Loyalty remains a strategic priority for retailers, but traditional approaches are no longer enough. That’s according to the findings of ‘How to Keep Hold of Your Customers’, a new global study released today by dunnhumby, the retail data science firm owned by Tesco.
Drawing on insights from senior retail leaders across Europe and North America, interviews with Ashwin Prasad (Tesco UK CEO), Bryan Roberts (IGD) and Marek Świderski (Synerise), as well as insights from thousands of grocery shoppers, the report points to an industry in flux. As shoppers demand relevance and recognition, retailers are rethinking the very foundations of loyalty, what it means today, and how their programmes must evolve to meet expectations in the years ahead.
Some of the study’s key findings include:
- Customer retention remains the top concern. For many retailers, price sensitivity and limited insight into ‘less loyal’ shoppers are seen as some of the biggest issues.
- Traditional approaches are losing effectiveness. Faced with the prospect of budget cuts, retailers would cut generic rebates and coupons, choosing to protect their personalisation efforts instead.
- Shoppers agree that loyalty needs to evolve. Basic discounts are no longer enough. Today’s shoppers are looking for exclusive offers and rewards that match their own needs and values. Relevance is non-negotiable.
- Effective loyalty programmes drive business performance. Retailers that excel enjoy a deeper emotional connection with customers, see stronger commercial performance, and tend to boast a higher CAGR than their competitors.
- Retailers are looking beyond grocery for inspiration. Beauty and lifestyle brands are commonly cited as innovation inspirations.
As well as exploring current approaches to loyalty, ‘How to Keep Hold of Your Customers’ also identifies three future focal points for retailers. From tackling the threat of loyalty programme homogenisation to developing the capabilities required for meaningful personalisation, the study contains advice for those looking to position themselves effectively for the next phase of loyalty and personalisation.
Ben Snowman, Global Head of Loyalty and Personalisation, dunnhumby, commented: “Loyalty isn’t broken, but it does need to change. Shoppers now expect more than ever in terms of relevance and personalisation, and that requires retailers to ask some difficult questions about their own approach. As technology makes it easier for retailers to deliver true 1:1 personalisation, they’ll need to work smarter than ever to stand out.”
The report includes perspectives on loyalty and personalisation from a range of industry names, including Ashwin Prasad, UK CEO of Tesco, who says: “Loyalty is about all the little things, every single day, every interaction and showing customers that we’re listening, we care, and we’re reliable. At Tesco, we bring loyalty back to what really matters: serving customers better. Loyalty and personalisation aren’t abstract – they’re about earning respect by being useful, relevant, and fair.”
NAM Implications:
- More ‘relevance and personalisation’ but without intrusion?
- i.e. ‘Don’t invade my privacy unless you demonstrably use the resulting insight to meet my specific needs’
- A delicate balancing act in retail…
- It’s all really about gaining repeat sales from satisfied customers.
- Delivering ‘More than it says on the tin’ every time…
- (and ideally stimulating positive ‘Tell a Friend’ reactions, every time…)
