Collect, redeem and scout for new rewards. With their loyalty programs, transform
retailers turn daily shopping into a scavenger hunt: If customers are happy about bargains, they return to the point of sale. The equation is working long after Migros and Coop launched their Cumulus and Supercard discount cards, observes Michael Grampp, Chief Economist at Deloitte Switzerland. With a wink, he adds, "Retailers have thus turned the Swiss into a nation of hunters and gatherers." Good news.

There is also a bad one: a study by the consulting company sees discount offers as an integral part of customer loyalty, but one in three lets the points they collect dry up. The reason: many customers feel oversaturated by the many offers. Grampp, who contributed to the study, also knows why. "Discounts alone are no longer enough," he says. "Simply redeeming points for products and perks has declined sharply." This trend has been exacerbated by the Corona pandemic: "Consumers are going to the stores less these days than they used to," observes the consultant. Of course, this is also at the expense of customer loyalty.

In the search for that certain something that binds the customer back to the retailer, some have come up with the idea: They need to offer experiences. The spectrum ranges from fashion shows in the store to wine tastings, such as those offered by Globus. Members of its "wine lovers club" receive special discounts at regular tasting events held at the retailer's stores. In the role of host, he ensures positive emotions.

Service instead of points

In addition to such entertainment formats, services also play a role in binding customers more closely. "For example, when the grocer delivers goods to the customer's home - free of charge and on the basis of the points he has collected," describes Grampp. "The motto behind this is: if the customer doesn't come to me, I'll go to the customer." Amazon proved that a delivery service increases customer loyalty during the lockdown in the U.S. and some European countries such as France and Germany: Via an Amazon Prime membership, the marketplace offers an "all-around worry-free package" for a monthly fee there. In addition to video and music streaming, the e-book library and cloud storage for photos, customers receive free shipping on many items, which often arrive the very next day.

A study by the Frankfurt University of Applied Sciences shows that Prime customers spend almost twice as much as normal customers: Prime customers spend almost twice as much money as normal customers. What's more, many users are willing to take advantage of other company services that are included in the subscription - instead of switching to a competitor. Grampp also sees the Miles & More loyalty program as a model of how modern customer loyalty works: customers can collect and redeem points not only when they book a flight, but also when they buy rental cars, hotels and products such as fashion, jewelry or electronics. The bonus program has also opened up to other providers such as Payback or Shell Club Smart: Customers can combine their earned points at these retailers.

Poinz's customer loyalty program pursues a strategy along similar lines. In the app, customers can collect deals and coupons at the approximately 1500 partner stores and receive loyalty discounts. Location activation is used to display primarily the deals that are in the user's immediate vicinity: from laser eye treatment to sugar bakeries. So far, the app has been downloaded 860,000 times, according to Robert Blum, CEO of Poinz, and a good 130,000 users use the app regularly. The special feature: Existing loyalty cards and credits can also be stored in the wallet. In this way, Blum wants to create added value for the customer. "Isolated stand-alone solutions, where each brand uses its own app, are pointless," he says. Users may be willing to install Migros' Cumulus and Coop's Supercard on their cell phones, but they leave out smaller merchants.

Multi-apps on the rise

Just like loyalty cards that make wallets burst, smartphone storage space is finite. Multi-apps not only replace many individual loyalty programs - they also create surprise moments via the abundance of the offer. Retailers can create these together with Poinz: "The customer can spin a wheel of fortune and win a croissant with their coffee at the bakery," says Blum. "Or a restaurant can offer free popcorn at the neighboring movie theater after payment. Through its large network of merchants, Poinz can thus guide customers through its offers and keep them on its platform. "The bundled packages are well received by our users," Blum says. They could be met with even more approval if merchants analyze their customer data collected through the programs in detail. "The data available via the loyalty programs has so far been little used," judges Grampp. According to the expert, this is also due to the uncertainty as to what may and may not be done with data. But with customer programs in particular, it's relatively simple: "After all, consumers provide data voluntarily - in the expectation of getting something in return," says Grampp. According to the consultant, data offers the opportunity to offer personalized bonuses. "For example, a retailer could offer its loyalty customers exclusive trials of new products that interest them based on their preferences." Ultimately, the point of loyalty cards is also to get to know and serve your customers better.

Online and offline. But retailers shouldn't do everything possible either. Blum thinks beacons, for example, which allow retailers to send coupons to customers' cell phones on the street when they are in the vicinity, are too offensive. "We only use sensitive data very carefully when we want to address the customer personally," says the Poinz manager. That might include a birthday greeting garnished with a congratulatory discount. Profital is also exercising restraint. The Swiss Post subsidiary offers currently valid advertising brochures and local offers from retailers such as Lidl, MediaMarkt, Conforama, Jumbo and C&A in its app. Raphael Thommen, CEO of Profital, strongly believes in the pull principle: "The brochures in the app are not perceived as annoying advertising, but as helpful content."

m&k: Apps are widespread in retail and are also used for customer loyalty. How do you assess this?

Raphael Thommen: According to a recent study by NET-Metrix, 78 percent of online traffic comes from mobile devices, and another study by the analytics service App Annie shows that consumers spend several hours a day on their smartphones. It is important to use the mobile channel as a touchpoint - also to strengthen customer loyalty.

How do you reach occasional buyers and new customers via Profital?

Profital combines brochures, offers, and store information from over 100 retailers in a single app and on the Profital.ch website. As a multi-offer platform, we succeed in appealing to a broad target group and thus also to switch buyers. These can also be retained: App users mark their favorite stores and are notified when new brochures are available. Retailers thus succeed in retaining customers via Profital.

What is the added value for the user?

They have an overview of the current offers in their area at all times. The brochures in the app are not perceived as annoying advertising, but as helpful content. In line with the pull principle, users only look at the offers that interest them. The numbers confirm our concept: over 350,000 users plan their purchases with our platform every month.

How can the impact be measured for retailers?

Users mostly obtain information online and make stationary purchases. The offers in the Profital app are played out using geo-targeting and linked to the nearest store. Thanks to geotechnology, we can measure the effect of Profital on frequencies in stores. Using GPS, users who have viewed a retailer's offer are registered on an anonymous basis when they visit the store.