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Loyalty Schemes & Smart Marketing

Loyalty schemes are used throughout many businesses in a variety of industries - from retail to printing. You're probably familiar with a number of loyalty schemes such as Nectar for Business, Makro Gold and Tesco Clubcard. In a changing world where more and more shopping is done online, some businesses are phasing them out, others are just bringing them in. But are they still a good idea?

The variety of schemes

Loyalty schemes come in a variety of different forms. Some schemes give you points, some give you exclusive privileges, but the type of reward is often down to the type of business thats offering the scheme.

A well known loyalty scheme is the Tesco Clubcard, which offers points for every pound you spend, and in turn exchange the points for things such as money off coupons or day out vouchers.

However, according to Lucy Tesseras of Marketing Week, brands should focus less on starting a loyalty scheme but become a loyalty brand and help dictate what customers want to buy based on previous sales data. Lucy notes that customers are starting to see through gimmicks to maintain loyalty and even companies such as Tesco are looking to refresh what they're offering it's clubcard members.

Do they really offer a benefit?

With the rise of discount sellers, loyalty schemes become a good way to cement the consumers loyalty with a brand. Not only do they allow the business to collect invaluable data about its customers, but it allows you to offer something very personal back. From Amazon, to Tesco, from M&S to Argos, they all offer a loyalty scheme in some shape or form.

Not all schemes come with the benefit of personalised offers, which is perhaps a downfall of some of them. But schemes do come in a number of shapes and sizes. Amazon offers its Prime scheme at an additional fee, but you benefit from free music, free films, early access to offers and more. This type of scheme flips the meaning of loyalty as customers come back to Amazon to receive the benefits (even though they paid extra for it), which benefits Amazon in the long run. But it benefits the loyal customer in personalisation in other areas apart from just shopping - Instant Video for example generate recommendations based on DVDs youve purchased.

Other schemes such as the M&S Sparks loyalty scheme tends to offer more of VIP event invites and special offers rather than flat money off, playing with the idea of making customers feeling important. Whereas Argos offers interest free credit with their offering of an Argos Card. While its a form of credit, allowing customers to spread the cost, they increase the likelihood of repeat custom, and therefore loyalty.

Smart marketing

In a data driven world, businesses of all shapes and sizes can predict what its customers want before they even know it. Through personalised marketing, such as sending emails to customers tailored to what they're looking for, brands can build up a loyal customer base, and there's no need to offer the rewards often associated with a loyalty scheme.

Some companies do this to an extent already, but as the trend for online shopping continues to grow, so will the data that companies can collect from you - especially as they already have you signed up to their site to monitor your shopping habits.

As the amount of data stored online increases (and growing rapidly each day), marketing has become far easier and more targeted. Whether this is a box showing on Facebook, or an email landing in your inbox suggesting another purchase. The vast amount of data stored about your purchases, your browsing history, and other key factors (right down to a predicted age and hobby list) allow businesses to ensure the right product is in the right place at the right time.

Do loyalty schemes have a place in todays business?

While they can help boost customers loyalty by offering rewards or something unique to keep them coming back, smart marketing can be seen as the better option. With tools monitoring prices of competitors, and what your customer base are looking at and purchasing, personalised marketing can be a powerful way to maintain loyalty.

Where does this sit with your business? Could a loyalty scheme prove beneficial to you? For new businesses, it may be a better option to offer a loyalty scheme of some sort until you can gather data from e-commerce or ePOS software.

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