The value of loyalty schemes to customer retention and long-term customer lifecycle value (CLV) have long been understood. 84% of consumers say they are more likely to stick with a brand if it offers a loyalty scheme versus one that does not. When two-thirds of most businesses’ revenue comes from repeat custom, the extra ‘stickiness’ of loyalty programmes translates directly into higher earning potential.
Indeed, it has been estimated that loyalty members contribute 12% to 18% more revenue to a business than non-members.
These are all impressive figures. But we’ve by no means reached peak loyalty. Businesses and consumers alike are in agreement that there is still plenty more value to be unlocked from loyalty programmes. It’s just been a case of waiting for technology to catch up to make it possible.
Predicting needs
A case in point is personalisation of the loyalty experience. It’s something that the general public have been calling for, for a long time. 61% of shoppers are reported to feel that businesses should be more thoughtful about how they use the data they share with them to predict their needs. That’s as clear a come-and-get-us call for more personalisation as you can get.
As well as driving customer retention and revenue, loyalty schemes are the ultimate data-sharing agreement between business and customer. By signing up, people agree to share their name and other personal details, and have their shopping habits and behaviours logged and tracked. Yet, if there’s one criticism of most schemes, it’s that they are too generic, too one-size-fits-all. Yes, they recognise repeat custom. But the rewards are always the same. A free cup of coffee for every nine you buy. A fixed discount for collecting so many points.
What we’re starting to see now are schemes that move beyond simply recognising and rewarding loyalty to embracing relationship-building at a far more comprehensive level. Answering that call from consumers to use their data more thoughtfully, advances in data handling technologies – AI included – are now enabling schemes that look at the detail of the data captured by the programme, and build rewards tailored to the individual.
Unique access to personal data
Data is already widely used at point of sale to inform up-sell and cross-sell recommendations. But these are largely based on patterns in general sales data – a large percentage of people add onion rings with that meal, or take out the premium aftercare service with that product, so make that recommendation.
Loyalty programmes provide unique access to data relevant to each individual. In an age where privacy laws mean you have to anonymise all data unless people consent to you collecting and using anything that could identify them, loyalty schemes represent an easy way to get that buy-in. The value exchange goes beyond straightforward rewards for repeat transactions. Businesses want customer data. Customers want personalised services. It’s a win-win for both.
In terms of implementation, the future of personalised loyalty will build on the ‘Insider’-style schemes that segment rewards and benefits into different tiers based on number of points won or other measures of engagement. But instead of, say, three to five defined tiers, you create a whole catalogue of benefits for the loyalty software to choose from to match to different preferences, purchase patterns and milestones. With AI involved, the software can ‘learn’ the kind of rewards individual customers respond best to. And over time, even generate unique rewards in line with specified marketing and pricing policies from scratch.
For the customer, the added benefit is rewards that feel like they were built just them, forging strong emotional bonds and giving them more incentive to return again and again. For businesses, the reward is more meaningful interactions and longer-term relationships, helping to increase customer loyalty and the value derived through retention.
Find out how you can build customer loyalty with personalised offers, exclusive benefits, and a seamless user experience at this year’s EuroCIS in Dusseldorf between the 18th -20th February 2025. On the 18th at 11:20 am CET there is a speaker session which focuses on Rethinking Loyalty: Customer Retention at the Point of Sale with an Integrated Loyalty Suite.
ADVANTECH-AURES will be exhibiting at EuroCIS on booth 9F26, please stop by to see our latest innovations in retail technology.