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UK consumers sign up to customer loyalty

By Retail Technology | Wednesday September 25 2013

When it comes to customer loyalty programmes, UK consumers sign up as research finds Tesco, Boots, M&S and Sainsbury’s gain real consumer engagement through their programmes

Nearly 95% of consumers who took part in research published by business analytics provider SAS and retail analyst house Conlumino has revealed that they have at least one loyalty card and nearly 90% admitted to using them regularly.

The study said its findings firmly establish the UK as a leader in fostering consumer loyalty. Just over 40% said they would be less likely to use a retailer without a loyalty scheme. 

The research also found emotional connections are key to fostering customer loyalty as 80% of consumers now believe engaging with a brand emotionally influences their likelihood of making a purchase.

The retailers, which have invested in customer loyalty programmes, such as Tesco, Boots UK, Marks & Spencer and Sainsbury’s, show the highest emotional connection with consumers in the research - with Tesco coming out on top. 

Learning from loyalty leaders

It is well documented that Tesco has proven success with its scheme. According to the website, Tesco has 16 million active users and states it is using the information obtained by consumer loyalty card activity to create a “rich and personalised offer” for their customers.

This is just what the consumers interviewed indicated they wanted. Around 50% said that, if offers were personalised, they would be more likely to use that retailer again. Neil Saunders, managing director at Conlumino, said: “This really creates a massive opportunity for retailers because those that grasp the opportunity to understand their customers and treat them as individuals, are more likely to see increases in shopping trolley purchases and add to their profit margin.”

The findings suggest that consumers are comfortable with retailers collecting data they need to deliver these more personalised offers. Nearly half of consumers have no concerns with loyalty schemes whatsoever. Almost 40% actively opt in to marketing material from retailers, meaning a significant number believe they can benefit from relevant offers by allowing retailers to market directly to them. 

The study also found buy-in to loyalty schemes is not just hypothetical – over a third admit that receiving marketing material from a retailer makes them more likely to purchase from them and nearly half would be likely or very likely to use a retailer if they provided personalised offers. In addition, almost a third of consumers were likely to respond to relevant instore offers, highlighting the increasing importance of location and the potential for mobile services.

Grasping business opportunity

The business potential for retailers who grasp the opportunity is evident. The largest loyalty scheme in the UK, Nectar, has, according to the website, 19 million collectors and 24 Nectar cards are swiped every second. If every card holder received a personalised offer, which resulted in them spending just an extra £1 annually, the collective group of retail partners could achieve an additional £19m in revenue.

Alex Fovargue, SAS UK & Ireland retail specialist, this personalisation becomes even more exciting in the UK’s digitally developed society because customer loyalty is going mobile. “This provides retailers with the opportunity to create instant wins by connecting with customers right when they are making a purchasing decision."

Conlumino’s research found around a third of consumers would be likely to take advantage of an offer if they received it via their mobile device while standing in a store. About the same volume of retailers agreed customers would do just that.

Making most of mobile channel

“With nearly 88 million mobile phone subscriptions in the UK, the potential business development in getting around 30% of that 88 million to accept offers would have a serious impact on the retail industry’s profit margins,” added Saunders.

Key to driving this shift will be the adoption of high-performance and visual technology solutions that not only manage 'big data' being collected from loyalty schemes, but also analyse and transform it into valuable customer insights. From here, retailers can make decisions based on evidence to deliver the right product, for the right price, at the right time, to the right person and via the right channel.

Fovargue concluded: “This really is the next step for retailers to take to get the maximum return from investment in customer loyalty programmes. The retailers wanting to take this step will be looking for innovative technology answers to turn this into a reality and reap the bottom line benefits. SAS, with its depth of experience and heritage in big data analytics, has those answers.”

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