Customer Loyalty in 2011

This year’s Logic Group Customer Loyalty report puts the spotlight on how the British public’s relationships with the UK’s best known brands are evolving, giving us a feel for both for what they like, and for what annoys them.

Some things are crystal clear. Forget ‘Europe’. It’s the economy people are worrying about – whether this be fear of unemployment, rising prices, access to the housing ladder, or indeed a combination of all these things. As recently as 2007, these issues weren’t really top of mind. They most certainly are now.

When we first carried out this study three years ago, we weren’t sure whether consumers would be able to answer a survey about “customer loyalty”. Maybe it is too abstract a term, marketing talk which of course we understand, but which would have little resonance with consumers?

We needn’t have worried. Consumers have been using loyalty schemes for years. They are part of everyday life, and there are three sectors – banking, retail and mobile phones – which are clearly our reference point. Most Britons feel loyal to one or more brand or organisation operating in these sectors. They are therefore perfectly able to answer our questions, and need little encouragement to come up with their own take on what works (and what doesn’t).

Each sector is different, of course. In travel, restaurants and hotels, once we are in a scheme, the norm is for us to be in more than one. The same applies to supermarkets. Sometimes this is called “polygamous loyalty”. This description may be a touch over the top, but it’s clear that consumers are not always entirely faithful to brands in these sectors. Hence the emphasis on “share of wallet” and indeed the energy and resources placed in developing loyalty schemes in recent years.

In this mature landscape we see consumers who are entirely comfortable with the “deal” – for example in earning points in return for spending more in a store or with a supplier. This is, to coin a phrase, a “fair exchange of value” in action. People emphasise the importance of keeping things simple, and they are wary about “complicated” schemes, or offers which are not relevant, or indeed simply not worth the effort.

But surely consumers are now increasingly uneasy about letting big companies free to do as they wish with their own personal data? Actually it’s more complicated than that. Provided there is a sense of a two-way relationship – ie that we get something in return – consumers are fairly comfortable with letting organisations use their data. Presumably this trust has been built up over a lifetime of having the supermarkets, banks, petrol companies around us in our everyday lives. After all, they are familiar faces, and they don’t leave laptops containing our data on trains. Why should we not trust them?

If there is a warning light from all this, it is perhaps a sense that all these loyalty programmes are a bit, well, “samey”. OK, so very few users of schemes are actively critical of them. But at the same time, very few are actively delighted either. So the question of how we can differentiate, how can we be distinctive, applies to a loyalty scheme just as much as it does to an individual product or indeed a brand more generally.

Perhaps new technology provides the answer here. QR codes provide a new dimension, a new opportunity to interact with people on the move or as the mood takes them. The advent of 4G will bring a further step change, as the mobile phone continues its journey to being a mobile small computer. And Near Field Technology (NFC), as seen in London in the form of the Oyster Card, brings new possibilities to marketers. Here the challenge will be to keep things simple, Steve Jobs style, if you like. Consumers are turned off by talk of what “new technology” may bring – it sounds complicated and a bit geeky. But ask them if they are interested in receiving offers and rewards there and then, while they are shopping, and, yes indeed, they are interested. Similarly, the concept of bringing a number of scheme memberships together into a single debit or credit card is also appealing.

This isn’t the first time that the message coming back from consumers is: show us the benefits, rather than the features. The other message is, overall, a positive one. We’re very happy to enter into relationships with the organisations and brands we do business with. Far from being a dirty word, British consumers are consenting adults when it comes to loyalty schemes. The next few years will no doubt bring some twists and turns as new technology comes on stream. But in many ways, marketers are starting from a good place. If only the same could be said for the economy...

• Download the 2011 report. The Imperatives for Customer Loyalty, 2011

Simon Atkinson is Assistant Chief Executive of Ipsos and wrote this article for Brand Republic