I think John Lewis are great. The way they treat their staff is great. Their business model is great. They usually live up to their ‘never knowingly undersold’ tag line.
However their loyalty program – launched Oct 2013 always seemed an odd fit. Especially one of the key benefits – free tea and cake for every cardholder once a month.
This is a bit odd for a few reasons.
1. Free Tea and cake.
If I take the Newcastle store ‘formerly known as Bainbridges’. I mention Bainbridges as this will still be how the majority of people that regularly enjoy ‘Tea and cake’ call the store. It’s the older brigade. The regulars who meet up in the same place week after week.
2. Acquisition.
I’d assume that the ‘regulars’ will have been very happy with the ‘free tea and cake’. They will have spread the word quickly amongst the ‘regular’ community. Not sure if these are the people that John Lewis really wanted to reach with their loyalty programme – I might be wrong (hope I am, if I am then great job John Lewis).
BTW. It’s easy to get it wrong. A well intended open acquisition offer can easily be picked up by the wrong audience and go viral.
3. Behaviour.
The monthly voucher was issued if you signed up, it was not linked to spend at all. So it was a ‘reason to sign up’ If my assumption is correct that the older ‘tea and cake’ regulars were the early adopters that signed up. Then I’d very much doubt that their buying behaviour would change. However the benefit, if nothing else, will have helped the pension stretch a little bit further. John Lewis can at least track the spend of the regulars now. ‘Put a name to a spend’.
Never knowingly undersold (the tea and cake)
I have recently read in the Mallorca press (I’m on holiday), that the ‘Tea and cake’ benefit has been dropped by John Lewis. Bad news has travelled fast and to unexpected places.
Further investigation proves that it’s not actually the benefit that has actually been dropped, it’s been adjusted to link with spend behaviour. I’d suggest this is a wise and sensible move, and as a result it will be the loyal customers that are rewarded.
Unsurprisingly, moneysupermarket and the Daily Mail are outraged. That is the unfortunate part of withdrawing published benefits. I hope the loyal customers are less outraged. Let them eat cake.
Loyalty lessons to consider
If you are considering adopting a loyalty programme, then the John Lewis decision has some valuable lessons.
1. Define your objectives for loyalty
Once you adopt a loyalty strategy it will change the way you do business. It will change the culture within your business. It will change the way your customers deal with you as a business. We want these changes to be positive, but they can quickly turn in to a negative. So you need to have a strong and compelling reason to invest in a loyalty programmme.
Once your progamme is live, it is very difficult to remove or change without creating negative PR. Remember I read about the John Lewis change in the Mallorcan press!
2. Test Test Test
As with most things, a common bit of advice is test test test. Same is true for loyalty. Targeted testing of benefits and rewards to specific customer groups can save massive headaches. Best to get it wrong in a controlled environment than across your entire business by diving straight in at the deep end and having to back track – in John Lewis’ case remove the tea and cake from the menu.
Hope this is helpful
Saul