Loyalty Schemes
Posted by Paul Hargreaves on
It turns out that this was a point of view of one person keen to push his own webinar, rather than an industry opinion as a whole. However as the debate is now “out there”, let’s consider the pros and cons.
Agreeing with Mr. Ward’s premise that 20% of customers being responsible for 80% of turnover, I’m not sure that a clever loyalty scheme can’t increase the turnover from such customers as well as increasing the ‘spend’ of the 20%. Most independent retailers have a much less technological system than the multiples, which may enable more clever schemes rather than the straight 1% discount Tesco’s offer – although this is currently doubled to 2%. I admit to being quite surprised at the average basket spends quoted by a few farm shops at the FARMA conference in January. Figures ranged from just over £10 to around £15. The £15 basket was viewed as being fantastic by some green-eyed farm shop owners.
Surely by encouraging shoppers to spend more with a loyalty scheme would generate more profit not less. Giving discount for basket spends in excess of a certain value is one idea.
Surely it should be possible to get these basket spends up with a bit of clever retailing. One of the businesses I run is an on-line shopping site, and many customers just come onto it to buy a couple of items, but end up spending over £20. The average basket spend on that site is £44.
Incentivising customers to introduce their friends to the shop by giving a voucher is another. Generally I think there are many ways to “box clever” by using schemes like this. To write them off with a attention-grabbing headline is a little premature. I think it is good that independents are introducing loyalty schemes or thinking of copying marketing schemes of larger retailers is good, as it means that they are thinking considerably “bigger” than they were a few years ago. We now regularly do special offers and tailored promotions to farm shops and food halls; these places weren’t even asking for these things a couple of years ago.
Independent retailers have taken their game up a notch – let’s not criticise them for doing so. OK, some marketing plans won’t work, but please let’s encourage them to try.
We are in a growing market, let’s keep on innovating and growing!
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