Retailers and FMCG brands need think beyond discount-based loyalty programs, says the creator of Tesco’s loyalty system, who has labelled cash incentive programs as “the easy way out”.
Speaking in Sydney this week at Mumbrella’s Retail Marketing Summit, Grant Harrison, who spearheaded Tesco’s Clubcard loyalty program, said loyalty doesn’t need to be based on price.
“I think increasingly discounts are the easy way out and I don’t think they’re the best answer. Relationships with customers now need to be much more thought through.”
Mr Harrison, who is now CEO of consultancy firm The Future Customer, believes loyalty programs should be centred on connecting and engaging audiences, referring to this concept as a “kudos economy”.
He noted Strava, a social network and mobile app for athletes that allows users to track and share their performance, and Linkedin, as two examples on loyalty programs which allow users to not only share their data with others but create their own communities.
“If you look at somebody like Linkedin, there’s still a useful function in terms of how you connect with people, but I think it’s more on the passion side on things that’s keeping people interested.
“Linkedin is a fantastic example of [the Kudos Economy]. I think the idea of kudos is a really new loyalty currency that works, “he said.
“I think the biggest challenge I have found with loyalty for FMCG is that the individual product price is so small it’s really hard to work out how much to invest in loyalty. I think the opportunity for FMCG is also this ‘kudos economy’.”
Mr Harrison said retailers, including the major supermarkets, also need to be more transparent with how they are using customer data.
“I think it needs to be a different time. Instead of supermarkets holding onto [data] because they think it’s really valuable and using it just as channel to the screw suppliers… we all have to push ourselves to be more open with the data. We have to show customers what we’re doing with it.”