05/05/2015

By Ian Horsham, Divisional Director for Promotions and Incentives, The Grass Roots Group

‘Orange Wednesdays’ from EE ended in February following a 12 year run. This marks a new start for EE and is the perfect opportunity for a refresh of what has been a longstanding and successful loyalty scheme. Although it can be a risky step to remove such a well-loved promotion, it can also be a bold and brave move which is certainly for the greater good of both the brand and its loyal customer base.

The Orange Wednesdays incentive has been one of the most successful telecoms promotions of the last decade – however the brand has since created a fresh scheme, which will continue to engage both new and existing customers. Its new programme will provide all new and existing customers of EE, Orange, T-Mobile and broadband plans with access to a blockbuster film rental every week for just £1 with digital entertainment streaming service, Wuaki.tv. With this, EE has recognised what has worked in a previous loyalty programme, but refreshed and enhanced it in line with changes in the way we live our everyday lives. For example – their updated programme reflects the fact the population increasingly consumes entertainment on mobile devices while on the go.

While a loyalty programme must be relevant to its audience, it is also important existing schemes do not become too familiar for customers. Customers can, over time, begin to view loyalty rewards as an entitlement rather than a gift, so by regularly refreshing or enhancing a programme there is always something new to please and engage the customer. This is vital for prolonged success and ultimately retaining loyal customers.

Further to ‘regular refreshers’, below are my other principles to be considered when executing the most effective loyalty strategy:

Talk about it

Our recent research has shown how powerful loyalty schemes are in retaining customers, but it is clear that not all industries are using them to their advantage. Effective communication is the key to the success of any loyalty programme. It is important to ensure customers understand the initiative and value of what they are being offered. Points statements, reward reminder emails and programme enhancement updates are simple and effective ways to drive customer engagement and cement the ongoing bond with the brand.

Do your research

Focus on your existing customer research – these are the customers you want to reward for their loyalty after all. Consider the relevance of the scheme in mind to determine whether the angle is the most beneficial for your current consumers. You should consider whether the customer needs or wants something for free; the attraction of the scheme doesn’t have to be reliant on financial savings for the customer. It can be viewed more as a gift for a customer’s loyalty, and should not result in handing out freebies to everyone who walks through the door. Essentially is this reward really relevant for your customers, or is it tailored for everyone?

Aim carefully

Both new and existing customer bases should be taken into account when considering a reward scheme. Some programmes suffer in the basic ‘compensation’ approach to loyalty, which may be with good intentions motivated by a pure desire to say thank you, but every promotion or programme has the potential to alienate the most loyal customer if their needs and values aren’t targeted and carefully considered.

Make it easy

Rewards must be quick and easy to redeem, without any high level of effort on behalf of the customer. Sainsbury’s Nectar Points is a prime example. By offering customers lifestyle rewards and point based loyalty schemes, it is making the incentive easy to redeem, with the financial benefits instantly available for customers to see.

Give people a choice

There is no optimal number of rewards that should be offered, as this varies on a programme by programme basis and is driven by factors including the spread of customer demographics, budget and programme objectives. Vouchers are a great way for customers to enjoy spending their rewards on themselves and can be tailored to appeal to many different interests. New rewards can be trialled on a tactical basis to assess impact on customer behaviour and the most important thing is to remember they must be relevant to the audience and something they really do want.

Surprise!

Providing a reward that a customer isn’t expecting can be a very powerful tool. By giving customers an incentive to win as they spend, the perceived value and memorability of the brand is amplified. With Lloyds Everyday Offers, current account customers have the chance to earn up to 15 per cent cashback from places they already regularly shop at.