This morning I was faced with a typical lady dilemma: I could not find something that I was sure I had put inside my handbag. Firstly, I should explain that I always purchase handbags of a relatively large size, despite being what can be defined as a petite person – even if this makes me look like I am carrying a cabin-size trolley case on my shoulder. The reason being that I want handbags which are large enough to fit to all my essentials, including my foldable umbrella, as having lived in this country for over 20 years I now know that I should never leave my house without it, even on what looks like a beautiful sunny day. In fact, every time I do, suddenly black threatening clouds appear above me and I end up soaked head to toe – which is something us Italians really cannot cope with. Anyway, the size of the bag implies that I always have enough space to store in it any random thing I happen to be carrying.
So back to the story – I was searching my handbag for my camera memory card. In a perfect impersonation of Mary Poppins, I started pulling out the contents from what seemed a bottomless pit: purse, keys, glasses, umbrella (of course!), packet of tissues, sunglasses, make up bag, iPhone charging cable, emergency battery pack, EU adapter… sellotape, old train tickets, Neurofen, several scrunched up store receipts, a letter I forgot to post (weeks ago), a few packets of sweets (looking pretty old), some lose Euro coins, a Stanley 8m tape measure, two ketchup sachets, a disposable plastic fork, a sewing kit, a nappy bag (what?), a small box of coloured pencils, a small Spiderman toy (never seen before in my life!)… But no partridge in a pear tree. I mean... no memory card. So I try looking inside my purse, just in case it ended up there: more store receipts, stamps, old passport-size photos of all the family, Athens bus tickets, 28 loyalty cards… What?
Are Loyalty Cards really about driving loyalty?
Yes, 28 loyalty cards!!!
A combination of store reward and other membership schemes, they had been hiding inside my purse for years. In fact, some of them expired years ago and it looks like the company never even bothered sending me a replacement. Of all of them, I have been actively using only 4, but mostly out of habit or because checkout assistants ask for them and I automatically hand them on. Thinking about it, Morrisons is my local supermarket and I have been using my card for years, but I really do not know what benefit I am getting from it, as I don’t recall having received any communications, discounts or any sort of offers from them, ever!
About the other 3, I receive some paper discount or offer vouchers from Boots regularly, but I always forget to take them with me when I go shopping, so I never use them. With Debenhams, every time I try to spend the money-off rewards I have gained, they have expired, because they only last 6 months. Therefore, while I am a relatively frequent customer, membership of these schemes is more irritating than engaging, as the benefits are poor and not easy to use. These companies certainly get a lot of my personal and purchase data (and money), but are not concerned with actually rewarding or encouraging my loyalty.
Finally, Nectar. This is probably the first ever reward scheme I joined and the one card I have used the most – also judging from the actual condition of the card, which is discolored and ruined at the edges, indicating that Nectar hasn’t even bothered replacing it (i.e. improving it) for many years. However, as I have heard that Nectar made several changes to the partnerships and structure of the scheme, out of curiosity I logged into my account online – which was surprisingly relatively easy to do just through the card number and a two-way authentication PIN sent to my mobile phone. So far so good. Apparently I have accumulated 57,000 points, equivalent to £285 to spend. Ignoring the discrepancy between the two numbers – I had to spent a lot to get not that much back – I wonder 1) where did I accumulate those points and 2) where can I spend my reward.
The website gives me the answer to both, showing that the vast majority of my activity is with Sainsbury’s, primarily because years ago I added my Nectar details to my online shopping account and have therefore continued to unknowingly accumulate points. Certainly this is not the objective of the loyalty scheme, as how could it drive my loyalty, when I do not even know who they are? In addition, despite all the data they have on me, it looks like also Nectar do not know who I am! The top 3 ‘offers tailored to you’ proudly displayed on my Nectar home page include: tickets on South Western Railway, when I live in the South East and have NEVER used them before; UK car hire, when I have never hired a car in the UK; discounted ‘Sunnylife Kids Rainbow Flask’ (no kidding!), when my youngest daughter is 17 years old. Considering they have many years of my shopping history, how can they display these as the top ‘offers tailored to me’?
Now very irritated, I click on the ‘brands’ link and discover that some of the companies I have been using recently are actually Nectar members, like Curries PC World, where only last week I spent nearly £2,000 in store and was never asked for my Nectar card. How can this scheme drive loyalty when customers are not even made aware of its existence?
Disconnect between how customers and organisations think about 'loyalty'
This is where ‘loyalty schemes’ are focused on the organisation, rather than on the customer.
I was recently discussing with a large UK retailer their intention to change their loyalty scheme. This is very well established with their customer base and has a high number of active customers who regularly enjoy some of its benefits. But the organisation wanted to change it, to save £3m by stopping the cashback and discounts offered to the scheme members. Customers would have been migrated to a new ‘Club’ scheme with no monetary benefits, but access to online content and information. Really? Also considering the age demographics of their customer base, surely this was not something they had properly tested with their customers, and certainly not something that would have increased their loyalty and engagement with the brand.
It is clear that there is a big disconnect between how organisations and customers think about loyalty. The recent ‘Loyalty Deciphered’ study by Capgemini shows that 54% of loyalty memberships are inactive and 28% of consumers abandon loyalty programmes without redeeming any points. Yet brands spend billions on loyalty programmes.
But what is ‘loyalty’?
The Cambridge Dictionary defines ‘loyalty card’ as ‘a card that is given to a customer by a business, used by the business to reward the customer for buying goods or services and to record information about what they buy’. This accurately indicates that organisations see loyalty schemes in a very rational and selfish manner, associating them to cards and points on transactions. They expect customers to keep these in their purse and voluntarily hand them all their personal data, to help them understand product purchase trends in return for some money-off reward, or sometimes not even that or anything of real value.
But is this what ‘loyalty’ means to customers? In the Cambridge Dictionary, the definition of the word ‘loyalty’ is ‘a strong feeling of support or faithfulness towards someone or something’. It is about a feeling, an emotion. In fact, when I think about ‘loyal people’ I imagine football fans, unconditionally supporting their team, or partners or friends, with whom there is a strong bond and a shared sense of trust, faithfulness and complicity. Loyalty is about emotional connections and engagement.
In fact, the best organisations seek to create loyalty through propositions that are engaging, complete and rooted in experiences, i.e. through a combination of rational and emotional factors. The rational factors are important, like discounts and offers, but it is the emotional elements of recognition, trust, reciprocity, personalisation and inspiration that truly drive deep engagement and brand loyalty. It is about understanding the emotional needs and desires of customers and building propositions and services around those, often irrespective of any gimmicky or meaningless loyalty scheme.
And just in case you are wondering, most of my ‘loyalty’ cards are now in the bin and my handbag feels satisfyingly lighter.