loyalty programme

Comment: loyalty programmes back in fashion

GENERAL MERCHANDISE

Customer acquisition costs have spiralled over recent years, especially through digital channels, at a time when customers have been increasingly shopping around for the best deals in a cost-of-living crisis. Is it any wonder, therefore, that we are seeing a flight to focusing on customer retention and at the forefront of this is the loyalty programme.

Retail loyalty undoubtedly changed when Tesco launched its Clubcard, with the help of pioneering data specialists Dunnhumby, back in 1995 but I’d argue that there have been few seismic developments since that point. The reality is that loyalty programmes have gone in and out of fashion over the intervening years as retailers have all too often operated poorly designed schemes that have merely given away margin to shoppers rather than engendered any noticeable loyalty that has genuinely driven incremental sales.

This is something of a cyclical game and right now we are at one of the peaks of retailers’ interest in loyalty as they fight for customers in a very competitive marketplace. Recently fast fashion giant Shein acknowledged that in order to hit its ambitious sales targets it needs to convert new customers into repeat buyers. In 2022 around 60% of its total of 142 million customers shopped on the platform for the first time and by 2025 it aims to convert most of its shoppers into loyal customers.

Its key challenge is that its core customers are GenZs who are one of the most open group to moving their custom to the next new thing. They have exhibited little evidence of loyalty to date, which suggests Shein has a tough task on its hands with its retention strategy. It would certainly be well advised to consider the potential for devising a credible loyalty

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  • March 25, 2023