Does brand loyalty exist anymore?

Published by Comments Off on Does brand loyalty exist anymore?

A wise man once wrote “Loyalty is for the dogs. Count me among the cats. And count me twice—once for each of my faces.”

The truth is, that with our purses and wallets having been squeezed over the last few years, our buying decisions are perhaps not as straightforward as they once were.  But when I recently overheard the owner of our local farm shop proudly telling a customer they’d be launching a loyalty card next month which would give shoppers a discount on their basket price, it took all the self-discipline I could muster to not to go running up to him and plead with him to reconsider.  Don’t get me wrong, I have nothing against small businesses adopting successful practices of larger businesses, but let me tell you why I think this particular scheme is a bad idea.

How many of those plastic rewards cards have you got crammed into your purse or wallet?  I seem to have more loyalty cards than bank cards.  The reason why stores like Boots and Tesco introduced these kinds of schemes wasn’t to reward loyalty. Oh no.  The ingenious truth is that when we swipe our loyalty cards at the checkout, we’re giving away hugely valuable data about our habits as shoppers – what products we buy, how often, what incentives we take advantage of, how we pay etc.  Data like this is priceless. The stores can build up a detailed picture of their customers, categorise us and send us tailor-made offers based on our shopping history to encourage us to return to the store and buy more stuff.  And they see which vouchers and offers we use and which we don’t. So every time we go back in the shop they are finding out more and more detail about us. It’s actually a bit creepy.

So why shouldn’t my local farm shop do the same? Well, that’s because they won’t be collecting and harvesting all of that important data using an expensive EPOS system. What they’ll be achieving is something quite different.  There are, broadly, 2 types of customer at the local farm shop.  The first type is those people who support the shop because they want to see it succeed, like the produce and the whole experience of shopping there.  The second type of customer is the one who use the local shop to top-up their weekly supermarket shop.  That’s not to say that this second group of customers isn’t as valuable, but you probably aren’t going to change their buying behaviour any time soon.  The farm shop is a single store, not part of a big chain. The people who own it, as they serve you at the till, see with their own eyes who is buying what, how regularly they use the shop, gather feedback and ideas, so they don’t need a complex computer system and computerised systems to give them that customer insight.

So what does the loyalty card achieve?  Actually, what it will potentially achieve is what worries me.  It’ll mean that every customer who has a card will be contributing a smaller amount of profit to the business. Which means that the farm shop will need to increase the number of customers and volume of sales to achieve the same level of profit as before they introduced the card. And when you’re located in a rural area, that’s not easy.

So does brand loyalty still exist?  Yes. Some of the time. But it’s not as simple as it might first appear and these days loyalties are tested almost hourly.  And it depends on which face we have on.

 

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