1. How do I know if I need a loyalty programme?
2. How can I make sure my loyalty programme uplifts consumer behaviour?
3. To introduce a loyalty programme, do I need to upgrade my till system?
4. How much does a loyalty programme cost?
5. What returns can I expect to see from a loyalty programme?

How do I know if I need a loyalty programme?

I often find companies that have issues with retention or increasing customer value, automatically think a loyalty programme is the right solution. This isn’t always the case, CRM activity to drive loyalty may be more suitable and effective.

To get to the right answer, we need to ask more questions. We’ll take you through them, to help you get to the right answer for your business:

• Can I identify who my best customers are and what whey are buying?
• Can I communicate directly with them?
• Is there desire for loyalty activity and use of data internally, at all levels of the organisation?
• Do my competitors have loyalty programmes?
• Is there consumer demand for a loyalty programme? (Actual demand, not claimed?)
• What activity has been conducted historically?

How can I make sure my loyalty programme uplifts consumer behaviour?

We talk to a number of clients about improving their existing programmes, because they’re not uplifting consumer behaviour. They’re effectively giving away margin for no return.

To make sure it doesn’t happen to you:

1. Ensure the programme is designed in the right way to suit your consumer and organisational requirements – Don’t be tempted with an off the shelf solution which is cheaper.
2. Once the programme is running, you need to make sure you prioritise the right analysis, and utilise that analysis when developing communications.

To introduce a loyalty programme, do I need to upgrade my till system?

The answer is simply, no… Technology for loyalty has developed over recent years, and there are now several solutions that don’t need changes to till systems or aren’t actually integrated with the till system in the first place. Which, if you are piloting loyalty, may actually be more favourable.

Of course, it all depends on your requirements and what works best for your business.

But, in any case, it’s not all or nothing. You don’t need a full on loyalty programme to encourage loyalty, there are several tactical strategies you could start implementing immediately to increase customer value.

How much does a loyalty programme cost?

Well, there are a few simple (and effective) changes we can make straight away – you’ll start to notice the differences within a couple of months. But, as a general rule of thumb, we recommend that most UK businesses spend between 1-5% of total revenue.

When Boots launched their Advantage Card in 1997, they budgeted for a cost of £25m in year 1. When Nectar launched six years later in 2003, they invested more than £40m on the launch campaign alone.

One final point though – you don’t need to introduce a full on loyalty programme to encourage loyalty. We’ve worked with clients who have a budget of less than £50,000 and we’ve been able to create effective tactical activity to increase customer value.

What returns can I expect to see from a loyalty programme?

If a programme is correctly designed and implemented, the general rule is that you should look for it to increase average transaction value by 15%, and average frequency of visits by 10%. It will of course also depend on the sector you’re in.

It’s highly likely that you won’t get to those kind of figures in year 1. In our experience, it’s strongly recommended that you also conduct research in year 1 to see the positive impact your programme is having. This also helps us define improvements to the programme and, of course, can be very helpful when you present the year 1 results back to the board!