Work that experience: The changing face of customer loyalty

19-Feb-2014 - Last updated on 02-Aug-2024 at 14:47 GMT

Young’s completed the £300k refurbishment of Horts in Bristol late last year

Consumers have become ‘value hunters’ and are increasingly willing to go extra lengths to get the best deal, making it more important than ever to build the relationship that will create brand loyalty. But with this loyalty comes further expectations and the need for more than just greater value but also for an experience, a point that a number of operators are quickly picking up on.

A report from VisitEngland last year - ‘Domestic Leisure Tourism Trends for the Next Decade’ - stated that the increasing demand for immediate communication and the use of social media will heighten the ‘fear of missing out’ – or ‘FOMO’ - driving the desire for broader leisure activities and new experiences.

Last year was also notable for the demise of money-off vouchers and deals. Horizons’ Voucher Tracker survey saw the number of vouchers offered fall from month to month as operators used them far less to drive business in favour of a more strategic view on pricing.

Online, operators are already relying heavily on creating engaging and innovative content, that at times tells impactful 'real world' stories to really reach their audiences. With the amount of choice already available, it’s likely that brand loyalty will decrease with consumers, picking and choosing products and services they want across a variety of brands.

According to a recent Deloitte survey of 4,047 respondents encompassing 28 product categories and more than 350 brands, brand loyalty is declining. It is the third straight year in which the company had found that brand loyalty has fallen. Not surprisingly, private labels are thriving under these conditions: 88 per cent of those surveyed report finding private labels that they believe are just as good as national brands. It was found to be the sense of individualism, a more personalised offer, that had created a sense of loyalty, followed through with a greater experience.

Exclusive benefits

Last September Jamie’s Italian, the casual dining chain spearheaded by Jamie Oilver, launched its Gold Club loyalty scheme, which offers consumers extra benefits and treats whenever they dine at one the group’s UK sites. The scheme is free to join and features exclusive offers, recipes and a priority booking line. Members also received complimentary tasters every time they visit a Jamie’s, plus a monthly newsletter, birthday presents and invitations to exclusive events and tastings. There is also the chance to enter 'once-in-a-lifetime competitions'.

Taking this a stage further, Byron, the Hutton Collins-owned burger chain, launched a new loyalty scheme under the banner the Byron Burger Club, at the start of this year. As with Jamie’s scheme, members of the club will be invited to new openings, tastings, street food parties and other events the 36-strong group holds.

However, they will also be the first to hear about the brand’s new one-off club nights hosted by its chef Fred Smith featuring the bespoke menus it is working on. The group said: “The Byron Burger Club was founded to reward dedication to the cause of proper hamburgers and open the doors to the inner workings of our kitchens.” It is that 'once-in-a-lifetime' or 'going that extra yard' that is creating that loyalty, with the word club to the fore.

It is something that the pub sector has traditionally been at the forefront of, with sports clubs and themed-nights, pub quizzes and karaoke evenings being the staple of many a community and high street-based pub. But even that old-world view is being challenged by operators such as Drake & Morgan, Young’s and Fuller’s, who are widening the spectrum of community tie-ins to grow loyalty.

A recent example is Young’s creation of VIP hospitality suites at six pubs for the Six Nations rugby tournament. The company said the areas are 'complete with fully stocked fridge, Astroturf dressed table and your own dedicated waiter'. The package includes sharing boards with mini beef burgers, BBQ chicken drumsticks, bourbon whiskey, pork, ribs and hand cut chips.

Unique experience

Jillian McLean, the driving force behind the central London-based Drake & Morgan, is a master at raising consumer expectations on what a bar/restaurant should provide, and she pulls it off in arguably the most competitive and fickle trading environment.

The group’s new 10,000sq ft site the Fable opened last week in Holborn. It will encompass three bars, a dining area, florist, library, deli, wine room and mixology tables. The venue seats 436 or holds 1,000 standing and is spread over three floors.

The deli will offer fresh breads, cured hams, continental cheeses and condiments from Borough Market producers as well as gifts and homeware. By night the space will become an area for masterclasses such as butchery, flambé and mixology. The florist features a roll top bath filled with flowers whilst the wine room includes a bottle wall and tasting tables with wine available to take home. This is not a one off; the group’s most recent opening, the Happenstance at St Paul’s, also features butchery lessons.

There is now a sense that remembering someone’s birthday is not enough when it comes to driving loyalty. Conversely as consumers have become more conservative with their spend, they have become more experience driven. They are demanding that this experience can not be found anywhere else, urging operators to further delve into their box of tricks to keep them entertained and loyal. It’s time to make sure you have plenty left up your sleeve.

Endgame

The brinkmanship on a grand scale surrounding the future of Punch Taverns, which is currently being played out across the media through official announcements and off-the-record briefings, will come to a head this Friday. Some will wonder how it got this far.

The latest reports suggest that Punch’s creditors have begun to draw up rival debt plans ahead of the crunch vote of the group’s debt restructuring proposals this week.

As analyst Mark Brumby points out, this could be rather a tall order 'because 1) they have surely left it rather until they hit the tree before they began trying to put on their seatbelt and 2) some equity holders, such as Glenview and Luxor, have blocking stakes in the bonds and may object to proposals that penalise equity. Paid advisor Rothschild is said to be working on proposals along with other advisers all of whom will be working up costs.'

Brumby says: “The new proposals are said to have ‘broad support’ but, without being unkind, we’ve heard that before and, at the moment, the bondholders have no power as neither of the securitisations are currently in default. The company, which has already put three sets of proposals to bondholders, insists that it has tried to find a middle way and will put its latest proposals to a bondholder vote Friday.”

Three quarters of the vote must be in favour to be approved and further votes could take place on 28 February if voter turnout is too low. It’s understood that if an agreement can’t be reached, an administrative receiver is likely to be appointed in late spring.

A Punch spokesperson added: “Bondholders can bring an end to uncertainty for our 4,000 tenants by voting in favour of the final restructuring proposal.” If not I fear a round of 'Valentine Day massacre' headlines may appear.

This feature was first published by M&C Report. To subscribe, contact Emily Croft on 01293 846578 or email emily.croft@wrbm.com.