Features of a Loyalty Scheme @loyaltyscheme #IndieRetail

From restaurants to grocery stores and stationers to shopping malls, loyalty schemes are fast becoming an inevitable marketing strategy for building customer loyalty. Businesses adopt them to compliment traditional, mobile, online and social media marketing. Loyalty schemes are used to encourage and build customer loyalty, reward loyal customers, promote brand identity, market products and services and stimulate sales.

Although loyalty schemes are distinctive in their applications, especially in the incentives and rewards businesses offer their customers, there are features that are common to the majority of them. They have loyalty cards, rewards, redemption process, membership and terms and conditions.

Loyalty cards

These are platforms that deliver the loyalty schemes. They are branded cards that detail the loyalty rewards, products on offer and the number of times customers must participate in order to qualify for a reward, redemption processes and duration of the scheme, membership details and terms and condition.

There are two types of loyalty cards, paper and plastic loyalty cards. See illustrations below.

Nando’s Paper Loyalty Card
Illustration 1.1

 

 

 

 

 

Costa Coffee Plastic Loyalty Card
Illustration 1.2 

 

Incentives & reward

The main attractions of every loyalty scheme are the incentives and reward. Incentives are steps customers should take, which would demonstrate their loyalty, in order to receive certain rewards. For example, using the Nando’s Loyalty Rewards as a case study, customers are offered a free ¼ chicken after visiting a Nando’s restaurant three times, a free ½ chicken after six visits and a free whole chicken after ten visits. Therefore, the more they visit the more the reward increases.

Market

When starting a loyalty scheme the business must decide what product and service would be on offer. Then they must decide on their target market. For example although McDonald’s restaurant offer a wide range of products, they have two loyalty schemes that target two different markets. They have a coffee loyalty scheme for coffee drinkers, perhaps to promote their morning breakfast menu and their coffee in general, and a student loyalty scheme specifically for students. Participants are given a McDonald’s coffee loyalty card while the students are required to present valid student IDs to redeem the offers.

Redemption process

The redemption process shows what the customer must do in order to receive the reward. In this case study, Caffè Nero requires their customers to buy nine cups of coffee in order to qualify for a free coffee. All they have to do after nine purchases is to simply present their loyalty card at any of their stores to claim a free cup of coffee. No identification, registration and membership are required. The loyalty card becomes invalid after the final redemption. Afterwards, a new loyalty card is issued to the customer to start accumulating new points for another free cup of coffee.

Caffè Nero Loyalty Card
Illustration 1.3 

 

Expiry date

Every loyalty scheme has duration. Most are yearly while the rest are periodical. The duration is determined by the objectives of the schemes. A loyalty scheme could be used to launch a new store at a specific location or to promote a specific range of products.

Registration & membership

For the purpose of gathering customer details for analysis, some loyalty schemes require registration and membership. Registration is either done online or by filling and posting an application form. However this is mostly associated with plastic loyalty cards. Most paper loyalty cards do not require registration and membership and are cost-effective.

Points & stamps

The type of loyalty card would determine whether the customer accumulates redeemable points or stamps. Plastic loyalty cards usually allow accumulation of points. In other words, the customer is automatically awarded points, which determine the value of their reward. For example, using Sainsbury’s Nectar card, a customer collects 2 points for every £1 spent. In this case the customer must accumulate a minimum of 500 points, which is £2.50, before they can redeem it on any of their products. While with a paper loyalty card, the customer accumulates stamps or signatures for every visit. For example, a customer’s Nando’s loyalty card is signed and stamped after spending a minimum of £6.

Terms and conditions

And finally, the terms and conditions define the legal obligations and liabilities of both the loyalty scheme provider and participants. Unlike campaigns where the winners are chosen by ballot, customers that fulfil your loyalty scheme terms and conditions must be rewarded. Loyalty schemes might be applied at specific locations, specific times of the day, for specific products and limited to specific markets.

This blog was written by Evelina Azar of www.iamloyal.co.uk. Evelina is the Marketing Director of Iamloyal Ltd.

Iamloyal is a specialised marketing company that manages loyalty schemes (B2B and B2C), designs, brands, prints and distributes loyalty cards.

If you would like more information or advice on how to start a loyalty scheme or how to improve your existing scheme contact me on 08432893105 or email at Evelina.azar@iamloyal.co.uk. You can also follow us at www.twitter.com/loyaltyscheme

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About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email champion@retailchampion.co.uk.
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2 Responses to Features of a Loyalty Scheme @loyaltyscheme #IndieRetail

  1. Darren Brady says:

    Really interesting article…
    I am interested in whether Evelina thinks that the future of loyalty is with paper cards or with mobile.

    Companies like Punchd – USA (www.getpunchd.com) and Loyalli – UK (www.loyalli.com) are now offering this service through the phone and seems to solve the problem customers like me have in not wanting to carry many cards in my wallet.

    I assume from a retailer perspective that knowing how many stamps you are giving out and getting other data on the effectiveness of the scheme will be of use and more valuable than a paper service.

    Finally, most people are aware how easy it is to fraudulently stamp or get hold of stamped cards (you can buy a stamped Nero card on ebay!). I believe Mobile solutions like Loyalli/Punchd help achieve this…

  2. Evelina Azar says:

    Thanks Darren for your comment.

    Whether it is a paper loyalty card, plastic loyalty card, mobile platform or via the internet they all have their advantages and disadvantages. Integrating all these mediums and giving customers options will enable retailers capture a large part of their market. Ideally, smaller shops like chicken & chips, barbers, saloons, drycleaners and similar businesses benefit from paper loyalty cards. Iamloyal for example designs, manages and markets loyalty schemes for retailers, wholesalers and online businesses. We are currently working on a mobile platform.

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