Loyalty cards: you’re doing it wrong.

I wanted to quickly write up a little thought that cropped up during a conversation last night. Skirting around behavioural economics and nudging, and whether it is something governments should really be doing, I found myself frustrated that it isn’t even done very well by commercial outlets.

My main bug-bear with the way the government wants to do it is that it is ideologically-driven and a bit sad to focus on changing minds by manipulative persuasion, rather than compelling actions. That’s not what a government should be aiming for, it’s small-minded.

As part of behavioural economics on the high street and in supermarkets, the act of nudging is designed (ostensibly) to tip consumers in favour of the retailer. To eke out a little bit of spare change, encourage the take up of three-for-two offers or simply choose the item that offers the retailer a greater profit margin. Excuse the oversimplification, here is Ogilvy’s Rory Sutherland talking about it in a more plummy voice than I have.

Key nudge elements in-store are signs.

Value pineapples.

That’s not a great example, but you understand. It’s not too brazen (uncharacteristically for Tesco), but suggests a pineapple might be a good addition to your basket this week.

The other important nudge tool in supermarkets is a classic piece of direct marketing dressed up as helpful advice.

Delia's rhubarb brûlée.

Good. That’s better. It could be helpful, but it’s very scattergun, not personalised. I hold in my hand a list of ingredients that, if the mood strikes me, I may be susceptible to buying. That’s where it stops though.

Every week or so, I receive special offers from my supermarket, directing me to money off or highlighted products in their online store. I look, but I don’t shop online. Once I close that e-mail it is gone. Yet, they know what I buy. I write a shopping list and go to the supermarket. I buy the things on it (and the odd item that isn’t). I get to the checkout, I pay, swipe my loyalty card, gather points and leave. This is where I feel loyalty cards are so pathetically exploited.

Broadly, customers have no loyalty to stores, they simply collect loyalty cards for when they shop in those stores. You often see them, don’t you? The people. Flicking through their store cards for the Next, the Tesco, the Lidl, the John Lewis store card? You see them, looking for the right card, slightly flushed that their loyalty is under scrutiny at the checkout. You see them, the people, they do it, they find the card and pay. They’re not loyal, because the only reward is at the checkout and accidental.

The two places you interact with your loyalty card are at the end of your transaction and by e-mail marketing. If an organisation a) knows what you buy and b) knows what it wants to sell this week/month/quarter — where is the recommendation engine?

I want my loyalty card and buying behaviour to be exploited in my favour. If I’m going to be nudged, nudge me in a direction I might like. Put the loyalty interaction at the start of the “consumer journey” around the supermarket.

So. Physical recommendations, a scenario.

  • Enter store, swipe NFC/RFID loyalty card.
  • Receive print out of most recent one/two/three shopping purchases (your choice).
  • Similar, cheaper or on offer items identified on your shopping list with alternative recommendations. “Bought a grapefruit last time, why not try a pomelo? They’re on offer and taste great.”
  • Shopping list fulfilled, tastes broadened (possibly even healthier), pocket may be happier.
  • A warm sense that although you are a statistic on a spreadsheet within a massive corporation, you are cared for and thought about. You feel a bit more loyal.

It’s not that hard, surely?

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5 thoughts on “Loyalty cards: you’re doing it wrong.

  1. I’ve had a similarly themed thought in my head recently.

    Brands can’t expect monogamous loyalty any more, it’s not how consumers are programmed to behave after years of exposure to price comparison websites and a plethora of choice.
    They have to accept that they are competing to be the best choice for that moment and look at themselves as part of a range lumped together with their competitors.

    Like this Disloyalty card http://plixi.com/p/68033723
    Go to all these places, then come back here for your reward.

    The only brand I’m unerringly loyal to is Boots because the points gained can be spent as currency very simply; buy any product = get points/spend points = get any product. (and coz Supadrug is chavvy)

  2. I kind of touched on this in a post about Tesco Bank I wrote a while ago but I was more focused on the banking implications of all this data and the loyalty and how the interactions could affect those products. I think you are spot on about the need for your data to be used to benefit you more. What would you do if you had access to all that data so you could map out what you bought? What if it was tied to other data sources? ‘Greg watched Delia last night (WeWatch?) and he tweeted how much he liked the look of her Rhubarb & Ginger Brulee = Here is a recipe and here are the ingredients and here is where they are in the store you just checked into with your NFC loyatly card.

    • I think, personally, that this kind of information is only useful if you’re not too aware of it. If you have a list of your own behaviours (watched, liked, tweeted, considered etc.), you may not be inclined to follow through the natural checkout process that is suggested, logically.

      People don’t mind having suggestions made, but the line between that and feeling like they were programmed is a tricky hurdle.

      It would be good if that information was used to nod at you as you walked past rhubarb, but if you make the machinations of that recommendation visible, it feels more like marketing, than caring. This is why the government is a bit of a divvy, see that RSA link in the post.

      As I say, it’s a two-way street. Happy to be nudged in the direction of a product the shop wants to sell, as long as it is believably in-line with products I may buy.

  3. Nice post Greg,

    couple of things come to mind. The current use of the loyalty card seems to be a blunt instrument. It seems to consider the whole shopping experience as a atomic unit. I decide where to shop at the beginning, I get savings at the end. These two may may then be linked into a cycle of ‘loyalty’.

    You are quite correctly identifying that their is scope to break that atomic unit down and use the shopping experience itself to drive loyalty. I think you are right, and I think a couple of supermarkets are beginning to see that, witness:
    – the new Tesco iPhone app. Their TV advert suggests that task of compiling your shopping list can be fun and interesting and spontaneous.
    – the ASDA price comparison service that shows you exactly how much money you’ve saved and on what items in your last shop.

    But it does seems that the grocery retail market is still years behind the ideas that were dreamt up by Peapod in the 90’s. Surely they should be miles ahead of that by now – where is the Wesabe-like social app for groceries.
    ‘you bought these ingredients, so did these people, why not find out what they made with them’ – and add the extra ingredients to your shopping list of course.

    And then let’s not even get started on supporting inept shoppers like me. Where is my app that allows me to wander up and down the ailes gazing about aimlessly and simply alerting me when I pass something that is on my shopping list. Ah! I digress.

    • Absolutely. Supermarkets seem very geared towards “in-and-out”, and this affects the journey. This is the path around our store (veg, dairy, frozen, bread, household, booze) — do not deviate.

      Ultimately, the concept of ‘loyalty’ is the misnomer. It is brand preference, or supermarket preference. You will go out of your way to go there, but it doesn’t mean you won’t shop elsewhere. As you say, there are marketing tools that are edging closer to shopping utilities, such as iPhone apps, price comparison things. Those things are still mostly foreign behaviours to the majority of people (what mum negotiating Tesco with two children can freely check her iPhone for items? A paper shopping list affixes neatly to the trolley). There was a small period with big tech boxes for shopping lists (but didn’t really take off).

      The idea of on-the-fly recipe suggestion is great. That is a very human experience of the supermarket, to pick up two or three things and not know what the final ingredient to make a meal would be. Again, it becomes a utility that makes people cared for and builds greater preference.

      The NFC alerts for an ambling shopper is superb though. “Saul, you just passed the milk aisle, silly.”

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