UK shoppers are the most likely to have a shopping loyalty card, barring Finland, and the least likely to use them, Nielsen research has found.
In a study examining 63 countries, two thirds of shoppers claim to be a member of a loyalty scheme, compared to 89% in Britain and 94% in Finland. The average UK shopper has more than three cards, second only to Japan and Lithuania.
Only half of shoppers surveyed said that they would buy from a retailer with a loyalty scheme over one without. This is the second-lowest number globally, behind Denmark.
"Most UK retailers are likely to be surprised and disappointed to learn loyalty schemes only cause half of members to choose them over a competitor, and that’s if all other factors are equal," says Mike Watkins, Nielsen’s UK head of retailer and business insight.
"Whether it’s because loyalty schemes aren’t offering the right rewards, are too difficult to redeem, or there are simply too many of them to make a competitive difference, retailers need to be addressing it."
Fifty-five per cent of British shoppers said that they shop more frequently at stores offering these schemes, while the global average is 67%.
When questioned about their behaviour, opinions, and potential advantages of loyalty cards, Britons were far less positive than their global counterparts, even though they have signed up to so many loyalty programmes. This indicates that Britons choose to sign up for the cards even if they don't plan to use them because the schemes aren't personalised enough for their liking, Nielsen said.
The most important points of current loyalty schemes are product discounts, cash back, free products and recognition of customer value, Nielsen found. Watkins added that this last benefit is particularly crucial in the UK, "Britons are nearly twice as likely as the global average to value being seen as an important customer – pretty much the only element of loyalty schemes Britons over-index on – so retailers need to consider more non-financial rewards as a way to narrow the large gap between the number of schemes people are enrolled in and the number in which they actively participate."
He predicts that loyalty schemes will transform in three ways going forward: firstly, they will use data to personalise the customer experience, which can be linked to point-of-sale systems for purchasing and rewards, as well as mobiles, for encouraging awareness and engagement; secondly, they'll be tied with financial-services loyalty schemes, such as credit cards; and, finally, they'll become part of subscription services, such as Ocado Smart Pass or Amazon Prime, which will allow retailers to give better and more expansive rewards and benefits for shoppers in the short and long terms.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. To subscribe to ESM: The European Supermarket Magazine, click here.
