I intially struggled with this chapter, however through further many different strategies came to light. This was perhaps the most interesting topic for me to write about so far. The sources are of a decent amount and it is here why most of by bibliography sits, due to singular papers being the sources of previous chapters. I feel this could be bigger still, perhaps by adding more examples of loyalty programs as well as formatting and referencing.
Words: 1806
Customer Loyalty
Brand loyalty is the result of consistent positive experience, satisfaction and perceived value of an experience. We have established supermarkets as all encompasing brands, with detailed structures, methods and intents and as a result have to maintain customer loyalty, brand loyalty, in order to maximise revenue. Today, supermarkets amass the highest level of consumer loyalty followed by mobile networks and banks. There are numerous techniques employed by these brands to develop a strong loyalty. JoAnna Brandi identifies that 'Quality standards needs to be specific so customers know what to expect. Make your core service consistent, and then surround that service with things that will surprise customers.' Quality standards takes a huge role when it comes to a retailers ability to deliver successful customer service and by extension a stronger overall brand.
Customer loyalty programmes build up real relationships based on a value-orientated benefit package (Butscher 2002 p.3) One main way for supermarkets to monitor their consumers loyalty is through the use of points schemes and loyalty cards, aptly named. Finance reporter Kevin Peachey clarifies that 'Loyalty points, or trading stamps, have been around for decades. The modern-day loyalty card was born in 1995 with the hugely successful Tesco Clubcard.'
'Before Clubcard, Tesco was stuck as the UK's second-ranking supermarket. Today, not only is it the UK's largest grocer, it is one of the worlds's most successful internet supermarket...and arguably one of the worlds most successful exponents of what the jargon terms Customer Relationship Management.' (Humby et al. 2008 p.3)
Loyalty cards have clearly been a massive sucsess for brands to entice customers to spend exclusively in their stores. In 2002, following the rapid success of Clubcard, Stephen A. Butscher customer loyalty strategist, predicted the increase of such loyalty schemes.
'Customer loyalty have become a more and more important component of many companies' marketing activities. The importance will certainly increase over the next few years creating an even larger wave of new programmes than we have seen recently' (p.3)
The concept of the loyalty card works via simple trade. By using one, the consumers consents to retailer access to useful data i.e age, time of shop, what goods purchase, frequency of purchase etc. This information not only helps them to better analyse their demographic but is important for maximising revenue, promotion and distribution. (Peachy 2015) As technology has developed the cards have become a rich source of data for the companies that offer them. Stores reap financial and strategic benefits from using the cards to find out what customers are buying. (Arnett 2013) By having a loyalty card, supermarkets build up demographic profiles and collect data about consumers loyalty, including what you buy, how much you buy and how much you spend. Online they can change what you see when you log in to buy, to better find the products their data suggest you will buy and in-store will use their data to make decisions about what to sell.
However, there are many arguments against the use of loyalty cards with Butscher also citing
'It is possible, but not very probable, that a customer loyalty programme...will lead to a lifelong relationship with its customers. First most customers cannot not be allotted to a single clearly defined target group. Today's 'nomad' customers either belong to several target groups simultaneously or continually move from one group to the other. (p.48)
With the growing diversity for shoppers, loyalty is an aspect that is harder and harder to grasp, as a result of a outside factors such as, the recession, employment, wages and inflation of goods. Consumers no longer shop at one place but choose different stores to suit their different needs. Customers are becoming harder and harder to box into only one demographic, therefore making it more difficult for brands to cater to them. Butscher also specifies that lack of reward incentive:
'Most customer loyalty programmes offer primary financially (hard) benefits. In essence, they provide price discounts - and discounts are the last thing that creates loyalty among customers. Customers who buy your product or service merely because of it's price will not continue to do so if they fine a better price elsewhere. The only way to create long term customer loyalty is to establish a true relationship with your customers which is based not on financial incentives, but on emotion, trust and partnerships.' Butscher p.3
As a continuing thread throughout this essay, it has been found that time and time again, price is ultimately the deciding factor for todays consumers, hence why loyalty schemes as a tool don't have the same impact as they once did.
Their demise has been predicted for a long time. Even from as early as 1999; A news story from the BBC website in 1999 headlined "Loyalty cards losing appeal". It reported that researchers had found "a third of people preferred low prices to points or other incentives".
Conversely, some academics argue that the end loyalty cards would mean the end of a rich collection of data that can be used to benefit society.These cards are able to provide detailed information on spending habits, that have the ability to highlight the difference between what people say they do and their actual behaviour (Peachy 2015)
Director of the Consumer Data Research Centre Professor Mark Birkin, from the University of Leeds, held this argument in the for the benefit of health and nutrition.
He explained how the consumption patterns revealed by loyalty cards are incredibly helpful showing how truthful consumers are about their eating habits, healthy and unhealthy (2015). Looking at the bigger picture, the same way cities consider building roads based upon travel patterns, cities may think about environment protection based on the amount of recyclable packaging being bought. The data these schemes collect, chances are, will help to inform such decisions giving loyalty cards the potential to impact larger social issues. (Peachey 2015)
Lifestyle brands
A huge factor within customer loyalty is the notion of lifestyle (or perceived lifestyle) which is one of the master concepts within marketing.
'Lifestyle would describe - or better, prescribe - a set of practices that give meaning and identity. The building blocks of lifestyles [are] individual brands that, consumed en masse, [will] form a stylish assemblage.' (Kornberger, 2009 p.192)
Lifestyle defines people by what they consume. Products posses potentialities, symbolic resources that people use to build their lifestyle. For all their pervasiveness, supermarkets have provenance and are huge perpetuators of this. Whereas class used to be about position, it is now about lifestyle. These brands all come from somewhere, they have a heartland. Southen brands traditonally have more middle class acceptance, these are Waitrose (London), Sainsbury’s (London) and Tesco (home counties). However, traditional northern brands are those found to have more working class appeal: Asda (Leeds) and Morrisons (Bradford). While today, these brands can be found virtually anywhere, the georgraphy and class systems have had a huge hand in the makeup of their cusomter bases.
'In the past, social structure and status was established through one's position in the production of things; you are what you produce. Lifestyles on the other hand, are based on peoples consumption patterns.' (Kornberger, 2009, p.192)
The professor for human geography from Sheffiled University, Peter Jackson, conducted a three-year study into supermarket loyalty and social class, said:
"What's clear from our research is that people just don't see those ranges that 'aren't for them'. In Sainsbury's, for example, some people will walk past the 'Taste the Difference' ranges to the budget ranges. They won't even see the ones that aren't targeted at them. And vice versa." This shows the clear sucsess of such particular branding choices and positioning.
Supermarkets are able to position themselves though subjective factors such as the pleasantness of the store, or how its decor, music, quality of products, exclusivity of products, design elements and affiliations, (many of which are strategies explored throughout this essay) chime with one's own self-image (Jefferies 2004). All of which can be just as important and as objective factors like price and convenience (all of which Jackson brackets under "cultural capital").
Verdict Research using the NRS social grading system:
A - upper middle class Higher managerial, administrative or professional
B - middle class Intermediate managerial, administrative or professional
C1 - lower middle class Supervisory or clerical and junior managerial, administrative or professional
C2 - skilled working class Skilled manual workers
D - working class Semi-skilled and unskilled manual workers
E - non working Casual or lowest grade workers, pensioners, and others who depend on the welfare state for their income
found that Waitrose has the highest proportion of shoppers from the professional social classes A and B (47%), followed by Sainsbury's (34%), Marks & Spencer (22%), Tesco (21%) and at the lowest end of the market, former Netto's 72% of shoppers were blue-collar Ds or Es and with Lidl (54%).
The argument against structuring themselves to appeal to certain classes is that it reinforces class ghettoes. Consumers already living in an affluent area are treated to 'essential Waitrose sugar free indian tonic water & lime' while those in a deprived postcode are left with just 'tonic water'.
This is seen in when Waitrose indulged themselves in subtle social engineering. Upon launching it's essentials line in 2009, almost all products were exactly the same as their higher-range only re-packaged in basic white tins and boxes. It was designed to shirt customers perception that Waitrose was just for the wealthy. Even if shoppers were not aware of this sleight of hand, It's worth wondering about whether there was embarasment from the upper class about purchasing these cheap-looking products. (Wallop 2013.
The commerical director for Waitrose found the opposite saying "We have found some customers putting their Waitrose goods in Tesco bags, because they are nervous that their neighbours will think they are decadent for shopping at Waitrose." The prices in Waitrose are known to be costly. however, their value range has made shopping there far more legitimate in this climate that it otherwise would have been. Waitrose's engineering was was the most potent signal of social mobility.
"In the latter quarter of the twentieth century this role was provided by Mark & Spencer, when to shop at M&S was to declare yourself part of the aspirational middle class...Waitrose’s gain has been M&S’s loss as the former has replaced the latter as the totem of aspiration – to shop at Waitrose today, even from the essentials range, its to declare that your family is moving upwards undaunted by the economic crisis that surrounds us. (Manchipp 2014)
Public perception of a brand is everything and with it, 'snobbery' is a powerful social force, but also a powerful commercial one. and perhaps should not been seen as completley negative. Being judged for how you spend your money, rather than how you earn it, can be percived as progress of some sort.
Bibliography
BBC NEWS (2015) Shoppers with reward cards see little point in loyalty [Online] Available from http://www.bbc.co.uk/news/business-32036916 [Accessed 21st December 2015]
BRANDI, J (2001) Building Customer Loyalty: 21 Essential Elements in Action. Texas: The Walk The Talk Company
BUTSCHE, S (2002) Customer Loyalty Programmes and Clubs. Gower Publishing Ltd. Aldershot: Gower Publishing Ltd.
HUMBY, C, HUNT, T and PHILLIPS T (2008) Scoring Points: How Tesco Continues to Win Customer. Loyalty London: Kogan Page Publishers
KORNBERGER, M (2010) Brand Society: How Brands Transform Management and Lifestyle. London: Cambridge University Press, 2010
AIMIA [Online] Available from: http://www.aimia.com/en/capabilities/consumers/customer-loyalty-management.html [Accessed 21st December 2015]KORNBERGER, M (2010) Brand Society: How Brands Transform Management and Lifestyle. London: Cambridge University Press, 2010
VERDICT [Online] Available from: http://www.verdictretail.com/ [Accessed 21st December 2015]
THE TELEGRAPH. WALLOP, H (2013) How supermarkets prop up our class system. [Online] Available from: http://www.telegraph.co.uk/foodanddrink [Accessed 21st December 2015]
THE GUARDIAN. JEFFERIES, S (2004) 'I'm rich and I'm living well. Shopping here is part of that' [Online] Available from: http://www.theguardian.com/lifeandstyle [Accessed 21st December 2015]
UK GEOGRAPHICS (2014) Social Grade A, B, C1, C2, D, E [Online] Available from http://www.ukgeographics.co.uk/blog/social-grade-a-b-c1-c2-d-e [Accessed 21st December 2015]
ADLITERATE. MANCHIPP, S (2014) Supermarket success – it’s a question of class [Online] Available from http://www.adliterate.com/2014/01/supermarket-success-its-a-question-of-class/
BBC NEWS (1999) Business: The Company File Loyalty cards loosing appeal. Available from http://news.bbc.co.uk/1/hi/business/the_company_file/481921.stm [Accessed 19th December 2015]
THE GUARDIAN. FERGUSON, D (2013) How supermarkets get your data – and what they do with it [Online] Available from http://www.theguardian.com/money/2013/jun/08/supermarkets-get-your-data [Accessed 19th December 2015]
THE GUARDIAN. ARNETT, G (2013) Are loyalty cards really worth it? [Online] Available from http://www.theguardian.com/news/datablog/2013/oct/31/are-loyalty-cards-really-worth-it [Accessed 18th December 2015]
