Article

James Smithdale
James Smithdale 24 August 2020

Why is Your Loyalty Scheme Still Card-Based?

In retail, enticing customers to be loyal to your brand is the Holy Grail. However, in an increasingly mobile-centric world that has fundamentally changed the way consumers shop, do paper vouchers and plastic cards adequately meet customer needs and expectations?

Acceptance of Shopping Technology

Industry analysts are watching closely to see whether consumers are even more reliant on digital purchases, payments and interactions, once the restrictions of the coronavirus crisis have lifted. Contactless payments and self-service checkout were already becoming the norm in stores. For example in grocery, a Nielsen study across 64 countries found that 87% of global shoppers are either using or willing to use automated and personalised solutions.

Now the promise of in-store service speed, ease and less risk of contamination could expedite the requirement for stores to automate and digitise their checkouts, utilising phones as the obvious conduit to completing transactions.  The handling of cash has certainly been something we’ve all wanted to avoid during the pandemic.

Digital Revolution is Fast Forwarding

In the UK, we’ve seen a near doubling of online sales since the start of the quarantine period. Retail analyst Richard Lim is quoted in The Guardian saying that half of all UK non-food spending will move online (up from 30% pre-Covid-19), as shoppers have been “forced to go on a customer journey they wouldn’t otherwise have embarked on”. Behaviours and mind sets will have changed permanently, the argument goes, and omnichannel retail will truly take hold.

Shopping from home and via mobiles was already brewing—Covid-19 has just accelerated it. And the retailers who know their customers and the dynamics of the markets in which they operate hold the strongest advantage. Those that have digitised their brick-and-mortar outlets, and have systems that allow for frictionless, cross-channel interactions and easy ways to complete the customer journey in stores, will be best positioned as we navigate the challenging months and years ahead. 

Where Does this Leave the Loyalty Card?

In this world of rapid digitisation, it’s fair to say that consumers’ appetite for paper-based loyalty is diminishing. Statistics from our own research have revealed the wide range of loyalty priorities for different demographics.

We found that plastic loyalty cards are losing popularity with younger shoppers, who are the most smartphone-centric.  In fact 26% of younger shoppers (aged 16-34) say loyalty cards are more hassle than they are worth. Sustainability is one consideration for this group, with a quarter of 16 to 34 years-olds saying they had refused a paper receipt or coupon on environmental grounds.

It’s important to note that this demographic does recognise the value of loyalty schemes. We found that the 16-24 age group are the most likely to want to collect their points each time they shop. So it follows that storing loyalty on smartphones would better satisfy these shoppers’ needs and expectations.

There are practical limitations too. Across all ages, a fifth of respondents complained that loyalty benefits were often wasted because they didn’t have their loyalty card with them in the store.  It seems that for many shoppers, printed or posted paper coupons, plastic loyalty cards and till receipts are simply not fit for purpose in daily life as we know it today.

Smartphone Apps are the Obvious Solution

There are countless ways for retailers to remedy this situation without breaking the bank. Apps are available today to help consumers migrate their loyalty and their shopping receipts onto their smartphones. Immediately they can benefit from the convenience of being able to collect points and receipt information direct to their phone, knowing this is a more environmentally friendly way to manage things.

For the retailer, this has the advantage of taking friction out of the payment process for the consumer, which should mean more regular, successful interaction with the loyalty programme. Retaining customers now is vital, so making loyalty participation as painless as possible should be a priority for marketing and retail operations teams.

Switching to phone-based loyalty also allows that brand to present itself as digital-ready and fully attuned to shoppers needs.  Having a two-way digital channel open to your customers can also pave the way to more meaningful long-term relationships with high-value, loyal customers.

Modernise with Easy, Flexible Plug-in Tech

Retailers want better results from their loyalty programmes, but quite rightly they baulk at the idea of making big changes such as overhauling loyalty platforms or back office processes. With today’s plug-in technology there are flexible adoption routes that integrate with existing loyalty platforms and payment applications. A retailer can get started on phone-based loyalty and receipts via remote deployment, quickly and easily.  

Consumers are in Money-Saving Mode

Now is the perfect time to promote the benefits of signing up to a retail loyalty scheme, giving cash-strapped customers the chance to qualify for helpful discounts and deals.  According to a new Coresight report into Chinese consumer trends emerging post-pandemic, “consumers are saving money and adopting a rational spending mind-set”. Analysts see this as the inevitable attitude of consumers globally in the coming months.

As recession looms, it’s not a big surprise that money will be tight, so delighting valued customers now with rewards and incentives will help you earn long term loyalty for the future. Offering the convenience of keeping everything they need on their personal smartphone can only help everyone’s cause.

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