Tesco caused mass outrage earlier this year when it announced it was making immediate changes to its Clubcard scheme. Overnight, the value of customers' points was halved, yet rather than reverse changes, Tesco simply postponed further changes until later this year, dismissing the concerns of their most committed customers. GAME is now experiencing a similar reaction.
The loyalty sector has been prominent in the news agenda in 2018, and from the backlash faced by Tesco for changes to its flagship Clubcard scheme, it's clearly a sector with huge consumer appetite. This increased focus on rewards programmes has laid bare several issues with loyalty schemes which have been brewing under the surface for some time now. But what makes consumers irate in the loyalty sector, and how can these issues be addressed to ultimately improve customer satisfaction?
According to research by retail marketing agency TCC Global, the average UK shopper signs up to three or more loyalty cards, yet will never use at least one. Pair that with the fact several retailers are starting to reduce the benefits they offer, and it can be said that many retailers simply are not understanding their customers' needs anymore.
As the former Managing Director of AirMiles, increasing its profits to £27.2m and making it the most profitable subsidiary of BA Worldwide at the time, I've first-hand experience that loyalty works – but the delivery is absolutely essential. Consumer attitudes to loyalty is shifting. They are making very rational decisions about which loyalty schemes are worth their participation and the market needs to adapt to this new attitude by delivering a premium, easily accessible, customer-first service that makes spending rewards points as easy as possible in order to deliver value to the customer.
Be more flexible
Consumers often criticise traditional loyalty schemes because they offer lots of places to collect points, but far fewer places to spend their collected points, or the availability of redemption product is restricted. Generally, the most loyal members of a loyalty scheme are those who have redeemed their points to attain value, so why take away flexibility and value from their loyalty programmes? Offering a large amount of benefits and rewards with no spending cap is one effective strategy to retain and gain customers. At Ice we give our members the ultimate freedom to choose where they collect and spend their points with no restrictions, something that has benefited both our customers and partner retailers. Choice and control is key.
Keep it simple
The modern consumer wants simplicity. They don't need extra hassle in their lives and that applies to their shopping habits as well. Technology has helped reduce the amount of effort consumers need to put into everyday transactions, particularly shopping. But loyalty programme is more than just a sleek technology. You need to understand your customers' motivations, help them make a rational decision to benefit from the programme while making the spending points effortless.
Flexibility and ease of use are key in most sectors, including retail, and the lack of this in the loyalty sector is meaning points or cash rewards are going unspent. Used sensitively, technology and automation can have an important role to play in increasing engagement with the loyalty scheme by helping people to spend their points for value rather than just helping them to collect points. If redemption were more easily accessible, there would be fewer unused points and more happy customers.
Customers should be rewarded for their loyalty without any sacrifice or clauses. Ice has developed a solution using Mastercard®'s Card Linked Service platform to ensure Mastercard credit card holders receive a simple, automated service with no physical loyalty card or special purchase instructions. Every time members use an Ice-registered Mastercard with one of our partner brands their transactions are tracked automatically and they are instantly given the option to spend their points, as many or as few as they choose for a discount or collect points instead. Customers are in full control of their points and we have received strong positive feedback on the model from users.
Whilst the data retailers gain from loyalty schemes is important to keep customers engaged, there is also a growing appetite from consumers for alternative, bespoke experiences. The most savvy loyalty schemes are becoming equipped to offer and implement these, and flexibility of reward is vital.
At Ice our partner retailers include household names such as TUI, Harvester and Go Ape, but we also work with a wide range of smaller, boutique brands and independent gastropubs to cater for a huge variety of customer interests. The companies we choose to partner with are selected based on the changes they have made to their businesses and their on-going commitment to reduce their impact on the environment which is something we're passionate about and is integral to our proposition.
By informing our members about these great companies we are giving them exciting alternatives. That could be having a family dinner at your local Miller & Carter steakhouse, which sources food produced in a sustainable and ethical manner and makes consistent effort to improve energy efficiency. Or by not giving up your summer holiday but choosing to use a company who is committed to reducing its impact on the environment such as TUI. As Europe's most efficient charter airline they are committed to delivering sustainable tourism. Over 77% of their hotels have credible sustainability certifications and 100% will be sustainably certified by 2020.
Most importantly, put the customer first
Ultimately, the loyalty sector must put the customer's needs at the forefront in order to succeed and drive customer growth. Everyone knows that a person will tell more of their friends about a bad customer experience than a good one, and this is the same with loyalty schemes. Current loyalty schemes must stop viewing their customers as data and instead see them as real people that have transacted frequently with the brands they shop at, in part to collect points from which they expect to receive value in the future. The more value provided to customers, combined with the ease to spend loyalty points, the higher the rewards for all.
Jude is the founder and CEO of Ice