Conventional wisdom tells us that it is cheaper to keep an existing customer than it is to recruit a new one. I have worked on many brands over the years and life is certainly a damn sight easier and more profitable when you run a brand that commands loyalty.
In my experience loyalty follows product quality. Consumers respond to products that do what they say on the tin. Deliver what you promise and you should retain loyal customers. Advertising campaigns may come and go, sometimes a hit and sometimes a miss, but great brands secure repeat purchase because they walk the talk and meet customer expectations.
I write about this because I am speaking at a conference next week on this very topic and need to get my slides sorted.
I have to present on whether loyalty cards are the best route to customer loyalty. My intuition says no, but the evidence is stacked against me. The girls in my marketing team swear by their Boots advantage card. Clubcard has been the marketing magic behind Tesco’s meteoric rise allowing the retailer to understand its customers like never before.
The card itself is not the sole driver of loyalty, but the customer insights that it spins off enable the retailer to apply the full marketing mix with devastating impact. For someone who doesn’t think of himself as a loyalty card junkie I have spent recent weeks signing up to be a loyalist. The perks of a free extra shot and wireless access are enough to ensure that Starbucks has secured the lion’s share of my caffeine credit ever since.
I am then reminded that I do already carry a John Lewis Partnership credit card. Not quite a loyalty card, but the reward of regular gift vouchers in return for my spending on the card is most certainly doing its job.
The same could be said about my BA Gold card. Rarely do I fly with anybody else. So, without even realising, I am somewhat of a loyalty card loyalist. Well not quite. For the past 10 years my local supermarket has asked if I have a Nectar card. For 10 years I have replied no. For 10 years nobody has ever offered me one. Nectar may be in the loyalty business but it could do with a course on new user penetration. As it happens, I still shop at that same supermarket. It is the closest one to my home.
So I was right all along. It is not always loyalty cards that drive loyalty.