By Kashmira Motiwalla
Successful brands and retailers know that customer loyalty is invaluable. Earning and building loyalty has been a retail priority for decades, growing into its own mini-industry.
Loyalty done well can be transformative. According to retail company Bluecore, repeat customers generate 40 percent of retail revenue; on average, they are 130 percent more valuable than first-time buyers. Harvard Business Review estimates that it costs between five to 25 times more to earn a new customer than to maintain an existing one.
So, we as brands and retailers invest accordingly, even prioritizing loyalty programmes over other marketing avenues and in some cases establishing them as strategic priorities for the business. We’ve started to think digital, moving beyond plastic wallet-fillers to apps, websites and integrated solutions. In a cost-conscious market, we trip over ourselves to come up with the best deals.
But why doesn’t it always work? Today’s average consumer is enrolled in between eight to 18 loyalty programmes but actively uses less than half of them. Those who do use them use them sparsely. Customers are just as likely to switch to another brand when they’re signed up for your rewards programme. The churn continues.
If it’s not enough to have a loyalty programme, what is? What kind of value, message, or pathway do we need to add that will make our brand sticky and our clients loyal?
Research informs us that when loyalty programmes don’t deliver as promised, it’s usually down to one or more of three reasons: fatigue, deals and distance. The good news is that these can be reversed. We’ve also identified what we believe to be a game changer for loyalty, not only in the UAE, but beyond.
A B2C divide
Before we look at solutions, let’s understand the problems. The first is fatigue. When it comes to loyalty, there’s a large gap between businesses and consumers.
Consider this: More than 90 percent of companies currently employ some form of customer engagement or loyalty programme, according to Accenture. But the same report says 77 percent of consumers admit they retract their loyalty faster than they did three years ago; 71 percent say loyalty programmes do not engender their loyalty.
When everyone from the shoe shop to the supermarket has its own rewards programme, that’s not surprising. Consumers are overwhelmed and fatigued by the sheer numbers alone.
The second factor is one that retailers may have brought upon themselves. Especially in a marketplace like the UAE, where we all know the value of a good deal, retailers and brands have championed deal loyalty over real loyalty, feeding deal sites, generating buy-one-get-one (BOGO) offers and come-one-come-all sales. The difference is simply this; deals don’t generate loyalty. They are short lived and transactional by nature.
Let’s examine the issue of ‘distance’. If a loyalty programme isn’t relevant to customers’ daily lives, retailers have lost them at the first point of interaction. The distance between earning and spending points, for example, is critical. How complicated and cumbersome is your redemption process? How quickly do your rewards expire? What’s the proportion between spend needed and earned? We tend to forget that interest is the easiest commodity to lose.
Switching to digital isn’t an instant fix either. If anything, it can open the floodgates even wider, resulting in mid-market fashion deals to the couture set, and other misjudged or mistimed steps. The point here is that you can’t auto-generate personalization.
Mobile tech is part of the solution, but unless carefully designed it can also be part of the problem. Clutter on our phones is as bad if not worse than clutter in our wallets. According to mobile intelligence firm Quettra, the average app loses more than 75 percent of its active users within three days of download, and 95 percent within three months.
At Majid Al Futtaim, we’ve begun a new journey, one that champions engagement and personalisation while being mindful of distance, deals and clutter.
Loyalty, we’ve found, is not about value, message or pathway: It’s about all of them together and under a radically different mindset that values differentiation and genuinely focuses on creating something unique.
From loyalty to lifestyle
The critical insight that defined how we develop a loyalty rewards program is that consumers love experiences and love to share those experiences. Specifically, people in the UAE are looking for more ways to share with their loved ones. 84% of UAE consumers also told an extensive YouGov market research poll that they would share more if prompted.
At Majid Al Futtaim, our enduring vision remains to create great moments for our customers, everyday. In translating this vision to the here and now, our solution has been to combine the sharing mindset with reach, technology, accessibility, personalisation and engagement to create one of the most robust, far-reaching and engaging rewards programmes.
In doing so, we have brought the entirety of Majid Al Futtaim operations to bear to create a new way of thinking about loyalty as a lifestyle. In short, our customers can earn points anywhere and everywhere they interact with Majid Al Futtaim and our partners, from our mall fashion stores to our cinemas to our hypermarkets to cafes. It is relevant across your entire life – not a loyalty programme as much as a lifestyle programme.
Whether you’re single, a young parent, a grandparent, or a teenager, our SHARE rewards programme works across the life cycle, offering something for everyone and delivered to your wants and needs.
We believe simplicity is at the core of successful engagement. And so, we have radically simplified the points journey, shifting to a ‘spend as you earn’ process. Essentially, we’ve created an alternative, instant currency so the rewards you earn at AllSaints can be spent when you walk into VOX Cinemas two minutes away.
Our app is engineered to minimise, not maximise. It is a platform that gives the customer everything they need at their fingertips, from payment to earn and redemption, and from bespoke offers to the creation of family groups for point sharing. We use our best-in-class data analytics to ensure relevance at every step of the customer journey while providing data security and privacy.
The fundamental difference, though, comes down to the experiential sharing mindset. If you can think beyond simply engaging with your customer to helping them engage with those they value, you’re several steps ahead of the game. If you can create great moments for every person who walks through the door by helping them create great moments with their family and friends, you’ve redefined the loyalty proposition. Your brand is no longer a static store but an enabler of fun and enjoyable experiences.
Experience – how a brand can make others feel – is indispensable and irreplaceable. In our view, that’s the future of loyalty.
Kashmira Motiwalla is the Loyalty Lead at Majid Al Futtaim. Opinions in this piece belongs to the author.
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