Loyalty schemes must adapt or die, says Keith Mills

Brand owners might be launching loyalty schemes at a rate of knots but they have been warned they risk alienating younger users, particularly those under the age of 25, who find signing up to – and being involved in – existing schemes too complex and long-winded.
New research commissioned by point of sale marketing specialist Ecrebo, shows that despite high average satisfaction (95%) and frequent use – 91% of UK consumers are signed up to loyalty schemes and use them an average of three times a week – there is a growing generational divide in how users view loyalty programmes.
The research revealed that while 91% of UK consumers are members of loyalty schemes this drops to 83% of 16-to 24-year-olds. Meanwhile over a third (36%) of under 25s found loyalty schemes to be too complicated, compared to 27% of those aged over 25. And three in ten (31%) under 25s felt that the sign-up process for loyalty schemes was too long and complex, almost double any other age group.
Sir Keith Mills, founder of Air Miles and the Nectar card, said: “Younger demographics are increasingly running their lives digitally so we need to make sure we can deliver fast, high volume and relevant rewards and offers to consumers through digital channels. One size fits all loyalty programmes will gradually decline as newer, faster, much more targeted programmes emerge.”
This point is reinforced by former Clubcard chief Andrew Mann, who recently became vice-president of insight, pricing and digital CRM at Asda. He commented: “Today’s consumers are looking for simple frictionless customer experiences that deliver clear benefits. Traditional card-based, points-based loyalty schemes add complexity. Loyalty creation of the future will be based around creating value in a frictionless digital experience.”
Consumers who used loyalty programmes identified several areas for improvement: Three quarters (74%) said they would be more likely to join schemes with personalised rewards, whilst 89% said if loyalty programmes were quick and easy to use, it would influence where they shopped. Half (49%) of consumers said they would be attracted to loyalty schemes that were cardless.
The polling also revealed a growing appetite for new types of rewards, with two-thirds (66%) saying that they would be tempted to use schemes that offered “exclusive access, services or products”. This rose significantly to 79% for under 25s. Personalisation was also an area younger consumers felt far more strongly about than other loyalty scheme users. Two out of five (40%) of those aged under 25 “strongly agreed” that personalisation of rewards would influence where they spent their money, more than double other age groups, with only 18% of those over 25 feeling the same way.
Ecrebo co-founder and CEO Dr Hassan Hajji said: “Despite the ongoing popularity of loyalty schemes, there is still work to do for retailers and brands as consumers are looking for a blend of speed of rewards, simplicity and personalisation.
“Our research highlights a growing demand – especially among younger shoppers – for loyalty programmes which are personalised, convenient and genuinely rewarding. In a marketplace which remains more competitive than ever, it is crucial that retailers continually reassess their loyalty offer, consider new and different ways of engaging customers and stay ahead of changing expectations and needs.”