I'm really interested in whether schemes like nectar card or club card actually do encourage brand loyalty. If anyone has the time would you be able to let me know your thoughts on the following
1. Do loyalty schemes dictate where you shop?
2. What is your favorite loyalty scheme and why?
3. What kind of incentive is most likely to attract you to a loyalty scheme? Vouchers, cash back, exclusive offers/benefits
I've got a nectar card and a shell card and I always try and fill up at either a BP or shell station and I try and use Sainsbury's as much as possible when buying food. As a result, last Christmas I ended up with about £80 worth of vouchers to spend at Sainsbury's which really came in handy.
the reason I ask is that we are currently working on giving some additional benefits to people who join our contractor profile scheme. One idea we had was to set up some kind of loyalty scheme.
Thanks in advance
Steve
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Replies
Hi Steve
All of the above!
Supermarkets aside, I'm not sure how much traction you would gain by giving out nectar points...
One of my local car supply places has a Loyalty Scheme, and they do money off and give away free window wipers ect, but for the life of me i just don't like it as they constantly bombard you with offers ect that seem for the most part pointless, I get the impression everything in the store has been bumped up so they can give you a 'discount'. Not my cup of tea at all.
On the other hand i have an arco card, that gives me a bit of discount on most things, every now and again they do shop sales, they let me know by text a few days before hand and they give card holders early access (1 day) I think it is... At the end of the day they aren't giving me that much but it's a much better experience and it's encouraging me to go into the shop and buy something!
I'm guessing exclusive offers/benefits would probably work well for you, although i am by no means an expert!
I agree with Steve
How do companies pay for these schemes and offers?
Alot of offers are to help supermarkets shift stock that they over brought, so your really helping them out proberly from a farmer for pence. But thats another subject for another day.
The simple answer is buy overcharging you in the first place Simples!!!
Alot of people are now understanding this. And shopping for a quaility product at a resonable everyday price and thats why Tescos and other big supermarkets profits are down and Aldi and Lidl are increasing.
hi Steve my local filling station is shell which i use quit a lot but i don't bother with the card as its virtually worthless, as for the supermarkets they don't give a lot away for the information that they get about your shopping habits etc, i do tend to use one only because its local and treat the vouchers as a bonus but i do not use there fuel vouchers as i have had probs with the fuel in both the van and power tools
Loyalty cards in my view are a waste of time and money UNLESS you have an highly advanced IT system OR an absolutely amazing scheme that benefits YOU and the customer
in another life I worked for a loyalty card company, and the company it was produced for.
Loyalty cards on a national scale (especially those from the supermarkets) do generally reward customers HOWEVER their main purpose is not to create loyalty or offer amazing unique discounts but to gather information to allow for targeted marketing from a variety of businesses. They are incredibly clever schemes, every time you use your nectar card, Tesco club card, etc etc the company can track what you are buying, when you are buying it where you are buying it, when you last bought it how often you buy it and how much you are spending, using a number of complicated formula and IT program's they will then target you with marketing literature specific to you and your spending habits. In addition they use this information to plan their new ranges, campaigns, seasonal changes and products based on socio economics, geography and the enormous volumes of data harvested from these cards. To the supermarkets it is a very valuable tool. It has become the key stone to many companies decision making processes, the volume and complexity of the data produced is incredible and it can be very very specific. This data is also very valuable and much is sold on to other companies and generates such an income that it is well worth the occasional discounts they offer. (Often they are just incentives to get you using your loyalty card anyway)
Unless you have a need for this kind of data but you still want to buy loyalty then I recommend offering specials like BOGOFs, twofers, and the like. If you are looking for loyalty look for the buy in, offer a contract say 12 visits for the price of 11, mow your lawn this month, get it half price next, or introductory offers 10% off on your first job.
In addition Loyalty cards are a b**** to manage unless you are absolutely specific about the reward, the time scales, how the data is stored, how it's used and how points are collected.
If you are going to go ahead be careful to make sure that loyalty cards are cost effective. Make sure you aren't giving it away at cost price or less. Do your sums very very carefully. Here's a simplified (very) example......a car wash near me is offering a loyalty card of buy three car washes get your fourth free, at £6 a throw this works out each wash costing the equivalent of £4.50. So in one hour they've now earnt £27, with four guys on my car for 10 minutes and assuming they have a constant flow of cars in one hour all collecting loyalty. This means then that just the minimum wage bill is paid every hour! What about the rent, water, soap, insurance, electricity, sponges, etc. In effect how does this loyalty card work, even if it generates more business there is still a finite number of cars that can be processed in one hour and on this scheme it doesn't seem cost effective?
There is a case of one national loyalty card scheme who went belly up because they misjudged the maths and ended up giving away more than the customer spent!
Loyalty cards, not for me thanks!
Thanks for taking the time to reply guys. Getting the message loud and clear that points based loyalty schemes are not at all popular
I think it depends on your audience - if your customers are the type of people to use loyalty cards it could work. Lots of mums and bargain hunters always seem hot on the case of a loyalty card!
Something a bit more simple such as the Starbucks/Cafe Nero scheme where you sign or stamp a card and on the 10th time you get some money off could be more appropriate. You wouldn't have to keep track too much as the onus is on the customer to remember to give you the card to sign and to keep track of where they put it!
Even if it only brings a little more loyalty it may be worth it, gets people talking etc. It is important to make sure that you are not only using them for people who would have got the 10th job done anyway though, as otherwise you are just losing money to already loyal customers!
Also this blog on brand loyalty is interesting - in theory there is no brand loyalty unless there is hypercompetition in the market place. People are usually swayed by how they feel at the time, priority such as price or location, or how convenient something is, rather than the fact they have used the brand before. A loyalty card could help keep you at the front of peoples minds though, and make them comfortable with your brand.
Brand Loyalty vs. Brand Comfort
Let us know if you try anything out at all! :)