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How to create engaging loyalty in the age of customer experience

Seize Digital
Author: Sarah Jarvis
You may or not have seen Paddy Power’s new advert for their ‘anti-loyalty scheme’, Paddy’s Rewards Club. (If not, you can watch it here.)
Featuring a deadpan Rhodri Giggs, he looks down the lens of the camera and simply states that: ‘Loyalty gets you nowhere. Live for rewards instead.’
The tongue-in-cheek advert, aptly named ‘Loyalty Is Dead,’ has certainly got people talking; with it being hailed as ‘astonishing,’ ‘genius,’ and ‘a masterpiece’.
This prompted us here at Eagle Eye to ask whether Rhodri and Paddy Power are correct, or whether the right type of loyalty scheme can continue to thrive in this, the age of customer experience.

The advent of loyalty

Looking back, it’s been 37 years since Homebase became the first UK retailer to launch a loyalty card, named Spend and Save. This was then followed by the launch of Tesco Clubcard in 1995 and Boots Advantage Card in 1997.
Today, YouGov states that over two thirds (77%) of UK consumers are loyalty programme members, with almost as many (72%) believing they are a good way to recognise them for their continued custom . This in turn suggests that, for the majority of UK shoppers, loyalty is still a long way from being dead.
Since then, the value exchange fundamentals of customer engagement and loyalty programmes haven’t really changed. What has changed is that physical businesses can no longer afford to sell or market to a completely anonymous customer base, especially when customers are willingly sharing personal details simply by virtue of shopping online.
Businesses need to be able to identify their customers so that they can collect valuable data on every interaction which, in turn, enables them to understand individuals’ wants and needs. This understanding can then be used to build relationships and to maximise customer value by offering personalised rewards to customers for displaying desired behaviours.
However, although the reasons a business might want to offer a loyalty or rewards programme hasn’t altered, the way customers shop and interact with businesses has changed dramatically. Customers are now always on, are digitally connected and their expectations from businesses continue to rise.

As a result, ‘customer experience is the new marketing battlefront,’  and according to a study conducted business consultancy Walker, by 2020, customer experience will overtake price and product as the key brand differentiator . This shift is having a significant impact on customer engagement and loyalty strategy. In order to succeed, we believe businesses need to be cognisant of, and able to respond to, the consumer’s shift towards the ‘experience economy’.

The ‘experience economy’

In recent years, customers have been moving away from spending money on material ‘things,’ instead preferring to invest in shared and memorable experiences. This is reflected within the loyalty space too, with many customers becoming disengaged with long-term points collection programmes, to instead, looking for initiatives that will instantly improve their buying experience through exclusive benefits, by removing friction from the journey, or by providing unique, experience-based rewards. Businesses succeeding in this space are moving away from collection mechanics and are instead focusing on making it easy for customers to stay loyal through providing members with added value services which they can access immediately.

Creating reasons to be loyal

Today’s most successful loyalty programmes or customer engagement initiatives offer a mix of rewards and recognition that appeal to both the hearts and the minds of customers. Today, consumers have less time, and even less patience than ever before. They expect you to know what they want and to make the shopping experience as simple as possible.

Therefore, to attract, convert and retain customers, you have to continually engage them with compelling experiences that are relevant, useful, desirable and valued. Businesses currently doing this well have a razor-sharp focus on how they can make it easier and more rewarding for their customers to shop with them versus their competitors. Think Amazon Prime and Starbucks Rewards.

From a scheme design point of view, these programmes successfully combine the mechanics of frequency and value to ensure that they truly appeal to both the heart and the mind. They do this by offering customers a compelling reason(s) to sign-up initially (e.g. a welcome offer), a simple and rational reason(s) to continue engaging with the programme (e.g. loyalty currency, free delivery), as well as emotional features that are used to engender true long-term loyalty and advocacy (e.g. added value through privileges and perks).

But back to Rhodri. The Paddy Power Rewards Club offers customers free bets to create the rational appeal, but then combines this with the ability to access discounts, gifts, matchday food and drink, the chance to win once-in-a-lifetime prizes and more, all of which drives the emotional connection.

Despite the name and the advertising campaign, Rhodri is still promoting a ‘loyalty’ scheme that has been designed to enable Paddy Power capture customer data, and to use this data to understand customers. Ultimately, they can then use this insight to improve their experiences while also driving business performance.

Is loyalty dead?

So, is Rhodri correct? In my view, no. Loyalty isn’t dead. But in this digital age, businesses need to fight much harder than ever before to gain, and more importantly retain customer loyalty.
‘Loyalty’ is no longer achievable with a purely transactional, ‘points equals prizes’ mechanic. It has to be earned by offering customers an omnichannel, friction-free experience which provides instant gratification, enables personalisation and delivers tangible and relevant rewards.