Why incentives are key to brand loyalty

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Why incentives are key to brand loyalty

After two years of COVID turmoil businesses across the UK are now grappling with the cost of living crisis that is ushering in a period of extreme caution among customers.

With inflation at a 40-year high, consumer confidence is falling rapidly. Even if people have money in the form of savings they are now more reluctant to spend. They fear soaring prices for energy and food will put the squeeze on their spending capacity for the foreseeable future.

GfK’s latest Consumer Confidence Index reported confidence was now at an historic low. Data based on interviews with 2,000 adults in July showed the worsening economic situation was “darkening the mood” of the nation.

This fear and caution is mirrored in the B2B market where businesses are being much careful about their spending with other businesses. An index from NatWest looking at business activity across the UK recorded the lowest reading in six months in July.

Retailers are facing a more permanent shift in market dynamics. A move away from high street shops to e-commerce during the pandemic has swung back the other way. E-commerce market share peaked at 37.4% in February 2020 but has now fallen back to 25.3%.

However, research published by global professional services firm, Alvarez & Marsal, reveals an estimated 17.2m UK consumers plan to make permanent changes to the way they shop.

Whether your customers are consumers, or other businesses, the message is clear: you are now in a fiercely competitive trading environment.

People and businesses will still have to spend money, of course, but now more than ever they are looking for that extra bit of value. Extra incentives can make all the difference when decisions about major supply contracts are made.

Putting together the right package

So in this tougher period what can brands do to keep people and other businesses coming back and spending? What is the key to customer loyalty?

Economists across the world swear by the same four-word phrase – ‘people respond to incentives’. Some are more obvious than others. Offering the right product, available quickly, and at the right price is one of the basics.

What must also be remembered is that all buying – online or on the high street, personal or business – is an experience. Make the experience a frustrating or unpleasant one and people will take their business literally, and virtually, across the street.

Social media has put more pressure on brands to deliver both the product/service and the experience. Pity the poor souls in charge of the big brand Twitter accounts when the ‘my nan is 85 and you have treated her appallingly’ tweets arrive on their timelines.

So let’s say you have got the basics right. The stuff is all in stock, the price is low or competitive, smiling staff are ready and eager to cater for the customers’ every whim. If that is the baseline what extra value can you offer over and above?

What do the customers tell us?

Love2shop is working with businesses across a whole range of sectors to help them improve customer engagement and, in turn, retain customers in a challenging environment. Love2shop offer a number of solutions that will incentivise customers to keep coming back time and time again.

In a major survey carried out by Love2shop, 13,000 people were asked about what they thought were the best rewards when it came to brand loyalty or moving to a new supplier. The results were no surprise. They revealed people love choice and they love gift cards.

It ran two polls across two months asking people to pick their ideal loyalty prize, and their ideal sign-up gift from a selection of popular rewards. Both showed a big preference for multi-retailer gift cards and discounts, with the former by far the most popular.

In fact, a whopping 76.6% of respondents said it was their favourite option. This was followed by 13% for discount on their next purchase with VIP experiences, upgraded memberships and merchandise all scoring in single digits. Read more about the poll on the original blog.

This explains the popularity of the Love2shop rewards and the Love2shop Engagement Platform offered by Love2shop to reward and incentivise both staff and customers.

Love2shop rewards can be used in around 150 retailers, including well-known brands such as Marks & Spencer, Wilko, Iceland, Matalan, Argos, Costa, Harvester, Tui and Jet2Holidays and many, many more.

For customers or employees, Love2shop rewards can offer a treat, or it can be invaluable for life’s essentials such as food and even school uniforms. When money is tight it can make all the difference to people.

Hard data shows incentives do work

Brakes is the UK’s number one wholesaler to the hospitality trade. It also offers food delivery services direct to consumers. In 2021 it forged what proved to be a hugely successful partnership with Love2shop.

Utilising both the expertise of the Love2shop team and the engagement platform technology, the Brakes ‘Help for Hospitality’ campaign was created and launched. The reward programme, delivered through the platform, offered Brakes customers a blend of discounts, cashback, charitable opportunities and Love2shop rewards.

Added to that, Love2shop provided strategic, technical, creative, and software support for the campaign. Love2shop provided the software to deliver cashback and also the Love2shop rewards to Brakes customers.

At that time, the UK was still only slowly emerging from the final pandemic lockdown. In this context the outcome of the collaboration was spectacular. It delivered what was described as “exceptional” growth.

During the five months of this specific campaign Brakes reported that 7.5% of sales came from new categories and products. Additionally, 20% of Brakes customers engaged in the Help for Hospitality. It generated more than 60% of Brakes’ sales revenue during the promoted period.

Help for Hospitality’s success was recognised when it picked up Best Channel Partner Programme at the 2021 Incentive Awards. This annual event recognises excellence in the reward, incentive, and loyalty industry.

Adam Heywood, Head of Commercial Marketing at Brakes, said: “The Love2shop team did a phenomenal job with the Help for Hospitality campaign.

“We’re incredibly proud to see that valuable work recognised by the Incentive Awards. I’d like to congratulate both our team here at Brakes and thank Love2shop for all their support.”

People do indeed ‘respond to incentives’. The data on that is irresistible. It is food for thought for those businesses selling directly to the public and those trading with other businesses. Increasingly, offering extra value to your customers is no longer just optional.

If you can see how Love2shop reward and recognition products could help your business, contact our business team today. Email [email protected] or call  0344 375 0739.

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Cost of living crisis hits consumer and business

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Cost of living crisis hits consumer and businesses 

We live and work in an integrated global economy. We enjoy the good times together and we all take a hit when the storm clouds gather. 

COVID-19, Brexit and conflict in Ukraine combined to create a perfect storm for both businesses and consumers. UK inflation stands at 9.4%, a 40-year high, and a cost of living crisis is upon us. 

This is often framed in the context of individuals. People struggling to heat their homes, pay rent and mortgages, buy food, fill their car with petrol and afford childcare. 

And this is also a crisis for business. This was summed up in June by Martin McTague, chair of the Federation of Small Businesses (FSB), who said: “The cost of living crisis starts with a cost of doing business crisis”. 

SMEs drive our economy  

Around 99% of businesses in the UK are SMEs (small and medium-sized enterprises) and there are 5.6m of them. They employ more than 16m people, 61% of the workforce. Their contribution to the national economy exceeds £200bn. 

According to the FSB, more than 400,000 SMEs disappeared during COVID lockdowns. Those that survived were just starting to put their heads above the parapet. Now they face fresh challenges. 

So-called producer price inflation, which includes input prices for firms, is up 22.1% over 12 months. Energy prices are soaring as are prices of raw materials. Supply chain constraints, made worse by Brexit, mean goods and raw materials are harder to get. 

A fifth of firms say input costs are their main concern, reports the FSB. It adds that many employers are struggling with labour and skills shortages. This was backed up by the Bank of England in July. It revealed two-thirds of companies were finding it “much harder” to recruit the right people. This further sends costs rising. 

Passing on the costs 

Higher costs, as well as hitting profits and investment, are eventually passed on to consumers. This pushes up inflation. Families face higher prices for essential and non-essential goods. Petrol prices and energy costs are soaring. 

And while people working from home may be able to reduce the cost of travelling to and from work, spending longer periods at home will push up their energy bills. 

The Bank of England will raise interest rates to combat rising inflation. This sparks a higher cost of borrowing for mortgage payers. It also means higher rents for those unable to get onto the housing ladder.  

However, people are finding they do have increasing leverage in the job market. And there is growing evidence they are prepared to use it. 

Workplace sees a seismic shift 

With labour demand outstripping supply, companies are offering higher salaries and more flexibility. COVID prompted a massive shift in the way we work. Post-COVID people are returning to their workplaces. However, millions still work from home either full or part-time. 

One recruitment consultant said earlier this year: “Prospective employees are looking more carefully at the culture of an organisation. More and more are looking for flexible/hybrid working… In the medium to long-term businesses need to change.” 

This is characterised as the so-called ‘Great Resignation’. It is a phenomenon that saw millions of workers quit their jobs during the pandemic. They left in search of a better quality of life. This exodus hit sectors such as hospitality particularly hard. 

Even before the pandemic, businesses were dealing with growing mental health issues. Stress-related absence costs UK employers £26bn every year, according to one estimate in 2019. 

COVID-19 worsened the problem. Data from Public Health England reveals the proportion of adults aged 18 and above reporting a clinically significant level of psychological distress stood at 20.8% in 2019. By April 2020 this had rocketed to 29.5%. Fewer people are now prepared to suffer stressful environments. 

Some employers respond by throwing money at the problem. They offer higher salaries and other financial incentives. However, smarter organisations recognise this paradigm shift demands a more sophisticated response. 

People want financial rewards but they also want to be valued in their work spaces. And they don’t want their jobs to take over their lives. They want more time with family and friends. Note the number of businesses now experimenting with four-day weeks. 

Value of incentives 

Love2shop reward products are available digitally or as a physical card and appeal to a wide audience. Recipients of the reward products can use them in multiple big-name UK retailers, including Sainsbury’s, Iceland, Heron Foods, ASDA, Primark, Boots, River Island and Argos. Consequently, recipients can use their reward gift for essential items or little luxuries. 

Building and timber supplier, Buildbase, is successfully rolling out a customer loyalty programme with the support of Love2shop. The programme incentivises those in the building and construction sector to spend more with Buildbase and in turn rewards its customers with Love2shop products. 

In hospitality, Love2shop provides an award-winning customer engagement platform. Food and drink supplier, Brakes, generated more than 60% of its revenues from their ‘Help for Hospitality’ programme during the period of the promotion. 

Additionally, in the finance industry, leading insurer, SunLife, uses Love2shop rewards to attract new customers and retain current ones. And in the healthcare sector, Love2shop reward products were used to recognise and reward care home staff during COVID-19. The full case study can be read here.  

Employers are increasingly taking the wellbeing of their people seriously, including financial wellbeing. Discount card schemes are just one way to help employees by alleviating some financial stress, which in turn, assists in overall wellbeing. Love2shop provides its employees with an ‘Everyday Benefits’ discount card, which helps cardholders to save money on day-to-day household expenses. It is also a product that’s proved popular with business too and many clients of Love2shop have implemented the Everyday Benefits card for their own employees.  

We are in the midst of economic turmoil and tough times are ahead. However, when the economic and cultural tectonic plates shift we discover new ways of living and working. Change is unsettling and also liberating. 

‘Our people are our greatest asset’ has been a mantra in the corporate world for two decades. Too often it’s an empty platitude. As we move into a new era, the companies that thrive will be those which make those words a reality. 

If you would like to discuss how Love2shop’s reward and recognition can work for your business, please get in contact.

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