How to build brand loyalty in a remote era

Op-ed

COVID is forcing the world of retail to change as shoppers go online and tighten their purse strings – sustaining strong customer relationships and brand loyalty is critical for survival. Loyalty programmes provide an important way to attract, engage and retain customers, but implementing a loyalty scheme is easier said than done. It must add tangible value to the end consumer – brands that get this wrong risk straining existing customers and alienating new ones.

At Mode, we spoke to over 100 Senior Marketing Officers at leading brands to understand the advantages and challenges of loyalty schemes that exist today. The importance of data and insights to truly ‘know your customer’ is crucial to success.

Loyalty puzzle: Most UK brands want a loyalty programme… but most don’t have one

Out of the 100 Senior Marketing Officers we spoke to, from some of the biggest brands in the UK, including Tesco, L’Occitane, Specsavers, Sainsbury’s and Fortnum & Mason, 53% think that having a loyalty scheme is important to retain customers. However, only 24% actually operate a loyalty programme today. This is because many brands worry about running a loyalty scheme that is relevant to their customers and shouldering the cost of managing a scheme that is ineffective and inefficient.  Our research shows that customers dislike being ‘over’ targeted or receiving offers that they do not want. Similarly, brands want reassurance that they are reaching consumers with relevant content, and that the rewards are tangible enough to entice the shopper to make repeat purchases.

A fragmented payments industry: Another hurdle for loyalty schemes  

Another big hurdle for marketers building brand loyalty schemes is the fragmentation of the retail payments landscape. Buying a piece of clothing online, for instance, involves multiple payments intermediaries such as card companies, banks, a payments gateway and of course the merchant. Each step further separates a brand from the paying customer. As a result of this limited data, retailers are unable to offer the tailored, adaptive and highly personal shopping experience that the modern-day consumer expects.

Consumer expectations are also evolving. A recent survey by Ecommerce Guide found that 86% of shoppers would volunteer personal data for improved privacy, faster shipping and greater discounts. The survey also found that increasing the loyalty of a customer by 7% can boost lifetime profits per customer by as much as 85%.

So, how can retailers capture this data… and keep customers loyal?

Critical to the success of a loyalty programme is taking a relationship-led approach. 55% of the Senior Marketing Officers said that one of the biggest disadvantages of loyalty schemes today is the difficulty in understanding the customer’s purchase preferences. Many also said that they struggle to select incentives and rewards that will entice the customers to make repeat purchases.

What’s the solution? Investing time and effort to know your customer. We see these highly personalised features used all the time across “super apps” such as WeChat, and AliPay, where I was UK CEO. They create a direct line to customers using initiatives such as individual offers and personalised messaging, location-based discounts, automatic repeat order, online gift cards and membership promotions. For many small and medium sized businesses, this can mean overcoming resource barriers to achieve a high level of personalisation and insight. In fact, 56% of Senior Marketing Officers we surveyed said that it would be beneficial to have a “relationship platform, where merchants are able to access customer data through the payment channel, and drive loyalty through tailored offers and bespoke rewards.”

An integrated payments and loyalty platform

An integrated and seamless payments experience is a critical part of the customer journey, which should drive loyalty through an ongoing relationship. This is where platforms providing customer insights and personalisation really come into play. Merchants can make targeted offers, based on a full picture of a customer’s spending and investment habits. Tailored offers must be relevant and personalised in order to remotely reinforce the relationship. Critical to making this happen is a payments and loyalty platform that directly connects merchants with customers and makes the payment and loyalty experience seamless, through one click.

Building long term customer loyalty is far from simple but with personalised brand communication, customers can forge strong brand relationships that last through trends and seasonal cycles. High value loyalty programmes must start and end with data, leveraging actionable insights to help build strong relationships in this ‘remote’ and digital era.

Rita Liu, Chief Commercial Officer at Mode and former Alipay UK Chief Executive

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