Our recent survey found that 69% of consumers view 'value' as the most important factor when choosing a brand. But we all know by now that value can mean very different things to different people. So in this blog, I wanted to dig a bit deeper into the various elements which influence value perception across the customer journey.
IGD recently launched their new value equation which I found interesting, mainly because loyalty schemes can be a vehicle to deliver against many, if not all, of these areas – and not just the obvious ones (Reward & Money). Although in the below, loyalty schemes have been specifically called out in ‘Reward’, I’m here to show you how an effective loyalty programme can make a difference across all 5 contributive factors.
Source: The new value equation, IGD
Here's how…
Some shoppers see shopping as an in-and-out job, whether doing the weekly grocery shop or buying a new shirt. But increasingly, consumers are looking for shopping to be altogether more delightful - they want elevated experiences. Now, experience is obviously a subjective metric, but the provision of quality, service, and a positive customer experience are important components of delivering value.
A loyalty scheme can be an effective conduit for enabling a real-time connection with your customers and allows you to identify the customers who appreciate the finer things - how you then elevate the end experience is up to you, there are a myriad of ways to do so.
Liberty have a unique way of doing this through their Beauty Box Subscription, an offering which sits on top of their Liberty Collective loyalty scheme, designed to elevate the experience for their treasured beauty category customers. Participating customers deposit £25 into their own personal account each month which they can spend with Liberty whenever they wish. In return for this committed engagement, they get sent four Beauty Boxes throughout the year worth £300, as well as free delivery and access to members-only offers, rewards and events, and exclusive beauty advice.
Loyalty schemes work on the premise of 'give to get'; a customer hands over their data in return for a reward or benefit(s). There isn’t a one-size-fits-all rule when it comes to the reward, you know your customers best, but it is important to get it right to ensure that you are using your program to drive the behavior you seek and rewarding customers appropriately for every interaction. After all, redemption of rewards are the tangible benefits a customer gets out of a loyalty scheme - so if you're not hitting the mark, they’ll likely stop interacting with the scheme. Whatever you do, make sure you let them know you've rewarded them "Thanks for shopping - here's 10 points/personalized offer/free delivery/access/content etc.".
Reward banks are a tried and tested method of easing the pressure of offering the right reward and puts the customer in charge, giving them the flexibility to choose their own reward. Virgin Red and Tesco Clubcard Exchange are two brilliant examples of this. Both of these schemes have integrated 3rd party partners into the scheme allowing customers to seamlessly spend their points across a range of carefully selected businesses. Expanding the redemption network increases the perceived value of the scheme rewards and in Tesco's case, the value of the rewards are multiplied x2 if you redeem outside of Tesco.
As mentioned, loyalty schemes provide a customer connection. A strong loyalty proposition should incorporate time-saving and convenience at the heart of this connection as we know that consumers value this. The most well-known and successful time-saving loyalty value prop is Amazon Prime’s free one-day delivery (take my money), but there are many other ways to help give your customers some time back. Coffee shops Pret & Starbucks have managed to speed up what was already a relatively swift transaction through a variety of tactics such as mobile order and pay and pre-paid coffee subscriptions.
Remember, time is money - in this case, value.
One of the more obvious elements when it comes to linking the equation back to loyalty as there is quite a bit of crossover with reward and providing the right incentive/reward to drive the behavior you seek. There are many ways a loyalty program can be used to generate a saving for the customer, I’ll just touch the surface and discuss a few. McKinsey & Co found that 76% of consumers get frustrated when businesses do not offer personalization, so that is probably a good place to start. There is no value in getting £ or % off meat when you’re a vegetarian. Personalized marketing is about putting the right offer in front of the right customer at the right time, not only is it a great way to prove to a customer that you understand their needs and increase the likelihood of redemption, but it can increase marketing ROI by 10-30%.
Member-only prices are becoming more popular with retailers as they encourage customers to scan their loyalty ID at every transaction in exchange for an instant saving. This helps retailers capture more customer data, the insights from which can be used to power future personalized marketing initiatives.
Stored value and subscriptions are another great way customers can feel savvy and make savings. IMO Car Wash allows customers to pre-pay for bundles of car washes at a discounted rate. Pret have a handy subscription calculator where you can input how many coffees you have a day/week and your order to work out how much you would save if you were a subscriber.
We power 100+ use cases of how a customer could earn through a loyalty scheme; check out our Real-Time Loyalty page for more info.
This is an important area that we're working closely with our retail customers and partners on. For some years we've provided the ability to be able to donate earned loyalty points to a charity of a customer's choice. We power this capability for Pets at Home which translated to £1.2m being donated to charity last year through their loyalty scheme. Enabling charity donations just by shopping with a brand makes customers feel good about doing business with them and acts as a competitor advantage.
A newer eCommerce use case we're now able to power is the ability to reward a customer for swapping an item in their basket for a healthier or more sustainable alternative. By providing a really simple user journey to help customers make better decisions can be a quick win for the retailer.
So, there you have it, put your calculators away and get your loyalty schemes out if you want to deliver value using the equation. If you'd like to find out more on anything covered in this article, please reach out.