Customer loyalty programmes... why bother! : Lance Walker at TEDxTeAro

Summary

This presentation explores the effectiveness of loyalty programs, discussing why they often fail to foster genuine customer loyalty despite encouraging repeat purchases. The speaker highlights that true loyalty stems from strong customer relationships, recognition, and great experiences, exemplified through personal anecdotes like the loyalty to a local café. While loyalty programs excel at repeat purchases, differentiation, and customer insights, their future lies in becoming more personalized, mobile, and real-time. Ultimately, the success of loyalty programs depends on how well they meet consumer needs and emotions, with the fundamentals of loyalty remaining unchanged despite evolving delivery mechanisms.

Takeaways

• 😀 Most New Zealanders participate in loyalty programs, but the effectiveness in creating true brand loyalty is questionable.
• 😀 Many consumers acknowledge that loyalty programs influence their shopping behavior, but few consider themselves truly loyal to the brands offering these programs.
• 😀 Loyalty programs can encourage repeat purchases, but this is not necessarily the same as true loyalty, which requires a deeper emotional connection.
• 😀 Building a strong customer relationship is key to creating loyalty; this includes recognizing customers and consistently meeting their needs.
• 😀 Recognition, such as remembering a customer's name or preferences, is a powerful tool in driving loyalty, as people value being acknowledged.
• 😀 Great customer experiences stand out and can build loyalty, even without a formal loyalty program, as exemplified by the speaker's loyalty to a cafe despite the lack of one.
• 😀 Loyalty programs primarily focus on repeat purchases, differentiation, and generating customer insights, which help brands understand and cater to consumer behavior.
• 😀 While loyalty programs offer rewards, they also allow businesses to collect valuable customer data, which can improve customer relationships if used appropriately.
• 😀 Consumer privacy concerns about data collection and use are growing, with customers emphasizing the importance of a good value exchange for their data.
• 😀 Loyalty programs will evolve with technology, with mobile apps becoming the primary platform, making them more accessible and interactive for consumers.
• 😀 Future loyalty programs will be real-time, open, gamified, and highly personalized, reflecting consumer demand for instant rewards and customized experiences.

Q & A

What is the primary distinction between repeat purchase and true loyalty in the context of customer behavior?

Repeat purchase refers to customers buying from a brand multiple times, but it doesn't necessarily indicate loyalty. True loyalty involves an emotional connection and consistent preference for a brand, beyond just repeated transactions.

Why do so many people still participate in loyalty programs if they don't feel truly loyal to the brands?

Loyalty programs encourage repeat purchases by offering rewards, such as discounts or freebies, which motivate consumers to keep buying from the same brand, even if they don't feel emotionally loyal.

What role does customer recognition play in fostering brand loyalty?

Customer recognition is crucial because it makes customers feel valued and personally connected to a brand. Recognition, whether in-store or through personalized communications like tweets, can significantly enhance loyalty.

How does a loyalty program help brands understand their customers?

Loyalty programs collect data on consumer behavior, such as purchasing habits, preferences, and interactions with the brand. This data allows brands to gain insights into customer needs and tailor their offerings accordingly.

What are some of the risks associated with the use of customer data in loyalty programs?

The primary risks involve data privacy, security, and how the data is used. Customers are concerned about how their data is handled, and brands must ensure that they provide relevant, meaningful offers without overstepping privacy boundaries.

What does the speaker mean by loyalty programs becoming more 'open'?

Loyalty programs are moving away from closed systems where interaction is limited to specific platforms. Instead, they are becoming more flexible, allowing customers to engage through multiple channels such as social media, mobile apps, and even third-party websites.

How is the mobility trend influencing loyalty programs?

The mobility trend is pushing loyalty programs to shift from physical cards to mobile apps, making it easier for consumers to access their rewards and for brands to communicate with customers in a more personal and real-time manner.

Why are real-time rewards becoming more important in loyalty programs?

Consumers now expect instant gratification and want to be recognized and rewarded immediately while shopping, not weeks or months later. Real-time rewards help meet these expectations and strengthen the connection between the brand and the consumer.

What is the significance of gamification in loyalty programs?

Gamification adds an element of fun and entertainment to loyalty programs, encouraging consumers to engage more frequently. It transforms the loyalty process into a more enjoyable experience, which can increase participation and brand attachment.

What is the key takeaway from the speaker's example of Nico Café and its lack of a formal loyalty program?

The example illustrates that genuine customer loyalty doesn't always require a formal loyalty program. Strong personal relationships, great products, and exceptional customer experiences can create deep loyalty, even without rewards or points systems.