Why retailers must take note of the Facebook scandal.

Consumer loyalty is a transaction. It’s a return on investment. In an era where accessibility to products and services drives consumer transience, the delivery of value to consumers, in return for loyalty, has never been more important.

As the evolution of digital has continued, much focus has been placed on the personalisation of services. A user wants to be understood by the organisation they’re interacting with. They want to be remembered. They want to be guided and have decision making made simple. They want intuitive propositions delivering information which is relevant to them, and their personal needs. In return they’re accepting of handing over personal data. But this is exactly where the perception of value is so critical.

The Facebook / Cambridge Analytica scandal has prompted users to ask whether the benefit of being treated as a statistical profile, and receiving personalised content (to that profile) is relative to the cost of their data being sold or used in a manner in which they didn’t originally commit. Or at least they hadn’t realised they’d committed. I can honestly say I’ve never read the terms and conditions of Apple, or Facebook or countless other apps I’ve downloaded - at least not in depth. Naive? Quite possibly. Typical of the masses? I suspect absolutely.

What this most recent and undoubtedly newsworthy incident has created is a lack of consumer trust in a brand. A services provider. A retailer. Like it or not, that’s exactly what Facebook has become. The user (and more specifically the users statistical profile) has become the commodity. And therein lies the impossibly fine line. Who has the power? The user or the platform?

So why should retailers take note? Customer loyalty is utopia to retailers. Understanding customer needs, frustrations, and what they recognise as ‘value’ is fundamental to delivering loyalty strategy.

Tesco recently got it wrong. Introduction of changes to the Club Card rewards structure were met with widespread discontent from customers and commentators alike. The error was a simple one. Tesco made assumptions about perceived values their customers hold. This perfectly illustrates that customer loyalty isn’t simply about rewards, it about customer engagement. It’s about developing a trust relationship with your customer in which they perceive an inherent value.

I recently spoke with a grocery retailer who bemoaned how little customer data their organisation holds. Indeed the sentiment was that, given their unique position in the community, it is an opportunity missed. Not to sweat customers for more, but to deliver an improved customer experience. They were missing the means by which to understand more about, and engage with, their customers. This approach is a central tenet the future of loyalty strategy.

I’ve read numerous articles about the death of consumer loyalty in retail. I believe the recent challenges of Facebook and Tesco serve to illustrate not that loyalty is dead, but of the heightened need to understand and connect with consumers with value relevant to them.

I find myself asking not what the future of retail loyalty is, but what will never change?

  • Retailers need to truly understand their customer base. What drives them? What frustrates them? What is their perception of value?
  • Retailers should never stop asking (1) and should be prepared to adapt as customers do.
  • Accept customers are transient. The differentiators do not lie in product, price and promotions in isolation.
  • Loyalty is not about rewards. It’s proactive engagement with consumers. Developing trust is pivotal.
  • Retailers need to embrace loyalty as a multi dimensional, multi channel proposition.

About the Author...

Rich heads Answer Digital Retail, delivering world class solutions to clients including Costcutter Supermarkets Group, FCUK, Arcadia and Ramsden International. Richard has a passion for retail and the transformational impact technology is having on customer experiences.