2024 will bring uncertainty – investing in loyalty will be key to growth

We are heading into the Year of Loyalty, where businesses that invest in their employees and customers will give themselves a platform for success.

Predicting what 2024 will bring is challenging – with the prospect of a General Election and the constantly shifting sands of economic policy have created a much more uncertain future.

Last year, we knew everyone was in for a rough ride and so it proved, with businesses and employees wrestling with rising costs and interest rates. But while 2024 may not be as clearly-defined, what is certain is that loyalty will be the most influential driver.

The experience of the last 12 months – and in some ways the last three years – has created in consumers and workers a greater sense of their own value – to themselves, the places they work and the businesses and services they use.

The businesses that succeed in 2024 will be the ones that recognise how to build and maintain loyalty in a more meaningful way.

Out with the old – sales and loyalty are changing

From a consumer standpoint, traditional loyalty programmes no longer have the influence they once did. Already we have seen the biggest supermarkets adjust their loyalty programmes so that rather than focusing on accumulating points, members get instant discounts at the checkout instead.

Price remains a strong influence, but that is falling. According to data from customer experience managers Qualtrics, 61% of consumers base their loyalty to a brand on the quality of the service or product and 47% on the customer service support. Only 43% base it on low prices. So the impact of sales – with the possible exception of Black Friday – is diminishing in customers’ eyes.

These significant shifts in consumer behaviour will filter through to all businesses in 2024. Consumers post-Covid have an increasing need to feel looked out for and protected from the unexpected.

Businesses that can offer wraparound care with tangible benefits – service packages for major expenses for example – will see real growth in 2024. But those packages need to offer real value at the right price. Never have consumers been more aware of what they are actually getting when they sign up for value-added services.

Make it too complex, too expensive or pay lip-service to the problem you’re claiming to protect them against and it could be very damaging to your business.

Retention is still king for employers

We’ve seen a lot of recent articles preaching retention for 2024 and we agree, retention is vital. We actually had this as a key point for 2023 and the message has not changed.

Recruitment remains challenging for business, with significant numbers of unfilled vacancies across the economy.

Latest figures from the Office of National Statistics show almost a million unfilled vacancies in the UK right now. So it’s obvious that retaining employees is vital to growth.

Love2shop’s own Employee Value Report, published in September, told us that despite this need to retain staff, 4.4 million UK workers are considering leaving their job as they feel undervalued, with 1.5 million ready to leave without a new role to go to.

When asked why, 41% said they felt their contribution to the business was not acknowledged, 32% cited poor pay and benefits and 29% believed that loyalty is a one-way street and they did not matter to their employer.

That indicates serious disillusionment with employers – and that could become a crisis in 2024.

What’s frustrating is that the UK workforce is not asking employers for a lot. We also found that 90% would feel more valued by receiving a spontaneous gift card at work but 47% said their employer never gifts them anything.

Small regular shows of appreciation beyond the pay packet in 2024 are the key to employee retention. Employee discount schemes can be one solution, but many are complex and not valued by employees.

Consider offering employees discounts they can apply instantly. Everyday Benefits from Love2shop for example is a card employees pre-load funds onto at a 7.5% discount. So for example, if they load £100 on, they only pay £92.50. They then have £100 on the card to spend at more than 140 partner retailers.

Businesses that get it right will be in a strong position when the economy begins to truly grow again.

AI will find its place

This year AI has been the buzzword in business and that is unlikely to stop. However, we believe it will settle down and find its place in the ecosystem in 2024.

The rapid explosion of artificial intelligence in 2023 made it seem a bit like the Wild West, with even Google struggling to keep up!

But 2024 will see more businesses employ AI strategically. Used as a support tool to improve customer experience alongside human interaction it can help businesses manage more enquiries and ease some of the teething troubles growing businesses sometimes have with fulfilment.

According to global research firm Forrester, AI will be used more surgically, particularly by digital businesses, to support customer service delivery, however it also predicts that 40% of buyers aged 25-44 will rate person-to-person interactions as their most meaningful – so if customer loyalty is your goal, invest in people.

Spreading API-ness

APIs are nothing new, but we will see them deployed more by businesses to enhance their user experience.

Businesses working with partners to deliver key employee benefits or customer rewards will move away from engineering their own in-house solutions and instead will expect suppliers to provide seamless APIs that help them to deliver global-quality brand engagement and user experience within their budget.

Critically, the most important investments businesses will make in 2024 will be around experience – the workplace experience, the customer experience, the online experience.

Integrating Love2shop into your reward and recognition systems is a great way to enhance those experiences – opening up a mammoth catalogue of brands for recipients to spend with.

You can find details of how our API integration offers safe, secure real-time integration here: https://business.love2shop.co.uk/api-for-gift-cards.

Whatever happens 2024 will be a year of significant change for business. Attitudes and behaviours may be shifting but by using new insights to focus on what’s really important businesses will thrive.

The primary focus, as ever is on quality of products and services. But invest in your workforce and your customers. Create an eco-system around your brand that people want to engage with and be a part of.

That will make your business resilient, agile and ensure you’re ready to grow whatever surprises 2024 has in store.

Love2shop helps make customer loyalty incentives sustainable with digital and biodegradable options 

Environmental impact and sustainability have never been more important to business – and the UK’s leader in gifting and rewards Love2shop continues to strive to make customer loyalty even more eco-friendly.

Gifting – primarily through gift vouchers or cards – has long been an effective way to incentivise and reward customer loyalty. To mark Global Recycling Day, we’re looking at how Love2shop can make rewards more environmentally friendly.

Love2shop already offered a no-waste option through its contactless e-Gift Cards. But many businesses still want physical products to send to customers while reducing plastic use and contributing to pollution through distribution. The solution was a ‘board card’ made from 100% virgin fibres. It is biodegradable and can be recycled up to eight times, but works exactly the same as a traditional plastic gift card.

“Our biggest challenge was sourcing a fully biodegradable product that didn’t compromise on the ease of use, nor the quality of finish without also placing a financial burden upon the customer,” said Frank Creighton, Director of Business Development at Love2shop Business.

“The sorts of materials that all companies deploy in gifting, engagement and incentive programmes will inevitably change over time so we wanted to be ahead of the curve.”

Love2shop worked with suppliers to create a recyclable board card that met those goals while offering the same simple yet effective incentives that businesses needed.

The product was initially tested in partnership with SunLife, the UK’s most popular provider of life insurance plans for the over-50s. With over 800,000 customers, SunLife has distributed a high volume of Love2shop Gift Cards to customers as a ‘thank you’ since becoming a partner in 2018. It was keen to find a more sustainable solution.

Jon Moore, Head of Operations, SunLife said: “As we continue to integrate new measures to develop SunLife’s approach to sustainability, our decision to use biodegradable gift cards is another positive step in introducing environmentally friendly materials into our business.”

The change has received positive feedback from customers and SunLife has now fully integrated the compostable cards into their welcome gift offering to customers.

Love2shop are the UK’s leading reward, incentive and engagement experts for business. They provide a variety of Love2shop gift cards, as well as reward platform technology to thank, retain and motivate employees and customers.

“We were delighted when we were approached by SunLife to help develop their work on sustainability,” said Frank. “We’ve enjoyed providing Love2shop customer reward gifting products to SunLife since 2018 – an ‘all-rounder’ gift that appeals to everyone – so this was a great opportunity to develop that relationship.

“The success of this product with SunLife reflects the broader business appetite for developing knowledge and expertise in the gifting sector to accommodate greater sustainability. Helping SunLife to create a more environmentally-friendly future has been an incredible achievement.

The biodegradable Love2shop Gift Cards are supplied by Swedish paper and board manufacturer Oppboga, with a metallic foil element supplied by British foil specialists Foilco.

Foilco’s metal coating technology allows for the card to carry metallic motifs and designs without affecting biodegradability or the recycling process of the Oppboga card.

The board card Love2shop Gift Cards can be recycled without separating the foil component, and will biodegrade in 12 months after use. Find out more about Love2shop at businessl2s.wpengine.com.

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Ultimate Guide to Customer Loyalty offers free insights to help businesses survive cost of living crisis

Businesses of all sizes need to prioritise investment in their existing customers if they want to survive the cost of living crisis. Love2shop’ Free Ultimate Guide to Customer Loyalty is filled with advice from the world’s leading experts on customer behaviour to help you create a successful customer retention strategy.

The Ultimate Guide to Customer Loyalty 2023 brings together insight from Love2shop, McKinsey, Mastercard and more to update you on the state of customer loyalty in 2023.

The value of loyalty

The cost of living crisis means businesses are looking more closely at how to improve customer value. Traditionally that means prospecting for new customers, but the latest research highlights how loyalty and retention make a more significant impact on revenue.

Far from just being a measure to protect earnings, our guide advises that investing in customers can bring a huge business boost. Research shows that retaining just 5% of a customer base can increase profits by up to 95%.

With the cost of acquiring a new customer five times higher than the cost of retaining existing ones, making customer loyalty cost-effective creates a real opportunity for businesses.

Download the guide now to discover how to build a strategy for customer loyalty, the true value of loyal customers and brand advocates and how to make data work to strengthen those relationships.

With rising energy and food bills causing shoppers to reduce spending and businesses reviewing budgets amid a cost of living crisis, everyone’s pockets are being squeezed to their limits. If your customers are not happy, they will be quicker than ever to explore other avenues.

Helping you get started

Our guide includes lots of research and insight to help businesses get started or improve their customer loyalty strategy.

This includes considering customer engagement technologies, such as flexible modular solutions like the Love2shop Engagement Platform. This allows your business to create campaigns driven by customer data and automate the core engagement functions you need. Being modular makes it a cost-effective way to implement a leading engagement tech solution while retaining the capacity for growth.

Share our customer expertise

“At Love2shop, we understand that customer loyalty is the cornerstone of any successful business, but it’s an evolving challenge,” said Frank Creighton, Director of Business Development for Love2shop.

“In today’s fast-paced world, it’s more important than ever to not only retain customers, but to turn them into brand advocates.

“That’s why we’re delighted to offer our Ultimate Guide to Customer Loyalty as a free download. It aims to empower businesses with the knowledge they need to understand the true value of loyal customers, how to build lasting relationships, and how to harness data to drive customer engagement.

“It’s been proven customers may increase their spending by between 15% and 25% with businesses that have earned their loyalty.

“This guide is a testament to our commitment to innovation and our belief that by empowering business leaders with the latest insights, we can help them achieve long-term success.”

The full, comprehensive Ultimate Guide to Customer Loyalty 2023 can be downloaded by following this link.

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Introduction to Customer Loyalty in 2023

Consumer behaviour is changing more rapidly than ever. As we head into a challenging 2023, how can your business keep up?

As experts in customer behaviour, Love2shop have created a useful introduction to customer loyalty in 2023. Here, we’ll explain the basics: from the value of loyalty to your business to converting customers into brand advocates.

Invest in loyalty before attracting new customers

This year more than ever, making every pound work for your business will be crucial to your success. Instinctively, when businesses encounter trading headwinds like recession, they do two things – look at where savings can be made and explore how to attract new customers.

But improving customer loyalty can have a much more profound impact. The standard rule of thumb is that it costs around five times more to attract a new customer than retain an existing one, but research from Bain & Company and Harvard Business School reports that increasing customer retention rates by just 5% can boost margins by between 25% and 95%.

This is supported by best-selling marketing guide, Marketing Metrics, which states the probability of selling to an existing customer is up to 14 times higher than selling to a new customer.

So, investing in customer loyalty makes total business sense, allowing you to minimise your outgoings and increase your profits.

Being the cheapest doesn’t always secure customers

In a world where consumer is king and choice abounds, how can you build and inspire loyalty without creating a race to the bottom on price?

Understanding customers is crucial. Price is always a consideration but in 2023, customers expect more – get it right and you can make that work in your favour.

This year, we will continue to see the younger generation focus their attention on brands and businesses that share their ethical and moral positions. This is no longer about paying lip service to environmental or social causes by updating your social media logo, but having robust sustainability or diversity and inclusion policies – and offering meaningful support to charities and causes that matter to those customers.

And what matters to customers? Authenticity. If they’re confident you’ve taken action because you truly believe in it, that will positively influence their brand loyalty and advocacy.

Prices do still matter

While today’s consumers do weigh-up other factors, price is still important. Particularly in 2023 when customers will have less spare cash to spend.

This is where meaningful engagement can really work for your business by increasing customer loyalty.

Love2shop has recently worked with a large national builders’ merchant to create a successful loyalty programme applicable to their customer base covering sole traders up to mid-sized builders employing 100+ people.

The goal was to create a simple reward programme that customers would use to encourage greater loyalty and sustain purchasing by offering realistic benefits they would want.

Using the Love2shop Engagement Platform, our expert team was able to create a programme that rewarded customers with points for each purchase and allowed the business to serve up seasonal offers on products they wanted to drive.

The implementation of the reward programme resulted in a 91% reactivation of ‘dormant’ customers, (those with accounts who had not spent for a long time), and a 46% increase year-on-year in registered customer spending. Can you imagine the impact these increases could have on your own business?

Customer expectations are on the rise

Buyer journeys have always been important – but greater awareness of this among consumers has given them an even greater understanding of their value – something consumers will really begin to leverage this year.

Luke Ladyman, co-founder and chief operating officer at cashback website Cheddar, told Forbes that customer ‘savviness’ has reached unprecedented levels.

“Gen Z consumers are going through a very tough time, with many having not experienced a situation like this before,” he said. “This has spawned a much savvier consumer, one that is ultra-connected, engaged and pragmatic with their money.”

He added that customers in 2023 will be more alert to whether offers and incentives represent good value and those businesses that do will see a rise in customer loyalty and recruitment.

Now is the perfect time to review your customer rewards – are the discounts or rewards you issue to customers being redeemed? If not, consider a survey to find out why. Strong data will always make your campaigns better.

It may be that the discounts are not deep enough or the rewards take too long to accrue to a meaningful level. Perhaps what they get for them is not appealing?

Rewards that are simple to use and can be redeem across a range of retailers and items – such as Love2shop multi-retailer gift cards  – are the most effective way to recognise customer loyalty.

Offering rewards that are flexible and can be used to purchase what your customers really want have a stronger influence on loyalty than, for example, ladder-based reward systems where certain amounts of points trigger free gifts or third-party discounts.

Insight can help you personalise your customer reward offer. Alternatively, with the right customer loyalty strategy, or engagement platform, you can harness purchasing data to streamline the process and create even more effective engagement strategies.

Service, service, service

Anything you do to increase customer loyalty needs to be simple and intuitive. It also needs to work.

Poor service, whether online, via a customer profile or at the point of delivery, will derail loyalty fast.

Ecommerce giants such as Amazon and QVC have raised the bar on ‘fulfilment’ – delivering the product quickly and on the day it was promised. And excellence in customer service is a given.

If dealing with your business is a pleasurable experience, customers will return. And they will become brand advocates, posting reviews on your company website or sites like TrustPilot. These reviews are key to driving new customers through the door.

A simple affordable solution

So how do you build smooth, effective customer engagement into your processes if you’re a small or medium-sized business with ambitions to grow? Or a large multi-national with complex CRM systems to navigate?

The answer is modular. Love2shop’ two decades of experience in customer engagement has allowed it to create an engagement platform that only gives you what you need.

The core module is ideal for businesses starting out and looking for an affordable, off-the-shelf platform they can quickly integrate into their business. But for those looking for more advanced or bespoke functions, Love2shop Engagement Platform offers those as add-ons – so you only pay for the services your business needs.

In addition, you have access to a dedicated account management team which works with you to understand every aspect of your business, provides extra insights and solutions you might not have seen yourself and ensures  your platform delivers real results and return on investment.

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Customer Loyalty Programmes: The Ultimate Loyalty Guide in 2022

Customer loyalty is more than just customers staying, and 2022 is a chance to build long-lasting customer engagement.

In 2021, we used to this blog to highlight why, despite the economic challenges of 2020 and 2021, customer loyalty actually wasn’t in trouble.

This year is even more interesting. According to experts from the utilities and insurance industry, as well as our own research into the broadband sector, it looks like customers simply do not want to switch. You can read more about that research and how to fight a sluggish acquisition market here, but today we’re here to talk loyalty.

While customers are less likely to switch suppliers this year, it’s not a time for loyalty specialists to relax. It’s a time to invest in building long-term, lasting customer relationships that secure revenue well into the future when the acquisition market picks up again.

A common and effective method for delivering that customer engagement is through a customer loyalty programme.

In this guide to customer loyalty programmes, we’ll explain their purpose, their impact, how to build a successful loyalty programme, and we’ll delve deeper into how else you can use the right rewards and software to build customer engagement and loyalty

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1. What impact do customer loyalty programmes have on retention and sales?

Studies by Bain & Company, along with Earl Sasser of the Harvard Business School, have shown that even a 5% increase in customer retention can lead to an increase in profits of between 25% and 95%.

As dramatic as that stat sounds, there’s more evidence that customer loyalty programmes impact on bottom lines.

Seven stats that show the impact of customer loyalty programmes:

  1. Loyalty leaders grow revenues roughly 2.5x as fast as other companies in their industries.
  2. 39% of loyal customers will spend more on a product, even if there are other less-expensive options available.
  3. 79% of consumers say loyalty programmes make them more likely to continue doing business with brands.
  4. 73% of consumers are more likely to recommend brands with good loyalty programmes.
  5. Adding a loyalty programme to an e-commerce platform can increase average order quantity by 319%.
  6. 15% of consumers are more likely to buy from a brand if they are part of a loyalty programme.
  7. Loyalty programme members spend 27% more when the brand establishes a positive emotional connection.

What’s wrong with loyalty programmes today?

61% of retailers cite customer retention as their biggest challenge (Retail Systems Research). In fact, it’s been estimated that companies could increase their profits by nearly 50% by retaining a mere 5% more of their customers.

So what’s the problem? Well, according to research from Edgell Knowledge Network:

  • 81% of loyalty members don’t know the benefits of their programs or how they can receive their rewards.
  • 32% of consumers see little or no value in being a member of their current loyalty scheme.
  • Only 40% are happy with the rewards that are on offer.

The stats show a disconnect between the potential and the reality.

Advocates are the customer retention end game

What you’re ultimately trying to create through your customer loyalty programmes is advocates. By advocates, we mean people who will speak on behalf of your brand.

The marketplace for any product is loud, crowded and full of other brands desperate for attention. It’s a huge help when your customers are enthusiastic enough to promote your brand to their peers or colleagues.

This is why it’s so important to invest in developing customers. They go from strangers, to customers, to repeat customers, to true believers. Once they’re emotionally and personally invested in your brand, they’ll promote you to their peers.

For loyalty programmes, this is now the benchmark. It’s what your competitors will be aspiring to achieve. Not embracing better customer retention schemes will eventually put you at a disadvantage.

2. What are the different types of customer loyalty programme?

If we’re speaking in general terms, there are roughly seven different types of loyalty programme:

1. Points

A simple transaction-based loyalty programme where points are assigned to purchases. Those points are exchanged for rewards by the consumer. They’re not the most innovative or exciting, but they are easy to introduce and build around.

They’re also the de facto basis for loyalty in many industries, such as the trade supply business.

2. Cash-back

Not dissimilar to the points-mean-prizes schemes we just mentioned, but instead of swapping their points for rewards, the customer earns a form of store credit.

3. Stamp cards

Everyone with a favourite coffee shop or sandwich house is familiar with the stamp card, or punch-card. The customer carries a card in their wallet, and presents the card when making a purchase. After enough purchases, the customer earns a free item.

4. Tiered

Tiered loyalty is where features, prizes, or access are only available to users with a certain level of spend. These programmes revolve around exclusivity, and are often deployed by brands with loyal audiences.

The users are signed up with free items, and eventually convert to paid customers as they move through the tiers. A similar concept is common across content production networks such as Patreon.

5. Coalition

A coalition scheme involves your business, and a partner business, signing up to run a joint scheme. It creates a closed loop for loyalty rewards, letting businesses enjoy collective success. The downside is that customers may redeem points earned at competing businesses.

6. Fee-based (premium)

Premium, fee-based loyalty programmes are about creating exclusivity, and delivering instant gratification for the customers willing to pay for it. It’s not for everyone – it’s a reward for the most engaged and enthusiastic customers.

7. Hybrid

One size rarely fits all, and you shouldn’t hesitate to mix and match elements from different types of schemes and combine them. In the end, what’s right for your customer base should drive the kind of loyalty programme you implement.

A more in-depth explanation of these different programme types is available here.

3. How to create a successful customer loyalty programme

It’s not possible to give you a step-by-step breakdown of how to build and implement a loyalty programme. Sight-unseen, we don’t know all the factors involved.

That includes your legacy programmes, the software you currently have in place, and what your programme objectives are. However, what we can do is offer you some best-practice concepts that apply to every modern loyalty programme.

Harness flexible technology

Having data is great, but the other half of the quiz is the ability to act on it.

Luckily, we have the luxury of working in an era where 3rd party platform and software providers have made it comparatively easy to be reactive and flexible.

Compared to when everything had to be developed in-house, that is. When assembling your loyalty programme and putting software and platforms in place, look for flexible and modular platforms that lend you flexibility in the future.

Make data your friend and ally

Data has changed how every business works, and loyalty programmes are no exception. Analysis plays a vital role in which customers you will choose to target most aggressively, how best to reach and engage them, and how to refine your loyalty programme in the future.

At every step, your decision-making process should be informed by inductive, but smart, analysis of the data at your disposal.

Keep up the communication

Constant communication is vital to maintaining engagement in customer loyalty schemes.

You don’t want to stray into the territory of being annoying and prompting unsubscribes or even customers leaving the system, so start as sparing as possible and use the data available to gauge the right balance.

Depending on the makeup of your audience you may try email, SMS, direct mailers, and possibly social media.

Refine the customer offering

In line with the emphasis on data and flexibility, be sure to adapt your offering to the customer. Respond to changes in your marketplace, changes in customer behaviour, or anything else that might affect how customers interact with your loyalty programme.

4. How to retain a customer for life

When we go to events, webinars or seminars about loyalty, a common refrain we hear is “loyalty is about more than points and prizes”. And they’re right.

Loyalty programmes are useful, they’re effective, and they will bring serious benefits to your company but you still have to nail the fundamentals.

There’s no loyalty scheme so good it can rescue a company that otherwise doesn’t get loyalty right. Here’s seven things you can do to make sure your customers stay in the fold.

1. Meet expectations, even small ones

Even small things add up when it comes to expectation – things that might not even necessarily be your core skills. Even something as small as a confirmation email not being sent after an order, or an inquiry call not being returned in good time, can be enough to cause a customer to think twice the next time they need your services.

2. Friction and frustration need to go

Patience is a virtue, but it’s not work putting your customers’ to the test. Companies like Amazon have set a near-impossible bar to meet for immediacy and convenience for the public.

It leaves other businesses with a significant challenge to meet with customer expectations about what’s reasonable and possible. We can’t all be Amazon, but we can give ourselves the best chance in a world of increasing demands. Depending on your business, that might include:

  1. Having a selection of payment options available
  2. Streamlining a support portal to minimise time spent looking for answers
  3. Improving search functions to find products or information more easily
  4. Investing in staff education and training to empower customer service
  5. Getting rid of hidden fees to avoid transaction abandons
  6. Clear stock levels on your website to avoid disappointment

When customers do get frustrated, they want to get in touch and talk about it. Which brings us to our next item.

3. Caring for customers is caring about loyalty

When your customers have problems and frustrations, then expect to be able to get in touch and get your help. Not only does that help need to be forthcoming, it has to tick the right boxes. Loyal customers are looking for customer service that demonstrates:

  • Competence
  • Knowledge
  • Coherence
  • Helpfulness
  • Empathy
  • Timeliness

Customers will forgive occasional frustrations if they’re met with the right customer service, but they will move on if they get the impression of indifference of incompetence.

4. Communication builds connection

While balancing it against the saturation concerns we discussed earlier, communication outside of your sales cycle builds connections to your company. Being proactive and positive about sharing updates, changes, or anything else that could affect your customer builds your credibility.

It also shows an investment in your customers beyond when they’re ready to make a purchase.

5. Fit into lifestyles and values

Consumers increasingly make values-driven decisions about which brands they buy from. In the long term, your brand will have to fit in with the needs and wants of customers whose buying behaviours will be driven by not just price, but by ethical and moral concerns.

No one is asking your to save the world all by yourself, but acting to minimise harm in the areas of the world your business affects.

6. Open up the two-way street

As we said earlier, customers want the chance to have their say. Make sure there are avenues available where they can offer their feedback or opinions. Crucially, also, make sure that you hear their feedback and act on it where possible. Then, as we said above, tell your customers about what you did.

7. Take control of your reputation

Your reputation on review sites like Trustpilot has become as important as word-of-mouth in today’s world. Taking control of that reputation, and having a proactive presence on those review destinations, is vital. We wrote more here on how you can do that.

5. Bring back customers that stray

Sometimes customers do leave, but when it’s not down to a catastrophic failure, you can always work to win them back.

Leave the door open

Understanding that a customer has made their choice, and allowing it to happen on the best terms possible makes it easier for them to come back.

While it’s always worth intercepting a leaving customer to see if you can solve their problem before they formally go, when the choice is made, diplomacy is the right way to go.

Look inside

If customers leaving is becoming a habit, then it’s time to act. Look at who they are, which products they’re using, and start proactively talking to that cohort.

Find out what’s happening in their market, or what competitors are doing differently, to arrest the trend before it becomes a crisis.

Tell them you fixed the problem

When customers are leaving, be sure to ask why. If the problem is inside your control, and affecting a sufficient number of people, it has to be fixed. Get back in touch with affected customers once the issue is resolved to let them know.

It gets rid of their initial objection, shows them you’re proactive about your products, and that your customer service is engaged.

Pick your targets carefully

Not every customer will come back, and not every customer is worth your pursuit. Use the information and data at your disposal to identify the most likely customers to return, and build your re-acquisition plans around that data.

6. Innovative customer loyalty programme examples

Some of the best loyalty schemes from around the UK, and what they’ve done that makes their audience so engaged.

O2 Priority

A cash-back and tiered system that amplifies user lifestyles

Video source: YouTube

O2 have been running their loyalty programme Priority, for more than ten years now. It runs as a counterpart to their O2 Rewards loyalty scheme, which focuses on giving consumers rewards in the form of airtime credit. Priority, meanwhile, focuses on exclusivity and lifestyle enhancement.

Members of the loyalty programme enjoy access to ticket sales, prize draws, educational experiences, vouchers for restaurants and cafes, and more. All of this is accessed through O2’s app, which lets users quickly and easily browse the prizes available to them.

Crucially, many of O2’s rewards are not linked to spend. They’re “always-on” rewards, available to the consumer at any time through O2’s app. These features have made O2 Priority a successful and rapidly-growing loyalty programme.

To compete with the success of O2 Priority, Vodafone have recently rolled out an AI-powered daily rewards service, VeryMe, to deliver personalised discounts and treats to their members.

What makes it work: Understanding their customers’ lifestyles, and enhancing those lifestyles through exclusives.

Tesco Clubcard

A successful evolution of the punch card into a points-driven reward and cash-back loyalty programme

Video source: YouTube

The Clubcard started 26 years ago, and one was among the first major supermarkets to use a magnetic-strip card instead of stamps. While the use of debit cards and credit cards was only starting to catch on at the time, it had a major advantage – simplicity.

Once the users have their card, they only need to scan it (or have it scanned) when making a purchase to accrue loyalty points. The points add up, and are cashed in for what Tesco call “vouchers”.  That might be store credit for Tesco, or something from their reward catalogue of VIP experiences, special gifts, and even holidays.

Clubcard sits nicely alongside any Tesco shopper’s lifestyle, works as a reward tool or a budget-stretcher tool for customers, and is almost totally unobtrusive to use.

The major benefit to Tesco, beyond customer loyalty, is greater input of data from their audience. While as a retailer Tesco will keep meticulous records of purchases, Clubcard customers’ purchases are tied to the demographic-related information.

That information gives Tesco much more useful data on who shops at Tesco, what they buy, how often, and when. All invaluable information for better serving the needs of their customers and, ultimately, keeping them loyal.

On the quality and scale of data they received after launching the card back in 1994, then Chairman of Tesco Lord McLaurin said, “You know more about my customers after three months than I know after 30 years.”

What makes it work: A simple, unobtrusive loyalty mechanic that delivers massive data benefits to Tesco


A points-driven system with premium flair

Video source: YouTube

As we said earlier, almost everyone who regularly visits a coffee shop has seen a punch card loyalty programme. Starbucks takes the punch-card concept, and adds a tiered loyalty system to a familiar process.

As a reward for using the app, or Starbucks card, customers are given “stars”. After saving up enough stars, the customer gets a free beverage. So far, so simple.

There is, however, a tiered element to the system. The lower tier, the “Green” level, is for customers who have made at least one transaction with Starbucks with their app or card. At fifteen stars, a Green member earns a free drink.

However, once a user passes 50 stars in a calendar year, they ascend to “Gold” level. At Gold, customers enjoy more than just free drinks. They earn free syrups, free whipped cream, free dairy-free milks, extra espresso shots, and more.

Starbucks’ customer loyalty programme has been a great success, offering a little exclusive treat to thousands of regular customers while feeding Starbucks plenty of data about their customers’ coffee drinking habits.

What makes it work: A simple app, using familiar mechanics, that makes VIP-tier loyalty accessible to everyone

If you take nothing else away, take this

Communication – Customer loyalty programmes, and customer loyalty in general, depend on great communication.

Flexibility – Consumer habits, markets, and technology change rapidly, making flexibility important for any customer loyalty programme.

Data – Not only is data vital to planning and deploying a customer loyalty programme, it’s a vital product of a successful loyalty programme.

Lifestyle – Fitting into your customers’ lifestyle is mandatory to bring users in and keep them engaged with a customer loyalty programme.

Over to you

Customer loyalty programmes are a vital tool to help you improve retention. That’s why we have a system that specialises in just that. That said, your customers need something to attach themselves to, something to be invested in.

Your business needs to turn itself into a company where customer loyalty is earned by your everyday behaviour, and secured with great rewards.

Could screwing up, and making it right, be the best thing you do for customer loyalty?

It sounds like a joke, right? Why would anyone be more loyal to a company that messes up, even if they make it right later on?

Many people out in the world would agree – once trust has been damaged once, you’ve made a permanent and indelible mark on your reputation with a client, shifting the balance of your relationship for a long time.

Well, that might not be so. In fact, many have claimed for years that recovering after a fumble may improve your relationship with clients. It’s a theory called the service recovery paradox.

There’s always been a bit of debate about just how much of the phenomenon is fable and how much is fact, but a recent meta-analysis in the Journal of Service, taking in data on the subject from a wide range of sources, gave us some interesting results.

The paradox explained

Sometimes, your service fails beneath where customers think your service level should be. This could be down to a variety of factors, some of them inside and outside of your control.

First, the company has to fix the problem, restoring service to at least to the level before the failure occurred.

Once the service dissatisfaction is gone, the company can build trust, and build the perceived value of the company according to customers. For some clients, this will make them see your company as more valuable to them than they did before they experienced a dip in service, and be more loyal to your company. In turn, increasing their value to you as repeat customers.

That’s the claim made by the service recovery paradox.

Reality bites

The findings of the study we cited above and others, unfortunately, found that while they could find evidence of the paradox working, it’s not something you should bank on.

Both the meta-analysis, an inductive analysis of all available information to the researchers, along with previous studies, paint a tenuous picture for the customer recovery paradox, with too many contingencies and moving parts to be considered reliable.

A previous study from Mangini found that the customer service paradox relied on:

  • Customers having not experienced previous service failure.
  • That the service failure was not thought of as severe by the customer, and;
  • That the failure was largely out of the company’s control.

Even when these criteria were met, and this effect is produced, the meta-analysis found that the paradox did increase satisfaction somewhat, but didn’t impact buying intentions, word of mouth behaviour, or the brand image.

However – you still have to recover that service. Like many of the things we talk about on this blog, there’s no silver bullet out there, or in this case a convenient paradox to make it easy. But keeping customers in the fold is more important than ever, and paradox or not it’s important to get a grip on it.

Service failure and recovery is a bit of a big subject to get into here, but there’s three big things you can start thinking about this week now to make it easier.

Making amends

Words and demeanour

Too often, companies scramble to offer effusive apologise and prostrate themselves on the good will of their customers. They believe that one mistake, even if they recover from it, should be treated as fatal.

The result is customer service teams that flail from one crisis to the next. Treating every small fire as a towering inferno, and passing that sense of insecure panic on to their customers.

Knowing that your own mistakes aren’t the end of the world, and that for some customers they might even be made happier than when they initially complained, should change the mind-set to helping unhappy customers.

Approach the situation with confidence that you’re a quality provider, that you’re in control of the problem your customer has, and that you can fix it and make amends for the inconvenience. And equip your staff to carry that into their interactions with customers.

Access and actions

Your company needs dissatisfied customers talking to your recovery staff. This is to demonstrate as early as possible that you’re in control, that you can make the problem right, and that you can make repair the problem.

Service recovery hinges on being able to talk to customers, and vice versa. Customers can talk amongst themselves, they can quietly leave, they can even complain on public forums like Trustpilot.

You can try to intercept as much third-party negativity as possible, but your service recovery effort is only effective when you’re in direct contact.

That means having clear, well-signposted and well-maintained channels for complaint, manned by knowledgeable, conscientious employees. Not having these in place makes it impossible to run effective service recovery, and takes the idea that customers will be more loyal to your company, regardless of any paradoxes, off the table.


Rewards make excellent service recovery tools, particularly when dealing with individuals’ complaints. Over a long period, an occasional cash-value reward as a sign of gratitude or, sometimes, apology is a great investment. It’s a relatively small outlay for you but isn’t easily forgotten by customers.

This is particularly effective when you can personalise how you reward. It’s not practical to try and warehouse a gift fit for everyone, so it’s most likely that you’ll be using a multi-choice product like a gift card or reward code. You can’t “personalise” the gift itself, but you can personalise the message around it.

For instance – if you know a customer uses your insurance company to insure a vintage vehicle, you can deduce they have a passion for cars. While you’re delivering them a reward, it might be prudent to point out the customer can enjoy their gift at a track day.

You’re not just showing that you’re reticent about a service failure, you’re showing that you see and appreciate that there’s a human being behind the account number and complaint.


If you’re not sold on the science when it comes to the service recovery paradox, you’re not alone. There’s definitely more research to be done into the phenomena, but it’s an idea worth talking about.

However, regardless of your opinion on customer service phenomena, service recovery should be a priority. Especially as the world heads into uncertain economic times – money and time spent keeping customers now is money exceptionally well spent.