New generation shopper loyalty program breaks free from me-too VIP / loyalty cards

For some time I have thought that points based VIP / loyalty cards offer retailers little differentiation. Besides them being in use in many retail businesses, I have felt there is a real doubt among shoppers as to their genuine value.  They are decades old after all.

FlyBys and Everyday Rewards are the market leaders in Australia and they educate shoppers that they need to spend thousands to get even a small reward. No matter how much small business retailers might say their program is different, if it’s points based it will be considered to be the same as these programs and offer similar value.

Shoppers are fatigued by loyalty programs. Some doubt their value. Others are sick of carrying cards. Others don’t like the promotions sent.

Retailers launching a VIP card today rarely offer anything new. Too often they reward shoppers for average behaviour.

It was with this background that I got involved in a very different approach to shopper loyalty. I wanted something that got shoppers behaving above average so that my business performed above average.  I am fortunate to have a software company through which I could play with my ideas.

Around a year ago through my software company I started work on creating a front-end approach to shopper loyalty, an approach that did not use points or require shoppers to carry cards.

In February this year I started a secret trial in one of my newsagencies and soon thereafter expanded this to a second newsagency. now, three months later I have an excellent set of data showing shopper behaviour. The data show how the new approach to loyalty, called Discount Vouchers, changes shopper engagement on the shop floor – driving basket depth and margin dollars banked from shoppers.

More important, Discount Vouchers give me a point of difference to the decades-old VIP and loyalty card programs. This point of difference is driving word-of-mouth and generating its won traffic.

I have personally had shoppers tell me how their behaviour has changed because of the Discount Vouchers. In one case, two months in, we won a customer who will spend $1,200 a year solely as a result of this program.

I wanted to trial it in secret as I was not sure how such a radical approach to shopper loyalty would work in a newsagency.  Now, three months on, and comparing my own experience to the experiences from trials in three non-newsagency retail businesses, the results are the same. Shoppers love it.

From a retail management perspective I control voucher value and the items on which the value is calculated.  I also control what can be purchased using the voucher. I can also change these business levers at any time without a need to retrospectively change past vouchers.

There is no paperwork for shoppers and no paperwork for sales staff. This program is easier that VIP and loyalty cards, it saves time.

When shoppers redeem a voucher we gather details to go in the running for a monthly prize draw – harvesting contact details for future marketing.

Having run a VIP / loyalty card program and other loyalty programs, I am confident that in Discount Vouchers I have a point of difference appropriate to today’s shopper and able to give me a competitive advantage in a world of shopper fatigue with VIP / loyalty cards.