Are the UK’s supermarkets revolutionizing customer loyalty?
The CX Network Weekly is the LinkedIn Newsletter from CX Network. Each week we share our take on a key development in experience management, with links to CX Network resources that can inform, inspire and help your organization’s response.
This week’s edition takes a look at the latest in fostering customer loyalty. When we researched the Global State of CX earlier this year, 35% of respondents told us that customer loyalty and retention are one of their top three areas for investment at present.
Points programs aside, true loyalty is built on the ability to meet a customer’s needs – whether they are aware of those needs or not – and generate repeat business as a result. We recently covered what customers want in 2023 and to recap, the consumer trends that are front of mind for CX’ers at present include:
Meeting these sounds simple. Right? But what if customers just don’t want to be customers anymore? Well, here’s a case study on customer loyalty programs to get you thinking.
The UK loves a supermarket and while the landscape is dominated by the “big 4” – that is Tesco, Asda, Morrisons and Sainsbury’s – the likes of Aldi, Lidle, Waitrose and The Co-op still provide strong competition.
It means consumers have a raft of choice and that competition for their attention – and loyalty – is tight. The big brand stores compete on many things but it mostly revolves around price, quality and range. Few compete on “experience”. In fact, in this sector – store lighting aside – experience is somewhat homogenized.
These businesses are, however, revolutionizing the loyalty program. ?
The story of the Tesco Clubcard dates back to 1994 then in 2019, Tesco took things a step further, leaning into the idea that its Clubcard users are “members”. It introduced exclusive prices for these members (that shoppers who are not members cannot access) and it also introduced a paid membership tier for those who want even more discounts. All the other Clubcard perks – points, third-party promotions, etc – remained but yes, you did read that right: as a normal consumer, unless you share your data with Tesco, there are no. store. discounts.
There are many interesting points to note here, particularly around the use of customer data. Let’s start with how the other supermarkets responded: some followed suit, among them Sainsbury’s, Co-op and Waitrose. The exclusive pricing tactic has also made it onto the high street where Boots, owned by Walgreens Boots Alliance, Inc, now runs the Boots Price Advantage for its Advantage Card holders. But unlike the supermarkets, non-cardholders can still enjoy price reductions in-store and online.
From the customer perspective, the grocery chains have added significant friction to a customer journey that was previously as simple as buying milk. Today, if customers want convenience they will have pay for it with either their data or money. There is no third option!
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It all raises dozens of questions. Could this new take on the loyalty program transfer to retail or other sectors? If customers reject this and start paying for convenience with their money instead of their data, what happens to forecasting, predictive CX and all the other things that customer data facilitates? And is the loyalty program not supposed to be fun for the customer? It may be the corporation’s last resort in building rapport with a fickle customer base, but it could still be fun.
The supermarkets may be actively deterring their customers from going to the competition, or they might have just hit upon the ultimate in customer loyalty – moving beyond gamification and most of the bribery to create a community of shoppers who return time and again, because they are members not consumers. What do you think?
They wouldn’t be the first to nurture an emotion-based bond with their customers, but doing so through a customer’s pockets provides lessons for us all. ?
Here’s something to inform you…
Here’s something to inspire you…
Here is something to help you…