.The real drivers customer of loyalty exposed

While most people would agree that loyalty is a good thing -  whether in terms of personal relationships or in choosing who to do  business with - but there are always some customers who benefit from  membership of a loyalty  scheme while others simply fall by the wayside, according to Anamaria Chiuzan, senior marketing manager for customer insight and loyalty at The Logic Group

Despite the apparent success of many loyalty programmes, recent debate surrounding their usefulness and validity have left many marketers questioning the true purpose of rewarding customers' loyalty. This article is copyright 2010 TheWiseMarketer.com).

With approximately 85% of households in the UK owning at least one loyalty card (TNS Market Research), while more than half forget to redeem their rewards, perhaps one factor fuelling the debate is a disconnection between customers' expectation of how their loyalty should be recognised and the reality of what they receive.

Similarly, it's important for retailers to realise that loyalty schemes are a long term platform on which to grow a customer base and repay loyalty by providing rewards, redeemable both in and out of store, that will be valued by the individual.

According to Chiuzan, many businesses have forgotten the ultimate reason for implementing reward programmes. Equally, for consumers, the initial draw of joining a loyalty scheme may quickly become a distant memory. If used correctly, it's very easy for customers to make savings and reap rewards. However, many retailers have jumped on the loyalty programme band wagon and issued loyalty cards without considering how the scheme will be used to its full advantage. As a result, consumers often feel overwhelmed by loyalty cards and the idiosyncrasies of the points systems of each.

One by-product of the saturated loyalty market is that many of us now feel happier when simply winning rewards, as opposed to the satisfaction to be gained by earning them. Nonetheless, loyalty rewards can have the same affect if they are made relevant and personalised to the individual consumer. To achieve this most loyalty schemes need to be re-vamped, as some businesses have simply launched loyalty cards with a 'that will do the job' mentality.

A loyalty programme is not just a tactical solution, rather a long term strategy with building frequency and driving customer loyalty and satisfaction at its heart. Loyalty programmes aren't just about quick wins such as sales and discounts; they enable retailers to manage customers and their profitability, while rewarding them with incentivised offers that will ultimately grow the customer base.

Loyalty schemes are successful in improving and maintaining customer satisfaction, on the other hand, sales are about attracting customers on a short term basis; once items of particular preference are no longer under offer, customers are likely to shop elsewhere as they have no feeling of loyalty toward the store. A downside to the sales-focused approach that retailers will undoubtedly feel the impact of long-term.

Retailers without loyalty schemes in place have to rely upon what amounts to a straw poll before going with the majority vote, as was the approach evidenced in a recent advertising campaign by Asda. This tactic is arguably unreliable and only benefits the customer if they belong to that majority group. If retailers dependent on sales believe this is the best way to drive profitability, they risk losing those customers who are neglected by the process and, in turn, may find it difficult to attract new customers (as many are members of loyalty schemes).

The other part of the great loyalty card debate focuses on the question of why loyalty programme members tend to benefit while other customers do not. Retailers with successful loyalty programmes are a result of access to customer data. Many customers may be loyal to a brand but prefer not to share their personal details, and as a result they are ostensibly never rewarded.

The customer experience is key, Chiuzan argues. So too are the relevancy of rewards - and the most successful loyalty programmes are those that combine relevancy with immediacy.