Three ways brands can learn from John Lewis’s loyalty success

Loyalty schemes have come under scrutiny as brands look to get the most value out of their programmes. Both Tesco and Nectar have slashed the value of theirs while Waitrose has derided the traditional points-based system.

Yet despite this, a study by research firm fast.MAP shows that rewards and loyalty schemes remain the most popular mechanic for consumers to access offers from brands. Their usage and effectiveness has remained relatively stable despite consumer interest in promotions more generally falling.

John Lewis was relatively late to the loyalty scheme game, launching the My John Lewis scheme two years ago.

It went down a different route to most programmes. Instead of accruing points through shopping, customers were offered “experiences” – free tea and cake, invites to events, exclusive access for example to its summer clearance sale.

Have a clear aim in mind

Speaking to Marketing Week, John Lewis’s head of customer marketing Chris Bates said the scheme was launched with a very clear aim in mind. The retailer had found itself “pigeon-holed”, used only for special occasions such as Christmas or big purchases such as a new sofa.

Plus while people felt “warmth” towards the brand this wasn’t reflected in how often they shopped with it. John Lewis wanted to shift those preconceptions and convince people to visit its store more often.

“Historically we were very much pigeon holed for special occasions but that was an infrequent trip. What we’ve seen with my John Lewis is people considering us for more shopping missions than before, so if they want to go and mooch around the shops on a Saturday afternoon with a friend, no set purchase in mind, then we’re actually now on their agenda when we weren’t before.

Free tea and cake, which has a 40% redemption rate among card holders, has proved key to that. As has the personalised content, which Bates said was a “useful stimulus” to get people shopping.

The scheme has resulted in 1.5 million extra shopping trips by loyalty scheme members over a control group and has seen “strong financial results” according to Bates, although he declined to give more detail.

It has also seen strong uptake among its most regular shoppers – described as those that visit more than 12 times a year. Here penetration of My John Lewis is at well over 50%, he claimed, compared to just 5% among the 50% of shoppers that only use the brand once a year.

Align the loyalty scheme with the brand

Bates said he didn’t go down a “points and discount” route in part because it would not have fit with the John Lewis brand.

“We wanted something that was differentiated, unique and in tune with the John Lewis brand which was why we focused on experience, service, exclusivity, treats.”

Chris Bates, head of customer marketing, John Lewis

The rewards concept has proved successful for John Lewis, said Bates because it has an emotional relationship with its customers that it pushes across its marketing. However he admits it won’t work for all brands and that marketers must work out their target customers and what will chime with them.

“Its got to feel right for the brand, for us it feels spot on but I wouldn’t suggest every brand copy what we’ve done because it wouldn’t necessarily be right for them.

“We were trying to make it more emotional than rational, as we do with a lot of our marketing. For other brands the purchase relationship might be a lot more rational and transactional and that wouldn’t be the way to go and money off is.”

Mark Evans, general manager at loyalty consultancy ICLP, says this brand consistency has been keen to success. “Delivering brand consistency across all propositions and touchpoints will always be the utopian experience.”

Test, test, test

Evans highlights that initially the John Lewis scheme offered money off, something that failed to connect with its members. Key to its success, he says, was being able to adapt the scheme to offer customers rewards they really wanted.

John Lewis is constantly updating its loyalty scheme, most recently with a new app
John Lewis is constantly updating its loyalty scheme, most recently with a new app

“Rewarding members with hot drinks, cakes, previews and competitions begins to speak a different brand language and promises a more valued emotive relationship. It seems the foundations are in place and the insights available to make the programme industry leading,” he explains.

Bates believes continuous testing has been crucial. John Lewis piloted its scheme with a small group of customers for a year, which Bates said helped him learn about the popularity of tea and cake, personalised content and events.

“It enabled us to test the proposition and which bits worked and gave us confidence launching it properly because you have to invest in the IT to support it so you need some confidence that what you’re going to do will work.”

Brands must also be prepared to learn and if necessary completely change strategy.

“Do the groundwork of understanding the market and then test the proposition and be prepared to tweak it and if you’ve got it fundamentally wrong to change it,” he said.

  • Find out more about gaining customer loyalty at this year’s Festival of Marketing, where you can listen to speakers on the “Insight” stage. For more information go to: www.festivalofmarketing.com

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