The perils of loyalty schemes

If I had £1 for every time a client had said to me ‘We’re thinking about launching a loyalty scheme …’ I would be a rich woman. Companies get very excited by the potential sales increase if they could only get customers to buy once more per year, or feel they need to reward and hence retain their heaviest buyers since they represent a big proportion of revenue.

But I have many reservations about loyalty schemes, the marketing archives are littered with examples of programmes that launched then disappeared, and there is very little published evidence that they are financially effective. Yet here we go again … this time with a scheme from a brand I buy regularly, Yeo Valley.

range shot

I eat plain yogurt with fruit for breakfast most days and recently started buying Yeo Valley plain yogurt (or ‘yeogurt’ as they insist on calling it) every week because I discovered it was delicious when my usual brand was out of stock. I was happy to make the move because Yeo Valley seems like a well-managed British brand with a strong sense of identity and good products.

Eventually I noticed that there was some kind of promotional programme involving collecting ‘Yeokens’ (which you have to admit is quite a good name) via a code under the pack lid.

IMG_9726

So (partly in the interests of professional research but also because I thought a good brand like this might offer something half-decent) I saved 5 lids and just went onto the website to see what you get.

website

I reckon what most people are thinking, if they’ve bothered to get this far, is: ‘what do you actually get, is it worth bothering with this?’. So what’s the answer here?

goodies

Well you can apparently get ‘Yeo Valley goodies, offers from our friends and great days out’ … but the detail of this (and how much you have to save to get anything) is not available unless you sign up to an account!  What on earth can the rationale for that be? It’s just asking for people to drop out.

So I created an account – not too onerous a process, but the fact that they say ‘we’ve made the form simpler’ implies it was worse in the past.

log in

(And what is the logic for including that apologetic message? Account users don’t see this page, they are logged straight in if they are returning on the same device, so anyone who has found the process tedious in the past won’t see the apology.)

So I set up an account and then entered my five codes – each 14 letters long, is that really necessary? Another ‘pain point’ at which people might drop out. Then I discovered that despite having bothered to save as much as 5 packs, the only thing I’m close to earning is a crappy trolley token keyring thing.

rewards

And the next item up from that requires me to save another 100 tokens – so I’d have to keep saving for another 10 weeks unless I buy a larger pack or other Yeo Valley products. Which frankly I’m not going to if the incentive is a branded yoyo (sorry ‘yeoyeo’) which looks like it would cost 50p to buy.

Surely they should be offering a better range of lower point items to keep people engaged early on? I imagine that the vast majority of Yeo Valley users don’t buy enough to qualify for any item in the foreseeable future, which limits the relevance of the scheme to a real minority of brand fans who must really like the products already and don’t need incentivising to buy again.

And worse, this is a risk that even brand enthusiasts might get annoyed by a poor scheme and become less inclined to buy. I must admit to feeling rather irritated by Yeo Valley now and as soon as you Google ‘Yeokens’ you see things like this:

fb2YV facebook

These seem to be referring to an earlier incarnation of the scheme but demonstrate the risk of disappointing your customers in any way.

As Byron Sharp (‘How Brands Grow’) and others have demonstrated with lots of examples, brands get big because of penetration not frequency or loyalty. There is not that much variation in frequency or loyalty within a category, because there are only so many times a week anyone is going to eat yogurt, and most of any brand’s buyers buy very infrequently. Hence any loyalty scheme or similar promotion is only likely to be cost-effective if it is able to influence lighter/lapsed/non buyers and is really cheap/easy to run. This scheme doesn’t look to be either of those things.

The only loyalty schemes which seem to ‘work’ are the ones for brands that people use very regularly (e.g. supermarkets, Boots) since you can build up points quickly … but even those schemes have understood the need to provide good rewards quickly. And part of the great value of those schemes to the brand owner is the purchase data at customer level acquired, which can then be used for personalised targeting of offers or sold on to other organisations. But to do personalised CRM is pretty sophisticated and expensive stuff and only very big, savvy companies can make it pay.

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One Response to “The perils of loyalty schemes”

  1. Rob Barker Says:

    Love it. Typical example of someone not thinking from a consumer or shopper perspective

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