British retail “drowning in sea” of unrewarding loyalty
cards
Only Finland has more but, paradoxically, British shoppers among least
likely to use them
London – 7 December 2016. Although British shoppers are the most likely in the world
to have a loyalty card, with the exception of Finland, they’re among the least likely
to see or utilise the benefits, according to a Nielsen study of 63 countries.
Two-thirds of shoppers globally report being a member of a retail loyalty
scheme, compared to 89% in Britain. Only Finland is higher (94%). The average
British loyalty card holder has 3.6 of them, behind only Japan and Lithuania.
However, loyalty cards are much less
likely to impact purchasing in Britain than around the world. For instance,
only half (51%) of British loyalty card holders will buy from a retailer with a
scheme over one without a scheme, if all other factors are equal. This is the
second lowest figure globally (behind Denmark).
“Most UK retailers are likely to be surprised and disappointed to learn
loyalty schemes only cause half of members to choose them over a competitor,
and that’s if all other factors are equal”, says Mike Watkins, Nielsen’s UK
head of retailer and business insight. “Whether it’s because loyalty schemes
aren’t offering the right rewards, are too difficult to redeem or there are
simply too many of them to make a competitive difference, retailers need to be
addressing it.”
Only just over half (55%) of British loyalty scheme members say they shop more
at retailers with schemes – noticeably below the global average of 67%.
In fact, across all 23 statements around behaviour, attitudes and potential
benefits of loyalty schemes, Britons show less positivity than the global
average, which Watkins notes “is a paradox, considering how popular they are
here. This suggests Britons simply like the idea of signing up rather than
actually using them – a ‘tick-box’ exercise – but the schemes aren’t
personalised enough to keep them engaged. The result being UK retail is
drowning in a sea of loyalty cards.”
What can retailers do?
The most valued benefits of current loyalty schemes are product discounts
(cited by 53% of scheme members), cashback (50%), free products (38%) and
recognition as a valued customer (20%).
Watkins points out this last benefit is particularly important in the UK as “Britons
are nearly twice as likely as the global average to value being seen as an
important customer, pretty much the only element of loyalty schemes Britons
over-index on. So, retailers need to consider more non-financial rewards as a
way to narrow the large gap between the number of schemes people are enrolled
in and the number in which they actively participate.”
Watkins anticipates that retailer loyalty programmes will evolve in three ways
in the future:
- They’ll
increasingly use data to make offers that are personal to the loyalty
member, and that can be digitally linked to both (1) Point of Sale systems
for purchasing and rewards and (2) mobile for driving awareness and
activation
- They’ll
be fused with financial services loyalty schemes, such as those by credit
card companies and other retailers, such as the John Lewis Partnership
card and Tesco Visa cards, so shoppers get the best of both worlds
- They’ll become part of subscription services, such as Ocado Smart Pass and Amazon Prime. These models will allow retailers to give wider rewards and benefits for shoppers who “join the family” which are long term (so good for loyalty) as well as tactical (for immediate purchasing).
“The future of retail loyalty is
personal, flexible and connected – schemes geared to what consumers really
want,” he concludes.