What can you learn from Waitrose’s “free hot drink” loyalty scheme?

Waitrose recently implemented changes to its much-loved “free hot drink” loyalty scheme, creating a great deal of discussion in the industry. 

This is an example of a loyalty scheme that has attracted a lot of attention – especially around its level of success, impact on profits and customer satisfaction. Some have argued the supermarket chain failed to incorporate any mechanisms in the planning stage, to prevent the programme being abused by newly-acquired customers, while others claimed the values and culture of its current customer base have been neglected.

We recently conducted research which showed that more than half of consumers (55 per cent) cited loyalty rewards as an important factor when staying with a provider, and 23 per cent have even switched to a new provider because of its customer loyalty scheme. 

This highlights the importance of getting it right. The role played by good insight, planning and strategy before implementing a customer loyalty or retention scheme should not be underestimated in order to avoid fire-fighting when a programme becomes too big or opposes the aim of business growth – evidenced by Waitrose giving away one million cups to its 5.6m customers a week, at its peak.

Figures suggest that the cost of customer acquisition is five times greater than keeping an existing customer happy. So it is imperative that brands do not avoid putting in the effort, and deploy tactics to ensure that customers don’t stray and that brand loyalty isn’t compromised. It is key to get the balance right between rewarding loyal customers and serving free coffee to the masses.

Utilise customer research

Focus on your existing customer research – these are the customers you want to reward for their loyalty after all. 

Read more about loyalty programmes and how they can help to grow your business:

Loyalty schemes can dramatically increase retailers’ basket value

How to measure customer loyalty

5 top tips for building customer loyalty

Consider the relevance of the scheme in mind to determine whether the angle is the most beneficial for your current consumers. You should consider whether the customer needs or wants something for free; the attraction of the scheme doesn’t have to be reliant on financial savings for the customer.

It can be viewed more as a gift for a customer’s loyalty, and should not result in handing out freebies to everyone who walks through the door. Essentially is this reward really relevant for your customers, or is it tailored for everyone?

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