Beyond loyalty cards: how to build customer trust and loyalty?


May 25, 2021 | By Shruthi Nair

It’s common knowledge that customers tend to buy from brands that they most trust. According to the “Brand Trust and the Coronavirus Pandemic” report issued by Edelman, 55% of consumers turned to brands they trust during the lockdown, and overall trust in brands has gone down. Oftentimes, retailers get carried away in creating incentive-heavy loyalty programs before configuring the steps and going through the process of getting to create those fancy schemes – a process that starts with trust and results in loyalty. 

While trust in the age of Cambridge Analytica, data theft, and privacy intrusion is increasingly becoming a task, the digital age has also resulted in bringing retailers and their customers closer. There is proactivity, unseen before, on the part of retailers to understand every individual customer’s needs and meet their heightened expectations. Data, therefore, plays a major role in the conversation of trust and loyalty as it helps retailers understand their customers better and in turn helps personalise offerings to suit their needs and wants. 

However, a recent survey by KPMG revealed the paradox of personalisation in the region, where only one in five consumers in the UAE see personalization – be it in terms of service, communication, promotions and offers – as a leading benefit of loyalty programs. Cashbacks or discounts on future purchases and special pricing were seen as the top benefits. 

When it comes to building trust, some of the factors that contribute include product quality, customer service, value for money, product consistency, easy shopping experience, selection/product assortment, and pricing.  

According to Shehbaz Shaikh, Chief Retail Officer at REDTAG, retaining loyal customers is the best way to ensure a sustainable business model that is resilient to change. 

“Commanding loyalty is about gaining trust, by consistently delivering great quality, at a price point that is comfortable for customers, and personalized communication. Once established, such trust and loyalty often result in customers ignoring variables such as price and waiting periods, in favour of brands they prefer,” he said. 

Building customer confidence and trust have become even more important post-Covid-19. Businesses acting in keeping with big-picture priorities during the crisis gained both accolades and customers. 

So what is the way to get loyalty right? “The best way to acquire and retain loyal customers is with brands willing to listen to their customers, and evolving in response to their changing needs,” he said. 

“Value-added customer engagement, based on differentiated services and enhanced value-propositions, has become the key to acquiring and retaining customers today. It’s no longer enough that a business offers its customers lower prices and other economic incentives. Emerging trends in customer behaviour in the Middle East indicate a modern, savvy, informed shopper, with a preference for brands that reflect their specific taste and needs.”

Purchases, especially in the Middle East, are dominated by millennials and Gen-Z and brands need to quickly adapt to that with their products, offerings and even loyalty programmes to meet the expectation of this digital savvy, better aware, sustainability-conscious demographic. 

“At REDTAG, a great example of listening to customer needs and offering them something extra to build trust and confidence in our recent CEM #WearASmile initiative. This includes several service-led brand promises that provide convenience and peace of mind to our customers – from AnyTime Anywhere exchange to Instant gifts to helping find your Size – all of them developed based on feedback received from our shoppers on their top concerns and pain-points,” he explained. 

Many retailers in the region are either still stuck to their age-old loyalty cards with schemes that people are either not aware of, or generic rewards they are not interested in, or points that take too long to redeem. It is paramount for loyalty programs to be easy to use and understand, that clarify their purpose, personalise rewards after understanding the customers, and are unique and innovative. 

“REDTAG’s RT Rewards tiered loyalty program boasts over 15 million members currently. Approximately 95% of our transactions now come from repeat customers. RT Rewards features a three-tiered – Silver, Gold, and Platinum – membership, based on customer lifetime value. Customers get a percentage to spend as points, and compared to our competitors, REDTAG is offering the highest percentage as points to spend,” he said. 

However, when it comes to trust and loyalty, it’s all about careful curation. What might work for a particular vertical of retail or a type of store or platform or a typical target audience, might not work for others. There is no blanket formula where it’s one size fits all figuratively (although in fashion retail, that is seen to be a tried and tested scheme that did deliver results). The ‘buy 10 get one free’ schemes still work for many cafés and shops. Multi-brand tier-based loyalty reward cards are still used by millions of shoppers across the world. Some retailers have gained market share without running a loyalty program and focusing on a targeted, calculated and curated selection of products at low prices to meet their customers’ needs. More importantly, the way loyalty works for brick-and-mortar stores is very different from how it works for online businesses. 

“Typically, offline loyalty programs require fewer incentives because customers tend to consider their choices based on physical proximity. In contrast, online loyalty programs have to account for higher competition and easily visible customer feedback, due to star ratings and reviews. Online customers are also much more likely to look for the best available deals and take much longer to research the available alternatives. To promote online customer loyalty effectively, businesses need to ensure that they deliver high-quality customer support, short delivery timelines, detailed product information, and trustworthy online privacy,” he said.

This said, everything about loyalty – from its definition in retail, to the scheming programs, and thought-process behind it – requires reinventing today. The fact that 59 percent of consumers globally use their favourite loyalty program less than once a week demonstrates a clear opportunity for retailers to improve their customer loyalty programs. And that’s because the process doesn’t start from loyalty and instead, begins from building trust and a solid relationship, which is a never-ending journey.

“Most retailers often have a disproportionate focus on delivering savings alone. This is not to say that customers don’t appreciate being able to get a product or service they want, at a lower price. But such offers are not sufficient, in themselves. Retailers need to build more intrinsic value, by creating seamless buying journeys, both online and offline; paying attention to insights and data around customer’s needs and wants, and build customer engagement through differentiated services, as well as by reinventing the value proposition,” he concluded. 

Key takeaways

– The journey starts with trust and results in loyalty

– The level of customer service you provide has a major impact on customer loyalty and retention.

– Be transparent and honest with your customers. Encourage reviews and feedback online 

– Engage and connect with your customers in-store and online. But remember to be helpful and not pushy. No aggressive sales pitches in-store and no spamming online. 

– It’s all about personalisation. From recommendations to communication, to curated loyalty programmes – use the data you gather from your customers to customise and tailor offerings.

 

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