Paradigm Shift in Loyalty Card Programmes: Win-win for Retailers, CPG Brands and Customers
Guest Post by
Srinivasan Nithyanandam, Manager, Client Services for Retail, CPG and Logistics - Europe , Infosys
Battling slow economic growth and high costs in a difficult market, retailers are competing aggressively to increase their customer's wallet share and mindshare. The new breed of digital consumers, who want convenience, personalization, and promotion-based pricing, has made winning in this environment even more challenging. Operating within the tight confines of single-digit-percentage operating margins, retailers must continuously innovate to increase consumer foot falls and clicks. In such an environment, personalised offers, rewards, targeted communications and promotions can help heighten customer interest and encourage repeat shopping.
Loyalty card or shopper identification programmes help retailers deliver value and relevance to their customers through a three-pronged strategy that involves:
•Identifying and acquiring customers
•Collecting data to understand customer requirements
•Influencing customers with attractive targeted offers and communications
While loyalty card programmes have given some retailers an edge in helping retain consumers and maintain market share, these initiatives can cost a supermarket retailer 1-1.5% of its revenue. Many enterprises that have launched loyalty programmes have not been able to make full use of the customer data they gather. Moreover, the proliferation of loyalty cards in the market makes it impossible for every programme to build and sustain a worthwhile engagement with the customer.
To attain their objective, loyalty card programmes must not be seen as a mere mechanism to award / redeem points or offer a freebie. The most effective loyalty programmes are those that reward customers in a way that encourages loyalty and drives them towards a greater spend, longer tenure, and positive advocacy.
In this context, the loyalty card must be leveraged as a powerful customer analytics tool. It needs to help retailers analyse customer data and provide valuable inputs to shape campaigns and formulate customer strategies. These programmes must be used to gain insights into buying behaviour and provide real - time answers on how to influence consumers.
Such a paradigm shift in loyalty programmes helps retailers engage with their consumers more deeply. It also provides actionable information for effective decision-making on pricing, promotions, ranging, space planning, store format / locations, new product development, and communication strategy - all of which contribute to increased revenue.
This revolution in gaining customer insights is reflected in one of our customer's success stories in transformation from loyalty provider to analytics provider.