With no sales staff to talk to and no requirement to stay local, the idea of sticking to a handful of brands seemed silly. After all, there are sites that exist purely to continue the idea of couponing, like Groupon, so the store with the lowest prices seems to win by default.
Loyalty Schemes
A note on the Paddy Power casino website says simply, “loyalty is dead”. Oddly enough, this bit of fatalism is written within its promotional material, which is designed to encourage people to play online casino games at Paddy Power. By stating what seems like an obvious point though, the site is better able to give customers what they want, i.e. free stuff with few ties, including spins and bets.
The demise of loyalty has actually been part of Internet conversations for quite some time now. Back in 2015, a Forrester Research analyst concluded that mobile phones are to blame for customers’ lack of brand allegiance. Once again, the conclusion was succinct, “loyalty is dead”. This phrase seemingly became a mantra long before mobile truly took over e-commerce.
Mobile phones allow shoppers to get instant gratification from their shopping journeys, a development that means that customers now control the conversation. Put another way, traditional marketing and advertising doesn’t work when the target decides when and how they want to talk with a business.
As a form of marketing, a loyalty scheme now needs to be a personal thing, changing with a shopper’s moods and interests. This simply isn’t how these programs function so there’s an increasing disconnect between how customers want to be treated and what a business is willing to do to attract customers. As before, why be loyal when you can dictate the conversation?
Scapegoats
All this makes the very idea of a loyalty scheme seem a little strange yet these special clubs are still a large part of modern commerce. In fact, companies that offer some kind of discount on purchases are still more likely to attract loyal people, even today. Research from marketing firm Emarsys indicates that 71% of shoppers will stick with retailers that regularly offer incentives to buy.
Put another way, yes, old ideas about loyalty are probably long gone – but newer forms have risen from their crumbling shells. This shift has been driven by Gen Z shoppers, who have recently taken over from millennials as scapegoats for declining cereal sales. Young Zoomers are unlikely to sign up for loyalty schemes but, ironically, they tend to be one of the most engaged groups when they do, according to a YouGov study.
In an article on the subject, Forbes describes Gen Z as “fascinating”, noting that they do everything differently to millennials and boomers. As a group that has grown up attached to their mobile phones and the internet, they’re living evidence that these two technologies have had an influence on loyalty, as the Forrester Research analyst claimed almost a decade ago.
Gen Z shops for goods with their own moral compass in mind, something that might seem like an alien concept to older customers (Forbes suggests that 43% of boomers are conscientious shoppers, compared to 68% of Gen Z and millennial people). While this way of doing things is a benefit of increased competition in the market, younger people want to know that they’re not funding anything questionable by shopping with a particular brand.
Customer Service
In summary, the issue with loyalty schemes doesn’t lie with customers, as the onus is on businesses to make their products or services appealing. Of course, loyalty goes way beyond its namesake schemes. Clothing giant Zara recently began charging £1.95 for returns of items bought online. Unfortunately, for smaller businesses (Zara’s owner, the Ortega family, is worth $59.6bn), a paid-for returns policy can be poison to customer fidelity.
Many aspects of loyalty ultimately come down to how customers are treated, rather than a store’s pricing. Returning to the stats from Emarsys, more than half (57%) of the people polled would take their business elsewhere if they had a negative experience, including poor customer service. Shoppers see their loyalty as something similar to a commodity, as an item of value that can be traded for a pleasant shopping experience.
There’s a problem here. As so many companies are trying to appeal to Gen Z, who reportedly shop more than any other previous generation, the market for loyalty schemes has become saturated. In the casino example from earlier, thousands of operators vie for the pennies of quite a niche market. This means that every offer, promotion, and rewards program has to stand out.
Overall, nothing ever really dies on the internet, including brand loyalty. It’s just a question of how a business chooses to approach it – if at all.