In his book, How Brands Grow Professor Byron Sharp talks about a piece of research conducted by the Ehrenberg-Bass Institute that analysed one of the worlds largest loyalty programmes. This programme, run in Australia, was shown to have a positive effect on customer loyalty BUT a very weak one.

Why is this? It’s mostly, according to Byron, because it’s the customers who are already loyal who join the loyalty schemes. Loyalty programmes are often most heavily advertised in-store. The non-customers who are heavy buyers in our category, that we would love to have join, don’t see anything about it in the place where they usually shop.

I think this applies to small coffee vans as much as to big supermarkets.

So why do supermarkets invest so much in loyalty schemes? When we sign up to them, we give the supermarket our personal data and we allow the supermarket to track our purchases. This is hugely valuable as it gives the supermarket the opportunity to promote other brands to us through offers often funded by the food or drink brand.

How can smaller businesses use loyalty schemes?

It could be useful to your business to develop a loyalty scheme if:

You collect customer data

You use that data effectively

You advertise the loyalty scheme outside of your business (e.g. a coffee van advertising in a nearby gym)

A loyalty scheme may help your business, but not necessarily by just by rewarding customers who are already buying from you. Think it through to find ways to recruit new customers and to get existing customers buying more or different products.

If you want help with your brand and marketing strategies, I provide a coaching service for business owner / managers and senior executives. Message me if you’d like more information.