Who do you think is the UK’s most prominent coffee provider? Costa? Starbucks? McDonald’s?
I’m betting Waitrose didn’t spring immediately to mind. And while Middle England’s favourite supermarket isn’t quite top of the list, they’re very close.
In fact, at last count, Waitrose is shifting around one million cups of coffee per week, making it one of the country’s largest coffee retailers.
Much of this success has come down to the introduction of the myWaitrose card, which since 2013 has given away a free cup of tea or coffee to those signed up to the loyalty scheme.
But success comes at a price. And Waitrose was in the headlines again recently as it revealed plans to tweak the system, requiring shoppers to purchase another item before redeeming their permitted cup.
Hell hath no fury like a Waitrose shopper scorned. But as some customers bemoaned the move, others applauded the decision – it keeps the "riff raff" away apparently, clogging up the aisles usually enjoyed by regular shoppers, all for a free cup of joe.
Whether you agree with the verdict or not, the need to make it goes to show that the desire for loyalty schemes are alive and well.
So why then, are so many retailers getting their loyalty offerings wrong? Or worse still, why are so many loyalty schemes still so low on a brand’s priority list? And what can be done to change that?
When loyalty schemes were in their infancy, they evoked a strong feeling of support or action. Some of the best still do. But in a lot of cases, while customers moved on, retailers didn’t.
Now, loyalty schemes based around accumulating points are unrewarding for a lot of customers. They’re often confusing, with few shoppers having any idea as to what those points actually mean, and even fewer knowing how they can reap their rewards.
And even if they do, claiming said rewards can be difficult too. Many programmes aren’t intuitive or allow for customers to switch seamlessly between channels. Some of the biggest retailers still require you to bring emails or vouchers in to the store to claim your benefits, or will restrict you to only redeeming against certain items. Invariably items that they’re desperate to get rid of anyway.
Let’s not put the nails completely in the points coffin. The basics still work – when kept simple. Boots’ Advantage Card is palatable because it’s easy to understand. Each point is worth 1p, which can be redeemed against your bill whenever you spend in store. No barriers. No fuss. No complicated algorithms.
But if it’s complicated, customers will avoid it. Especially as signing up to loyalty programmes is not a big deal anymore. It’s not novel. Millennials in particular are programmed to effortlessly avoid communications that are no use to them. They don’t mind giving over an email address for an initial discount if all they have to do going forward is drag a monthly email in to their Trash.
Maybe that’s why research shows that people are registered for an average of 13.3 loyalty programmes, yet only actively participate in 6.7 of them. Quite a difference. Young people have been brought up on a diet of knowing how to get anything. They don’t need to be committed to you – you need to be committed to them.
And the best way to show that commitment is to get personal. Loyalty programmes are used by brands as a way to mine data, but if customers give companies that privilege, they expect them to use that data for their benefit in return.
That means no unimaginative emails. That means no irrelevant content. That means no generic offers that don’t feel like the brand had that specific customer in mind at all times.
And that’s just the start. Loyalty should tap into emotional rather than rational instincts, so why are rewards still so product-based?
We know that millennials value experiences or events over buying something desirable, so retailers should be applying that to how they incentivise. Brands like Jacks Wills and Harvey Nichols are clever in making their members feel special through added experiences, such as private shopping events, member days, first looks at new collections and beauty tutorials.
These things that "money can’t buy" tap into that emotional mix. Young people want to be trying things first. They want Instagrammable moments. And if their brands can facilitate that, then a loyalty programme will be viewed as so much more than just another card in the wallet.
And that’s when things can get a whole lot of fun. If expectation levels for loyalty programmes have grown, and if loyalty is based on emotion, then it’s the unexpected rewards, those moments where a brand appears to be going the extra mile, that can really resonate.
Apparent "random acts of kindness" have worked nicely for Pret A Manger, where staff can reward customers of their own choosing with free cups of coffee. They could do it to cheer someone up who appears to be having a bad day, or do it to show their recognition of a regular.
These loyalty moments have to be well timed - if they’re too close together then it loses its impact, if they’re too far apart then it seems too random. And they also have to be communicated well (often, people didn’t realise that the free coffee came from staff living out Pret’s values, thinking instead it was on the whim of a disgruntled or rogue employee).
But rewards that think outside traditional loyalty structures can be incredibly powerful and encourage excellent word of mouth PR.
Yet all these watch-outs and recommendations mean nothing if we don’t revert back to why loyalty schemes have been put in place – and why most brands should exist. They are there to make their customers’ lives better.
The brands who do loyalty best are the ones who provide customers with a sense of belonging. Of being understood. They use the data they have to make the shopping experience cheaper, simpler, or perhaps more enjoyable.
It’s not about devising a scheme that adds new barriers, it’s about having a programme that breaks more down.
Paul Vallois is the managing partner of Partners Andrews Aldridge.