Vouchers vs Points: Co-op become the latest to switch

Having a loyalty scheme in place makes a huge business difference, providing an incentive to grow your customer base and the ability to drive footfall and influence next purchase and measure campaign success.

Whether you’re a loyalty advocate or sceptic, repeat custom comes as a consequence of delivering a retail experience that makes customers feel special and provides reasons to return

The ability to provide a personal experience is now a reality, through smart technology that has enabled retailers to re-evaluate their loyalty programmes, ditch what doesn’t work and embrace new ways that deliver all of the above benefits and more.

Why using a loyalty scheme makes such a difference

Customers want to feel valued, and feeling valued comes from personal service and an immediate ‘dopamine hit’ of immediate savings, rather than having to wait months to collect enough points.

As we’ve seen with the success of Tesco Clubcard over the years, getting products for a cheaper price than other people by signing up to the loyalty scheme works. Walking into a shop knowing that you’re going to come away with a cheaper basket than the person shopping next to you is a sure-fire way of retaining customers.

As more retailer’s trial different ways of rewarding custom, many start to change the way they work for the better.

What is Co-op doing differently?

Last month, the Co-op axed the way its loyalty scheme works and followed suit of Tesco by ditching their points-based rewards.

• Customers who are signed up to Co-op Membership used to earn 2p for every £1 spent on Co-op branded products and services.
• They would then be issued a voucher with the points they’d accumulated.
• This meant that they had to wait to get the money back on their purchases and could only enjoy that incentive off Co-op’s own branded products, rather than the brands we see discounted in other supermarkets.

Now, customers get instant money off selected products across the stores, including branded products alongside the Co-op’s own produce. They have almost doubled the number of products available to over 300 with lower prices for its members, including Warburtons, Robinsons, Whiskas, Pampers and Cadbury, with savings worth 15% on average.

Matt Hood, Managing Director for Co-op Food, said: “We exist to create and return value to our members, rather than encouraging shoppers to spend more money than they planned, which other retailer loyalty schemes often do. Co-op is a vibrant and thriving consumer cooperative, and membership is not a loyalty scheme but rather the Co-op difference in action, whereby the people who own our business, our members, benefit every time they shop, whether that’s lower prices in our stores, cheaper insurance premiums or gaining first-in-line access to presale tickets at Co-op Live.”

Why money off vouchers work best?

If you’re looking to set up a Loyalty Scheme for yourself, you may be toying with the idea of a points-based rewards system or issuing money off vouchers to your customers. Both have their pros in the way they work, but one significant difference is the control you have over the savings.

Some retailers run rewards as a paid membership which then gives the consumer 10% off everything across the store as many times as they want during the year. Although a great incentive, there is then no control over the products they would ideally like the discount to be used on.

With points for pounds, it’s a similar scenario. You cannot control how much is spent on what products, meaning the customer again can use their incentives on whatever they deem fit.

Take control of your margins & still provide more choice

With money off vouchers or so called “star buys”, Tesco, Asda and now Co-op, have full control over the products with a discount or saving.

The objective here is not to give big discounts away, simply small discounts across a large number of regular purchased products. i.e. in the minds of the customer the loyalty programme is more compelling as it more comprehensive.

With a little forward planning, you can make these vouchers and offers timely and relevant to the time of year or season, which would work particularly well in a garden centre setting. Seasonally, buying habits change in your garden centre. As we enter Spring, customers are looking for outdoor plants, sowing, watering and outdoor furniture, whereas in the Winter months they’re steered towards Christmas, lighting, bulbs and garden maintenance.

Each month, you can add different vouchers or star buys to reflect this, from 50p off bulbs to 50% off outdoor plants. You can also test and refine different offers to see what works best for your customer groups but what you are doing is creating a retail experience of surprise and delight!

So, what makes a good loyalty scheme?

There are so many things that make up the characteristics of a ‘good’ loyalty scheme. Just a few common to all good loyalty schemes include:

• Rewards that offer instant value
  A customer likes to be rewarded for making the choice to shop with you there and then.
• There is product or service/event exclusivity
  Even using the term ‘exclusive’ will make your customer feel special.
• Saves the customer money
  People are actively seeking out the cheapest shopping basket or the best offer on the high street by researching the competition before they buy.
• You’re adding more value to your customer data
  Helping you work out what is and isn’t working by way of marketing incentives and encouraging more customers to sign up.
• You can control your margins and increase your base
  You can offer customers the VIP treatment but without impacting your margins and your business’ needs.

Personalisation: The real VIP treatment

Using our smarter marketing ResponseWorks system, we can track sales trends, products, ATVs and buying habits, attributing these to individual customers, building a full profile of their consumer habits.

From there, personalisation is much easier. Making those VIP customers feel special is easy to do, by addressing correspondence to them by name and highlighting offers and vouchers that suit them and the products that are relent to them.

When offering discounted products and special offers, the aim isn’t to give away money or lose profit, it’s to give customers that incentive to come in-store and shop with you more times than they would naturally plan, increasing the ATV whilst doing so.

Your Rewards App brings rewards to you and your customer!

There is nothing more annoying for both you and your customer than them getting to the till point and realising that they have forgotten a plastic loyalty card. As more and more retailers go digital, carrying a plastic card is the last thing people want to do now.

People pay for their shopping using Apple pay, store boarding passes in their Wallet and have folders of apps for their favourite retailers. If you’re not engaging with your customer through an app, sending them notifications and prompts when new offers are available in-store or when new vouchers are released for them, you’re missing out and paving the way for a competitor to do this instead.

Still not convinced? Think about the percentage of notifications and SMS’ you open compared to the amount of emails you open. We suggest 95% compared to 50% of your inbox. You’re missing out on doubling your marketing response in the absence of an app!

With the Spring season right around the corner, the quicker you get started, the more people you will sign up during your peak times. Contact us today to discuss what loyalty would look like for your customers and to better understand how technology is making is making things more personal, engaging, and driving sales.