There’s an age-old saying in cop movies and crime dramas: loyalty goes a long way. In retail, the growing importance of loyalty schemes has enabled brands to saturate all areas of consumer lifestyles.
Look at French supermarket Carrefour, which recently announced it is teaming up with Netflix to offer joint subscriptions. Offers like this go beyond the aisle, impacting customers’ lives even when they’re not thinking about the weekly shop.
And these approaches are working. If Lidl’s victory over long-term rival Aldi at Christmas has taught us anything, it’s that brands need to think beyond the product, no longer seeing loyalty schemes as just an add-on.
But at a time when many shoppers feel like loyalty price promotions are misleading, retailers need to think about how they can positively communicate their offers, ensuring customers always feel like they’re being valued.
Because at the end of the day, real loyalty comes from being practically useful and emotionally meaningful to customers’ lives. It has to be earned, not bought.
Real loyalty vs deal loyalty
This is an area where low-cost, discount retailers should tread carefully. After all, by definition, they are low-cost retailers. Deals are their bread and butter.
Deals without a larger purpose – pushing points, promotions, and prizes – could easily result in a race to the bottom. This kind of promotion has been proven time and time again to not equate or lead to ‘real loyalty’. The focus is purely transactional, resulting in dwindling appeal, distinction and trust over time.
There are glimmers of light within this. The Lidl app offers broader incentives, such as wider partner offers with shoppers’ favourite brands, which increase customer insights and personalisation.
The question these low-cost retailers need to ask themselves is: what can they do as part of their app, loyalty proposition, brand and customer experience that will drive real loyalty, particularly in a cost of living crisis?
Both Lidl and Aldi are famous for their wines. Could they, for example, do something to make this part of a reward for a week’s shop? That wouldn’t dilute their low-cost positions, but rather cement them as partners to their customers in truly adding value in challenging times.
Last Christmas, Tesco partnered with Cineworld to launch the Tesco Movie Nights campaign, giving customers free screenings of holiday classics and the new Wonka movie. Based on Clubcard data, the partnership rewards shoppers with incentives beyond the in-store experience. In the bleak midwinter, this scheme gave something genuinely uplifting.
In a similar vein, Co-op has just signed up 50,000 new members thanks to its Co-op Live arena in Manchester, giving customers first access to presale tickets for some of the biggest music acts in the world, including Liam Gallagher, Olivia Rodrigo and The Killers. This unique partnership with entertainment developer Oak View Group rewards loyal shoppers with almost once-in-a-lifetime opportunities to see their favourite bands, and customers are clearly loving this.
For longer-term initiatives, you only need to look at Waitrose & Partners’ partnership with health and life insurer Vitality. Vitality members can access up to 40% cashback on the supermarket’s Good Health food range in all stores and online. The programme is scientifically backed by behavioural economics programmes that encourage people to make healthier lifestyle choices. Each time members engage in physical activity, they gain points linked to an activity-tracking device, with cashback levels correlating with the amount of physical activity the member has done the previous month.
These schemes are a phenomenal way of showing these brands are committed to customer care outside of the supermarket. If you give people something beyond just deals, it engages them with your brand in a much deeper way, driving customer growth.
Loyalty needs a different starting point
Instead of starting at the checkout, retailers need to step back and think about their brand purpose and how they create a space as a trusted partner.
Existing loyalty schemes are already providing the data. Now it’s about optimising that to give unique insight into customer expectations.
Data, tools, and technology can help brands move from a transactional, linear model, to a more holistic ecosystem. This builds currency and data value for retailers, and increases usefulness and trust for members.
There is value in embedding the principles of real loyalty – practicality, emotional resonance, value – into brand strategy, to create a holistic approach to delivering loyalty. It makes the loyalty scheme authentic and inherent to the brand, helping it resonate more deeply with customers.
Retailers need to realise loyalty is not a strategy. It’s the consequence of making their customers’ lives easier, better and more rewarding.
Real loyalty impacts customers’ lives in meaningful ways beyond the supermarket, furthering trust and respect for the brand. Retailers need to wake up to this – or risk being left on the top shelf.
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