Supermarkets must look beyond points to reward loyalty

In this, one of the biggest week’s for supermarkets as we find out how they all performed over Christmas, talk has turned to loyalty and the programmes they use to keep us coming back for more.

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Both Tesco and Sainsbury’s trumpeted the impact of their programmes, saying the data they capture from the cards’ use enables them to target promotions at customers and personalise communications, therefore increasing efficiency. Waitrose too credited its instant rewards loyalty scheme for helping it post its “most successful” festive period.

Meanwhile Morrisons has bemoaned its lack of loyalty programme after seeing the impact the lack of a data-driven loyalty scheme had on Christmas sales. It is now planning to trial a service where it will target consumers with personalised offers.

Quite what form this will take is unclear, but if I were them I’d be looking at something beyond the usual collection and redemption method so popular in the loyalty market.

There is no doubting that ClubCard and Nectar have been hugely successful for Tesco and Sainsbury’s, enabling them to capture vital customer data and tailor marketing to, as Sainsbury’s CEO Justin King puts it, “get more bang for their buck”. They also grew in importance over the festive period because many people save up their rewards all year in order to spread the cost of Christmas.

However, these schemes are expensive. Entering the market late, as Morrisons yet again is, will only increase the costs associated with setting it up, marketing and running it.

Plus points, which used to be the go-to mechanism for loyalty schemes, are falling out of favour. Technology, mobile and changing consumer behaviour mean it isn’t as relevant as consumers look for instant gratification and in-the-moment rewards.

That’s why Waitrose’s strategy of giving customers incentives such as free tea and coffee and offers on newspapers is so good. It gets customers in the shop and spending, plus rewards them for that visit rather than requiring them to shop there all the time to get any benefit, something that is becoming less common as consumers vary where they shop.

Mark Price, the retailer’s managing director, recently told the Telegraph that its format is “disruptive” to the market while points are “meaningless”.

It’s hard not to agree. I’ll admit to having both a Nectar card and a ClubCard that I almost always swipe to accrue points when I’m in Tesco or Sainsbury’s doing my shop. Every couple of months or so I get some post through the door from both with paper coupons offering me money off my shop, as well as offers for products I’ve bought recently.

This all feels rather gimmicky however, trying to convince me to buy products that I might not particularly want just because I bought them a few weeks ago. Plus, to be honest I usually forget to take them to the supermarket anyway. I’m sure I’m not the only one.

Instant payback is what consumers want now. Morrisons should take heed.

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Comments

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  1. Stephen English 26 Nov 2014

    Great article.
    Waitrose have got the customers in the door with thier marketing idea, they still have to sell to them!
    The supermarkets should be using mobile apps to excite the customers in usage of technology when shopping, giving pieces of paper is nothing new.
    I belive that points still have a value if earned through mobile marketing applications. These app’s can allow the shopper to be targeted geographically and instore.
    Supermarkets must reward customer loyalty for doing far more than just shopping for themselves. The customer is a great resorce, not just a shopper, the supermarkets are still missing this trick! Marketing people need to get creative and develop enthusiasm in shoppers.
    Seasons Greetings.

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