The successful implementation of a well-organised loyalty scheme for end customers brings many tangible benefits, such as an increase in market share. This is achieved by increasing the average basket value, improving the frequency of purchases and attracting new customers who, until recently, preferred the competition. To achieve success, however, the organiser must tackle a number of challenges. We have outlined these in the article below.

Launching a loyalty scheme – what do you need to bear in mind? What are loyalty schemes?

Loyalty schemes They are exceptionally popular in Poland, not only amongst customers but also amongst sales agents. There are around 120 schemes operating on our domestic market that are aimed at end consumers; these are known as „loyalty programmes” and their aim is to reward the most loyal participants. There are even more incentive schemes for sales agents. As can be seen, such sales support techniques are widespread. For this reason, it is worth understanding their specific features.

Loyalty schemes are long-term marketing initiatives designed to boost sales. Depending on their target audience, two types of such schemes can be distinguished. The first type consists of loyalty programmes for end customers, otherwise known as B2C (an abbreviation of the English term. Business-to-Consumer). The second type consists of incentive schemes, referred to as B2B (an abbreviation of the English term. Business-to-Business). They are aimed at distributors, shop owners and sales staff (sales assistants, advisors, cashiers, etc.).

The most popular B2C loyalty schemes operating in Poland are: Orlen Vitay, Moja Biedronka, Lidl Plus, Klub Rossmann and Payback.

Loyalty and incentive schemes. Similarities and differences.

Loyalty schemes are long-term initiatives, which is why they continue for many years. They are designed with end consumers in mind, who can receive specific benefits through them in return for repeat purchases. By achieving the targets set by the organisers, they receive attractive rewards. The tasks set are usually sales-related or designed to encourage competition amongst participants. According to surveys, six out of ten adult Poles take part in at least one such scheme, whilst two in ten are enrolled in four or more.

Incentive schemes are, in turn, aimed at representatives of the retail sector in traditional trade. These include, amongst others, shop owners, managers, sales staff, shop assistants, advisors, etc. These campaigns are organised on a recurring basis, usually lasting a year. They contribute to achieving measurable benefits, such as increasing sales figures, implementing display standards or improving product availability.

Classification and categorisation of loyalty schemes

Loyalty and incentive schemes They can be categorised according to various criteria. Most commonly, they are distinguished by the type of scheme – discount, loyalty points, hybrid (points and discount) or cashback (a refund of part of the amount paid).

Another criterion for classification is the target group. Programmes can be aimed at specific audiences, such as end users, distributors or representatives of a particular sector (e.g. vets, construction professionals or architects).

Distinctions are also made based on the source of the points or so-called ‘loyalty tokens’ (symbols entitling the holder to a reward). The most common programmes are those that award points to participants: immediately after making a purchase, upon presentation of a proof of purchase, or after registering a code from the packaging.

How do you set up a loyalty scheme?

Organisation of a loyalty scheme It is a multi-stage, complex process that requires a considerable amount of time and effort. Before getting started, you need, amongst other things, to:

– set specific objectives,

– analyse the competition;

– to identify the preferences of potential participants

– draw up a legal and tax framework;

– write or buy the necessary IT programme;

– to create and then test marketing materials;

– sign contracts with prize suppliers, whilst at the same time organising the logistics of their distribution.

Once the programme has been implemented and launched, the following actions, amongst others, should be taken:

– carry out performance measurements on an ongoing basis;

– draw up a sensible, effective risk management plan;

– to engage in an active, interactive dialogue with participants.

To secure funding for all these and other activities, you can approach the Management Board or seek external funding.

Is it better to implement a loyalty scheme yourself or with the help of experts?

Preparation, and then launch of a loyalty scheme It is no mean feat. Although this procedure is extremely complicated for inexperienced organisers, it is common to proceed without professional support. In some cases, independent attempts are successful, but only if one possesses the necessary skills, resources and qualified staff. Reluctance to use the services of external firms usually stems from a desire to save money. In practice, however, this can lead to higher costs, such as those associated with rectifying mistakes. What is more, any shortcomings affect the results. Consequently, they can drastically reduce potential benefits, which translates into losses. As one might expect, a lack of experience leads to delays, mistakes or other shortcomings. It therefore turns out that the best course of action is to collaborate with an external organisation specialising in such projects.

What are the key factors of an effective loyalty scheme?

Thanks to their knowledge and experience, the specialists at i360 are fully aware of what contributes to the success of a loyalty programme. There is no doubt that the most important factors are clearly defined objectives and rules, ensuring data security, selecting attractive rewards, user-friendly terms of participation, and a sound strategy for running the entire campaign. Other factors include:

• legal and tax compliance;
• compliance with the GDPR;
• effective IT security measures;
• crisis management plan;
• gamification elements;
• ease of use for participants;
• a high incentive ratio;
• communication that relates to customers’ habits;
• a constant willingness to make any necessary changes;
• analysis of feedback.

What are the most common mistakes made by loyalty scheme organisers?

Organisers of loyalty schemes They frequently make mistakes that affect the format and the success of the whole campaign. The most common of these include:

• a run-of-the-mill offer;
• failure to set clear objectives;
• a failure to understand the concept of the action itself;
• failure to make use of new media and popular communication tools;
• failing to make use of multi-partner arrangements and coalitions;
• the establishment of lifetime membership;
• inadequate observations and analyses, from which no appropriate conclusions are drawn.

The problems listed above do not, of course, cover the whole subject. However, they are among those that occur by far the most frequently. Moreover, they have particularly unpleasant consequences. Organisers who allow such shortcomings to occur risk serious losses, as they squander the potential of the capital invested, which is utilised inappropriately. These shortcomings are, however, so widespread that they have led to the so-called ‘commoditisation’ of the market. This phenomenon means that all loyalty schemes operating in Poland are strikingly similar to one another and ineffective.

We will discuss some of the most important issues in detail to explain where they come from, and what to do to prevent them from arising.

Mistake 1. A non-original offer

It is not hard to see that Polish loyalty schemes are alarmingly similar to one another. Consumers, in fact, cannot tell them apart at all. This phenomenon has been demonstrated by tests in which the names, logos or rewards for individual options were swapped. All these schemes imitate one another, meaning that none of them stands out in any particular way.

Mistake 2. Lack of specific objectives and a misunderstanding of the concept of the campaign

It turns out that very few Polish loyalty scheme organisers understand what customer loyalty actually is. The overwhelming majority have no idea how to encourage consumers to make further purchases, as they pay no attention to their actual needs. The situation is not helped by the very low incentive rate, which stands at just under 2%. It takes a very long time to collect points for purchases, and the rewards or discounts received in return are not satisfactory.

In practice, customers quickly forget that they have earned any points. Discounts on products such as low-involvement purchase They are very rarely used, as hardly anyone remembers them. If you were to ask customers who are members of various loyalty schemes how many points they have collected, it is highly likely that only a few would be able to give an approximate total.

Most programme organisers believe that loyalty is linked solely to repeat purchases. Furthermore, they do not specify any specific requirements or criteria. In fact, it is unclear what they hope to achieve by implementing such campaigns, let alone how they are supposed to influence the brand’s image or communication.

Mistake 3. Failure to utilise new media and communication channels

Most loyalty schemes operating in Poland are based solely on rewarding customers according to the amount they spend on purchases. Outdated stamp cards, sticker booklets and other accessories from a bygone era are often used. It is surprising that relatively few programme organisers have dedicated mobile apps or social media plugins. The lack of virtual methods of direct communication is a clear sign of a failure to understand the needs of modern customers.

The organisers are also unable to engage in a meaningful dialogue with customers. They have the greatest difficulty with those who visit the shop only occasionally. As a result, they have absolutely no idea how to persuade them to shop more often, let alone foster long-term brand loyalty.

It is, in fact, a common mistake to reward only regular customers. This approach is not particularly effective, as these customers are loyal anyway. As a result, such schemes fail to reach the very people who could potentially bring the greatest benefits. The greatest purchasing potential actually lies with customers who choose competitors or shop in different places.

Mistake 4. Failing to take advantage of the benefits of having multiple partners

There are around 120 loyalty schemes operating in our market, which is unsustainable in the long run. This problem can be easily solved by creating so-called multi-partner or coalition programmes. By joining forces, several or even a dozen or so organisers of campaigns aimed at the same target group can achieve significantly greater profits. Consumers also prefer such solutions, as they are usually much more convenient for them.

However, the concept of such cooperation is completely overlooked, probably because it is not properly understood. The large number of active programmes meant that most of them did not even reach the 1% target for participation. Interestingly, many organisers had an interesting idea for a campaign and expressed a willingness to join a multi-partner initiative, but the conditions prevailing in our market simply do not favour this.

Mistake 5. Lifetime membership and ignoring inactive participants

In the Polish market, there is a persistent belief that the more customers a particular programme has, the better it must be. It turns out, however, that this criterion is not always reliable. Most organisers keep inactive participants in their databases to boost their statistics, without even making an effort to encourage them to take part in the campaign.

Neglecting inactive customers is a common mistake. Even simple, low-effort measures – such as sending automated messages to initiate a dialogue – are virtually never seen. Nor are measures such as offering special discounts to encourage customers to visit the shop again ever used.

Mistake 6. Lack of reflection and failure to act on feedback

Loyalty schemes are designed to encourage customers to become loyal to a particular brand or shop. To achieve this, you first need to gather basic information about them. The data collected is extremely useful, as it helps, for example, to personalise offers or establish a more effective dialogue. However, gathering such information requires the use of appropriate technologies, including those in the field of data science. This is the only way to analyse them properly and draw useful conclusions.

Every loyalty scheme organiser must pay close attention to the data they collect. Only through careful, in-depth analysis and acting on feedback can the entire programme be run effectively. Monitoring these aspects helps ensure the right decisions are made, which in turn supports the growth of the entire initiative.