How to change your loyalty scheme
As experts in the loyalty space, we have seen many retailers look to change their loyalty scheme, and we have seen great examples of this happening – and examples that are less likely to impress a customer base!
If you have a loyalty scheme you might be wondering how you can change it, without incurring the wrath of your loyal VIP customers.
Should you keep your loyalty scheme?
Absolutely. As economic hardship encourages consumers to shop around, loyalty schemes keep customers faithful and engaged with a brand. Whilst it's simple to use a marketing budget on attracting news business, protecting existing customers is critical - especially when studies showing it costs up to 10 times more to generate a new customer than to keep a relationship, retailers should do all they can to hold on to existing customers.
A well-implemented loyalty programme is one of the best ways to keep good customers, enabling a firm to successfully attack retention from different angles.
Take Boots, who estimate they have half of all UK women over 16 on their scheme, The holders of their famed Advantage Card are spending double that of non-cardholders on average - with data insights, they are providing a better service than competitors.
What changes do brands make to their loyalty schemes?
Starbucks changed their reward programme – which had previously given perks for frequency and changed to reward on value. Members of the rewards program went from getting a free drink after buying just 12 $2 coffees to $63.
Sephora changed their loyalty programme, not only changing to add a minimum spend for certain tiers, but also adding an 18-month expiry date – the end of the ‘never expiring’ offer it had given for years before.
Birchbox used to reward unlimited reviews to receive 10 points- and at every 100 points collected within a year, users earned a $10 discount. The capped this to just 5 a year - and slashed their expiration date from 1 year to 6 months.
Tesco changed their Clubcard scheme from allowing vouchers to be used for up to four times their face value to a capped system where all vouchers were worth three times face value. (They later went back on this change!)
Tranxactor has helped many of its clients change their legacy loyalty schemes. Subway is a great example, where Tranxactor guided the transition from the traditional ‘punch card’ to a highly sophisticated real-time points accumulation system which runs across the UK and Europe.
How to change your loyalty scheme: Use your data
If you want to change your loyalty scheme - you have to have the data to back it up. If you can analyse your customers’ behaviour, needs and preferences, you can serve a better programme - 54% of those surveyed by GI believed that companies have used knowledge of their circumstances and requirements to improve the service provided within the last year.
How to change your loyalty scheme: Show value
In GI research, Fifty-eight percent of people say they have stayed loyal to certain brands, retailers and suppliers over that time if they have been given value in return for loyalty.' At the same time, people won't notice your great news. The Gi study also showed that participants were unlikely to notice positive changes - just 40% admitted they noticed the schemes they belong to increasing points, improving rewards or providing more bonus point opportunities.
In loyalty, the perception of value is key. A move from Tesco's 4 x face value to 3 x face value seems like a reduction. Meanwhile, a shortened expiry date or a cap seems more reasonable.
How to change your loyalty scheme: Be prepared
No one likes bad news. Be prepared, or prepare your social media teams for lots of complaints. But at the same time, see if you can navigate choppy waters by working with your influencers, brand advocates and loyal customers by telling them first. Be open and honest. If the program itself doesn’t define the reason for making the change, the consumers won’t understand either. Ideally, you won't be making a knee-jerk change due to stakeholder pressure for profits and will have the data insights to prove loyalty works, as well as insights from current scheme members on recommended improvements. Birchbox had loyal advocates come to the defence of their brand on social media when they made their change - something that speaks volumes about how they slowly rolled out the changes.
Are you interested in hearing how it works? We'd love to speak to you about it. Why not get in touch with our UK head office today?
P.S. Did you know that we are proud sponsors of the Loyalty Awards? Learn more here.