THE POWER OF PERSONALISED LOYALTY
Loyalty, today and tomorrow
We’ve come a long way from Green Stamps. While the origins of the customer loyalty industry can be traced back to the late 1800s, capabilities have evolved since then. Over the past decade in particular, the proliferation of digital technology – and significant advancements in data science – have enabled retailers to engage customers in entirely new ways.
Inevitably, that has led to a lot of buzz around new ideas and applications, something that Sam is quick to point out. “A huge amount of time has been devoted to discussing trends like gamification, subscription-based programmes, and tokenized reward points,” she says. “Because of that, it can sometimes be difficult to know what’s actually happening on the ground, and what is just noise.”
To help clarify the situation, we wanted to establish the grocery industry’s current approach to loyalty and rewards. It immediately became clear that ‘tried and tested’ programmes continue to see the greatest uptake.
What loyalty programme does your client offer to customers today?
Figure 1: Analysis of currently supported loyalty programmes across the global grocery market shows that traditional approaches like vouchers and discounts dominate.
Figure 1 provides an overview of the loyalty programmes currently offered by the retailers included in this study. Discount coupons and vouchers proved to be the most popular (in use at 82% of retailers), with personalised shopping experiences (68%) and points-based reward systems (61%) also in regular use. Tiered membership systems appear to be largely experimental at present (17%).
One model also seeing significant adoption is that of exclusive, member-only discounts (75%). While some retailers introduced initiatives of this kind before the recent inflationary period – Tesco’s Clubcard Prices scheme was launched in 2019, for example [3] – many grocery chains have introduced them specifically to support customers through the cost-of-living crisis.
Debora states: “Of all the tactics we see employed today, this one feels most specific to the pressures of inflation.”
If tried-and-tested is the priority when it comes to current loyalty programmes, what are retailers prioritising for future implementations or changes? Looking at some of the new loyalty trends that have either been introduced already – or are being proactively explored [4] –adoption is limited.
What new loyalty trends are being explored by dunnhumby retail partners vs. the wider market?
Figure 2: Mobile apps and omnichannel marketing are the only new implementations to gather any significant support. The future focus is squarely on a select number of core initiatives.While we do see a little more support for new loyalty trends, there are no significant differences between the featured retailers and the wider market. Adoption of loyalty initiatives is – relatively – universal.
While mobile apps (82%) and omnichannel marketing strategies (75%) are enjoying healthy uptake, for instance, most other trends have gained limited traction. As shown in Figure 2, gamification (46%) and loyalty partnerships (also 46%) are the only other tactics with any tangible support, with notable hot topics like augmented reality (7%) and chatbots (0%) proving uncommon at best and non-existent at worst.
Clearly, this situation isn’t restricted to the subjects of our study. In the wider market, experimentation with new loyalty trends is similarly limited.
Figure 2 also provides an overview of the same loyalty trends as they area being explored by other retailers operating in the same markets as our own retail partners. While there is some variation, the only real differences appear in the areas of partnerships, chatbots, and user-generated content. All of these enjoy a little more use within the wider market.
It’s clear the priority is on doing the basics brilliantly. New mechanics are being tested, but they’re far from seeing what could be considered widespread adoption."
Debora Franchim
Director of Personalisation and Customer Engagement
Samantha Sergeant
Customer Engagement & Media Global Propositions Manager
“These results are particularly telling,” says Debora. “Based on some of the hype and coverage around loyalty in the retail industry, it can be tempting to assume that you’re lagging behind if you don’t already have initiatives like chatbots, AR, or customer advocacy programmes in place. The reality is that the majority of other retailers don’t either, and nor are they planning to introduce them in the near future.”
Sam concurs. “It’s clear the priority is on doing the basics brilliantly. New mechanics are being tested, but they’re far from seeing what could be considered widespread adoption. While it may be a factor, that on its own doesn’t necessarily point to lower customer loyalty – indeed, it may mean that customers want to stay loyal and are simply seeking to extract the greatest value from those tried and tested programmes,” she says. “There’s also a sense that some concepts touted as the ‘Next Big Thing’ have yet to show their real value. The fact that so few appear to even be considering chatbots is testament to that.”
One thing both are keen to make clear is that this shouldn’t be read as a lack of ambition from retailers. “To me, this is about knowing what works best for your customers and continuing to improve on that,” continues Sam. “That’s particularly smart in a tougher economic climate, because it limits the chances of failure and minimises the risk of wasted investment."
All that, of course, drives a subsequent question: if the focus right now is on getting the basics right, how are retailers looking to improve the loyalty experience for their customers? Let’s find out.
3. Supermarket loyalty: is Tesco Clubcard Prices model the ‘new normal’? – Grocery Gazette, 28th April 2023
4. Here, we drew upon the expertise of dunnhumby’s client leads and their knowledge of planned future implementations.