Nowadays, most businesses operating in the retail sector and targeting end consumers have their own loyalty scheme. In some market segments, such as petrol stations, loyalty schemes are run by every nationwide chain.

Loyalty schemes – how to ensure they’re effective?

Why do companies decide to invest in this sort of initiative? There are several key reasons for doing so. First and foremost, running a loyalty programme helps to expand the base of regular customers. The benefits on offer, such as physical rewards or attractive promotions, encourage consumers to make frequent purchases with a higher average basket value. Furthermore, thanks to the programme, we are able to build a strong bond between the brand and the customer. The factors described above contribute to an increase in the revenue generated by companies, their market share and the strengthening of their market position. As we can see, investing in a well-planned loyalty scheme, which forms part of the company’s long-term business strategy, will always pay off. To maximise the benefits, there are a few key points to bear in mind when implementing a loyalty programme. Here they are:

Registration

Registration is the first step a user must take to join a loyalty programme. Organisers should pay particular attention to the registration process, the number of steps a prospective participant must complete at this stage, and the scope of the data collected. Above all, the registration process for a loyalty programme should be as short as possible and fully understandable to the user. Too much red tape and an excessive amount of personal data required may discourage potential customers from joining the loyalty programme. It is therefore important to bear this in mind, as we may unwittingly put new customers off. It is also essential that the registration process for the loyalty programme is fully digitalised. Paper registration forms are now a thing of the past, whilst a well-designed registration process allows for the use of social media plug-ins offered by Facebook or LinkedIn. In this way, joining a loyalty programme for the first time can be done with a single click and does not require the (always tedious) task of coming up with and remembering a new username and password.

Rules

Every loyalty scheme has pre-determined rules that set out exactly how it operates. Unfortunately, most brands fail to take into account that terms and conditions written in legal jargon can be difficult for users to understand. This is yet another reason why consumers might decide not to join a loyalty programme. It is worth ensuring that well-trained staff who liaise with members via the helpline are able, when necessary, to explain the rules and address any concerns. Another golden rule is to prepare summaries of the terms and conditions which, in a concise manner, set out the most important rules and obligations on a single page. Ultimately, the way in which the key rules are presented on the loyalty programme’s website plays a crucial role. This provides an opportunity to creatively present the participant’s rights and obligations, so as to convey in a simple way what the legal and tax departments have set out across dozens of pages of terms and conditions.

Website

One might think that these days every loyalty programme has its own website. Surprisingly, the reality is quite different. There are still some organisers who do not see the need to invest in creating a website for their programme. This is a serious mistake. It is essential that, on a dedicated loyalty programme website, consumers can find all the necessary information about the programme and how it works. Almost all of us are never without our mobile phones. It is worth capitalising on this fact and ensuring that the website is responsive and designed in such a way as to remain fully functional on a smartphone screen. A more advanced approach to building relationships with participants is to launch a mobile app for the loyalty programme. Consumers will always have it to hand to check the latest promotions, their points balance and any changes to the terms and conditions.

Prizes on offer

Consumers join a loyalty scheme in order to reap its benefits. The organisers offer various types of rewards (usually falling into categories such as material, financial or experiential rewards, etc.) to reward loyalty, which is measured by the value and frequency of purchases made.

The rewards catalogue is undoubtedly one of the most important components of a loyalty scheme. Well-chosen rewards motivate people to actively use the loyalty programme. For customers, the catalogue is often a decisive factor when choosing a retail chain. For these reasons, it is important that the rewards catalogue is well tailored to the preferences of the target audience.

Internationalisation

Consumer expectations and attitudes vary across different parts of the world, which is mainly due to cultural factors in each region. When implementing a loyalty scheme in overseas branches, it is important to bear in mind that in every country where we wish to run a loyalty scheme, we need to tailor the rules and rewards to that country’s specific circumstances.

Particular attention should be paid to issues relating to legal and tax matters, which usually require adaptation to local legislation. We also observe many errors relating to the unwitting organisation of gambling, which in every country (including the European Union, which has already harmonised most of its legislation) is subject to separate regulations (in Poland, this is the Gambling Act).

Most loyalty programmes also offer a bespoke rewards catalogue. However, the contents of the rewards catalogue are often based not on an analysis of members’ expectations, but on top-down corporate guidelines, which creates a risk of dissatisfaction amongst local consumers. It is therefore worth thoroughly researching buyers’ preferences in each market and understanding their expectations, so that the rewards on offer are not only varied and unique, but also tailored to participants’ expectations, which will motivate them to be more active. A well-designed and thoughtfully developed rewards catalogue will lead to an increase in transactions and greater customer loyalty.

Product range

From the participant’s point of view, taking part in a loyalty scheme is an opportunity to gain additional benefits from transactions that would have taken place anyway. From the perspective of the end consumer who buys groceries, what matters most is, after all, simply having the necessary items at home, rather than the fact that they were bought from a particular retail chain. However, in return for their loyalty to a specific brand or retail chain, members expect rewards and additional privileges. It is important to note here that excluding certain products from the loyalty scheme is viewed particularly negatively by members. It is understandable that sensitive products, such as alcohol or tobacco, are excluded from loyalty schemes; however, failing to offer rewards for the most popular products – those most frequently purchased by consumers – is one of the cardinal mistakes made by organisers.

Standing out from the competition’s offering

Trends in 2021 have revolutionised the loyalty programme market. Mobile apps and rewards in the form of BLIK vouchers are replacing loyalty cards and the accumulation of points for physical rewards. This state of affairs is driving continuous technological development. The impact of the pandemic has also been significant, contributing to rising customer expectations. Standing out from the competition is one of the most important „golden rules” that can be offered to loyalty programme organisers. The simplest way to achieve this is through the use of technology. Mobile apps have opened up new possibilities that were previously unthinkable. By implementing modern channels of communication with participants, using solutions on the cutting edge of artificial intelligence, and utilising chatbots to engage with participants, organisers have the opportunity to attract a younger demographic of potential customers. Research shows that young people are increasingly using loyalty programmes based on mobile apps, as they have no difficulty using the latest technology.

Summary

A loyalty scheme offers many benefits to organisers. An increase in the number of customers and a rise in revenue are just some of them. However, when setting up a loyalty scheme, it is important to bear in mind the above points, which will ensure its success.

How to prevent abuse in loyalty schemes, Management of promotional lotteries, „Premium” loyalty schemes and paid membership,