Loyalty programmes are essential, but many brands still don’t understand what loyalty is
Marks & Spencer is experiencing a bit of turbulence. Its half year sales reported slides in most areas, most notably in its fashion offering – and this has caused scepticism over the success of its new loyalty programme, Sparks, which the retailer hoped would draw in new customers.
Whilst it’s too early to tell what impact Sparks will have on its sales margins, I’d argue it’s never sensible to pin your hopes of revival on a loyalty scheme. People buy brands, not transactions. What the brand stands for and the product and experience it offers matters most. Yet most loyalty efforts focus purely on the transactional. Given that, what is becoming increasingly clear is that many brands don’t seem to grasp what really drives loyalty.
To be fair on M&S, its insight and loyalty director Suzanna Broer did stress following the announcement of Sparks that “loyalty is the wrong word to use”. What she did do is then talk about ‘the need to develop a new relationship with customers centred on a relevant, tailored conversation’. Although this is not really new news for those of us with an appreciation for direct marketing – and all that means in today’s omni-channel world.
Nevertheless, despite the fact that M&S is somewhat late in its adoption of a loyalty programme, Broer is certainly right that the concept of what it means to be faithful to a brand today is tricky. In the fickle age of social media, “loyalty” increasingly needs to be redefined and drilled down into its component parts.
Perhaps the best place to start is to define what loyalty isn’t. Both Sparks and the also recently-launched ASOS Rewards programme follow a model where people can collect points for both buying products or social activity, such as posting a review or a picture of themselves wearing the purchase.
But – and this is where the major misunderstanding arises – points programmes are not a way of instilling loyalty; they’re a form of currency used to stop shoppers going elsewhere. Admittedly, however, “loyalty scheme” has a much better ring to it than “prevention programme”.
Similarly, rewarding people for sharing their experiences and saying nice things about your brand is all very well but, again, this is not necessarily a sign of loyalty. You could have an ASOS fan, for example, tweeting incessantly about how much she loves the brand’s shoes and posting pictures of them mashed up with love hearts, without making a single purchase.
For all you know, she could be a social media addict who is doing the same on Boohoo or Very.
She’s not loyal; she’s a valuable, outsourced part of your marketing effort. ASOS knows this because when fans post images on social media, this content is then used to populate a feed on its website. Doing this gives customers the impression that a friend is recommending that they try a new outfit, not a big faceless corporation. It gives the brand a more personal feel. Therefore, while she may not be loyal, rewarding her for her services as ASOS Rewards now does makes perfect sense.
There’s plenty to say about what loyalty isn’t. What, then, is it? Brand loyalty comes from delivering a great product and end-to-end service experience, of which a programme like Sparks or ASOS Rewards is only part of the equation. If the experience is no good, no matter how many points you offer, you won't earn your place in consumers’ wallets, phones, watches or key rings.
Tesco is the most obvious example of this truism: despite a highly sophisticated points programme, it lost custom to Aldi and Lidl because these newer supermarkets offered better value and a more satisfying overall experience. By the same token, although Waitrose has a popular loyalty scheme in myWaitrose, where members can get free coffee, a weekend paper and personalised offers, this is not why people shop there faithfully.
Instead, these shoppers are loyal because of the quality of the food and the values the retailer strongly upholds. As with any programme, as Waitrose’s ambassador Delia Smith well knows, the perks should be the icing on the cake and not the actual cake itself.
Mike Cullis is managing director at creative direct marketing Soul.