Loyalty Programmes

Loyalty programmes are a way for the retailer to encourage the continued patronage of customers, allowing retailers to gather data on customer behavior in order to decipher trends, appropriately reward loyalty, and influence shopping behavior. When properly designed and correctly implemented, it can encourage long term loyal buying behaviour, serve as an interface between companies and their customers, and foster constant engagement.

Many booksellers regard them as the cost of doing business. Some booksellers don’t even use a physical card, preferring to let their computerized inventory systems do the tracking. Still others find themselves caught up in the age-old shopping dilemma: Paper or plastic? But are frequent-buyer cards worth the time and effort? Do they contribute to the bottom line? Or do they cost too much to offset any public relations value? What about other ways of developing customer loyalty?

Case studies in the US and UK reveal interesting but confusing facts about implementation of these programmes – some independent stores

feel that loyalty programmes do not, in fact, inspire loyalty, but are nonetheless useful to learn about customer buying patterns. Bigger chains feel that “membership” definitely has its advantages, and also use frequent-buyer programs to glean customer information. There are literally thousands of different ways to implement a loyalty programme in some shape or form, and speaking to some South African booksellers proved that no two programmes are the same. From Exclusive Books’ elaborate Fanatics club, to a simple programme at The Booklounge in Cape Town where customers get 5% of their previous purchase deducted from their next one, each time they buy. There are no cards or pieces of paper, and it works well. But, warns owner Mervyn Sloman, loyalty schemes alone do not equal returning customers. Customers return because of good service. In a different take on things and in a successful effort to make the lives of their customers (direct and indirect) so much easier and thus encouraging loyalty, Van Schaik Bookstores use their 30-day account facility as an incentive for students.

Books & Books in Durban also follows a simple approach, where new customers register, and are given a “loyalty number” which gives them one “stamp” for every R100 they spend. When the card is full, they receive R100 discount on their next purchase, and get issued with a new card. According to Janine O’Connor, their customers enjoy the fact that they are rewarded immediately, and they like to believe that every time a customer opens their wallet, they are reminded of Books & Books.

Loyalty programmes that stay attuned and responsive to their members by giving them tangible rewards are those that will be left standing in an increasingly competitive environment, according to eBucks CEO, Jolande Duvenhage. Generally one of four mechanisms is used to reward members, with each reward type offering its own set of benefits:

If you haven’t found a way to “reward” your loyal customers yet, perhaps it is time to consider the value of loyalty, and how rewarding it can be for your business.

Customer Loyalty – How independents and chains operate frequent buyer and other discount clubs, by Judith Rosen, Oct 15, 2001,www.publishersweekly.com
Loyalty programmes must make ‘cents’, by Jolande Duvenhage, 28 Sep 2012, www.bizcommunity.com
Customer Loyalty Programs That Work, by Maggie Starvish, http://hbswk.hbs.edu/