Many well-known brands such as Waitrose, Tesco, Boots, and Sainsbury’s, have recently made significant changes to their loyalty programmes. However, the question is, does a loyalty programme truly capture and foster real customer loyalty? Is loyalty even the primary focus that brands should aim for?
While many believe that a loyalty programme identifies and rewards the most loyal customers, it is not quite that straightforward. The customers with the highest number of loyalty points may appear to be the most devoted shoppers, but all these points reveal is that these customers frequently shop with you. Loyalty points account for a customer’s spend, but they reveal nothing about how someone genuinely feels about your brand once they’ve left your shop or website. Therefore, their value may be questionable.
In reality, the most valuable customers are those who genuinely love your brand and recommend it to their friends and family. These brand advocates may not be your biggest spenders, but their value comes from the revenue coming from their own spend plus that of everyone they refer. Consumers tend to trust recommendations from a friend or family member above other forms of advertising. Besides, customers acquired through a referral are predisposed to like your brand and are more likely to refer someone else.
Instead of only incentivizing customers to spend more, brands need to think more about how they can offer the best experiences and VIP gifts to those customers who are accelerating growth through referral and advocacy. The future of marketing will involve much more time dedicating to engaging advocates rather than only incentivizing customers to spend more. Brands need to continuously thank customers for their advocacy and find innovative ways to engage advocates.
To transform business economics, the next revolution in marketing begins by tracking advocacy at an individual level. Brands need to know where their customers are on their journey, so they can serve the best action to nudge them closer towards becoming a fully-fledged brand advocate. A loyalty scheme only does half the job in isolation, and brands need to pair it with an optimized brand advocacy strategy to redefine who they view as their most loyal customers. By doing this, they will make their marketing strategy infinitely more effective.
Brands should make a change and focus on their customers; they are the key to driving sustainable growth and transforming their business economics.
