration – a win-win. And finally, the incredible amount of data and insight gained from a cleverly run scheme far outweighs any upfront investment.
Yes, loyalty schemes need to move with the times, and innovate as the customer evolves. And multiples shouldn’t forget to engage and reward all types of customers – even those whose weekly shop doesn’t generate the highest profits.
But judging by Tesco’s recent record profits, the first-to-market grocer scheme is still finding that a well-run loyalty programme is its secret formula.
Kalleen Knowles Client services director Ideas-to-Market, part of the Publicis Groupe