Loyalty and establishing effective customer retention programmes

Customer retention is a vital consideration for any business and an ever-pressing concern.

This issue was tackled during an expert debate at the Gift Card, Gift Voucher and Reloadable Card Summit, hosted by the UKGCVA. The session, ‘Rewards & loyalty: Trends in effective customer retention programmes’, consisted of panel of industry insiders and was hosted by Rachelle Smith, regional director UK and Ireland at PrePay Solutions.

Smith was joined by Maureen Dunlop, head of CRM at House of Fraser; Tim Davies, founder of retail advisory business Adwerth LLP; and Tessa Unsworth, chief information officer at PrePay Solutions. Smith explains: “Recognition programmes are becoming innovative in response to developments in technology. However, it is essential that businesses harness technology to deliver results and attract and retain customers, rather than let it drive the business.”

House of Fraser put its customers at front of mind when relaunching its Recognition Reward Card. Points are awarded on all spend by any payment tender, converted into cash rewards and loaded onto the card for the customer to spend in store or online, thereby driving further spend. This is in addition to the established Recognition MasterCard which rewards spending, both in House of Fraser and over 24 million other outlets worldwide, via paper vouchers.

A good scheme needs to keep the focus simple and drive sales through a variety of activity, as Dunlop explained: “Earning rewards by collecting points is an obvious benefit. We also run bonus points events to help customers reach thresholds quicker and get them engaged in the programme.

“We also provide added value through invitations to events, exclusive discounts, news about new arrivals or launches and third-party benefits.”

All these benefits can provide customers with additional extras to the base reward and, therefore, increase loyalty and drive incremental spend and visits.

The use of technology in the House of Fraser Recognition Reward Card creates a seamless online journey for customers, allowing them to check the card balance, manage the account details and receive updates via email. This also has the advantage of reducing costs for the business.

Davies, former director of strategy and customer management at Debenhams, said: “Using existing technology to keep costs down is essential in the current climate and technology has moved on so fast that you can deliver solid loyalty functionality from a number of different sources.”

Businesses need to be able to maintain a flexible approach to loyalty and be prepared to change their strategy in order to adapt to new developments in technology, such as phone-based loyalty solutions and others that will emerge in the coming months.

Unsworth, who is responsible for PrePay Solutions’ product, platform and software development, added: “Although platforms must be innovative in their solutions, merchants need a platform that fits with their company’s objectives and not be blinded by technology. Businesses need to ensure they do not lose sight of what the customer wants. After all, it is much easier to change IT than customer behaviours.”

Smith concluded: “Activity must target existing customers as well as attract new ones. New and existing customers will disappear if there is nothing offered that appeals to them. A loyalty programme must be relevant in order to keep them engaged.”