Loyalty schemes without measurement just won’t work

| October 16, 2018 | By

What is the point of loyalty schemes if you can’t measure customer impact? Yoyo CEO Michael Rolph says retailers need an accurate view of whether customers are walking away with rewarding experiences and making those crucial return visits.

Loyalty schemes without measurement just won't work

Blind loyalty schemes

I walked into a pretty well-known coffee shop chain the other day. I was already aware that they didn’t have any real type of loyalty scheme, and so of course, me being me, I got talking to some of the staff and asked why they thought the chain chose not to when most, if not all of their competitors did.

The reply was something along the lines of this: while they didn’t dish out loyalty stamp cards, each coffee shop had a fund set aside so they could reward their customers with free coffees whenever they liked. Apparently, they’re actively encouraged to just hand out free stuff.

Initially you’d think, how cool is that – back to the old days, customers getting to know the team behind the counter and being rewarded for their regular custom by someone they gradually get to know.

And I guess the idea of these types of loyalty schemes is to empower local-level teams to engage with their customers as they see fit – who could be a better judge than the team who talks to their customers each and every day, right?

Now who couldn’t agree with that? Different outlets face different opportunities and challenges. For instance, a customer strategy for a coffee shop on the high street shouldn’t be the same for one situated in an airport – so it’s important that each of these teams are empowered to face their own challenges in their own way.

But where’s the measurement?

On the face of it, it’s a nice idea. For me, however, the only question that popped into my head was: “All well and good, but where’s the measurement? How on earth can a company tell if these types of loyalty schemes work, both for the business and their customers.

Let’s say a customer, who regularly visits the same coffee shop near their office, builds up a relationship with that outlet and every now and again receives a free coffee for their loyal custom. Then they visit the same coffee shop when they’re at the airport or another part of town – all of a sudden that built up relationship goes back to zero.

This type of loyalty strategy, like far too many others out there, puts too much of the onus onto the customer – they literally have to work for their well-earned rewards.

For me, nurturing loyalty is about placing as much ease, convenience and choice into the hands of a customer. It shouldn’t be for individual managers, team leads or cashiers to arbitrarily decide who gets a free coffee and when.

And just like those retailers which still hand out paper loyalty cards (yes, it beggars belief), there is no way of measuring whether it works or not!

Tech, data, experience

Successful loyalty schemes in 2018 should be able to deliver an experience where retailers actually know that their customers are walking away feeling genuinely and, now more than ever, personally rewarded, regardless of where they interact with a retailer or who serves them.

It sounds simple, but this is a fundamental reason why loyalty schemes exist in the first place – delivering enhanced experiences so that customers feel rewarded and return to spend another day.

With brick and mortar retail as it is, achieving this now requires three things – technology, data and a seamless payment experience (the same three reasons that Amazon is winning online).

Technology can place convenience, speed and choice in the hands of the customer, and the right data reveals to a retailer how they can genuinely deliver personalised rewards and experiences.

So, I’m now going to shamelessly plug Yoyo. First let’s talk experience:

For customers, a Yoyo-powered app provides a seamless mobile payment experience combined with automated retailer-specific loyalty and digital receipt collection at the point-of-sale, as well as rewards and offers personalised to what they buy.

Now let’s talk about measurement:

For retailers, Yoyo identifies every customer at the point-of-sale through their Yoyo-powered app and connects them to stock keeping unit (SKU) data to analyse individual purchasing behaviour.

Through a purpose-built measurement platform, retailers can then use this data to analyse real-time business performance, as well as segment and engage with customers, creating incentivising and rewarding campaigns based on said purchasing preferences.

(A quick side note before you start asking: All this data is double tokenized and fully anonymised by Yoyo so that retailers never actually see the personal or financial data of their customers.)

Utilising data to deliver experience

This mobile-led loyalty strategy achieves two things. One, it delivers a personalised in-store loyalty experience to customers on a level usually only found online.

Two, it enables retailers to instantly measure the value of their customer retention strategies i.e. are customers actually satisfied with their experience, are they making those key return visits, and have all those free coffees you’ve handed out provided a healthy return on investment?

And what’s more, not only does this customer data give a retailer an holistic real-time view of business performance, it actually further empowers site-level teams, which can personally engage with and reward a lot more deserving and loyal in-store customers then could ever be done otherwise.

I’ll leave you with just a couple of key measurements from Caffe Nero’s loyalty programme to consider.

In just 12 months its Yoyo-powered app reached an 80% 30-day retention rate – customer were loving the experience and making regular return visits (in mobile app terms, this is unheard of and exactly what loyalty schemes done right are supposed to achieve).

Not only that, the app was taking a massive 10% share-of checkout (and growing) and was rated amongst the most highly rated coffee apps in the world.