Loyalty is not a new term to marketers, however, it is quickly becoming a winning proposition for brands all across the world. Since the emergence of digitisation through e-commerce and digital payment infrastructure a new chapter of loyalty programs has arrived.
Marketers need to shift their focus from creating absent cookie cutter one-size-fits-all loyalty programs to immersive personalised and unique loyalty experiences. We need to start being responsive to customers across the channels of their preference, relevant to customers based on their changing needs and enable them to choose how they would like to be rewarded.
Loyalty History Lesson
Let’s start with a brief lesson on how customer loyalty programs first kicked-off. Loyalty programs have stories dating back to the 18th century where retailers apparently used redeemable copper coins for future product purchases.
The late 1900s saw the birth of one of the most well-known loyalty programs ever created: Frequent Fliers. Often regarded as the first full-scale card-based loyalty program of the modern era, American Airlines' launched their Frequent Flier program in 1981. The program revolutionised customer loyalty and now boasts over 50 million members in their revamped AAdvantage program.
In 1995 Tesco launched the revolutionary loyalty club card. The science and messaging behind the program itself became quite sophisticated and changed the game for Tesco. Edwina Dunn (co-founder of dunnhumby) explains,
First and foremost it was a thank you and that thank you was money off, so people visited the store one more time, which led to millions and millions of pounds’ increase [in revenue]. They would occasionally put another item in their basket which translated to a huge sales uplift.
Today, programs such as Starbucks Rewards is optimised for mobile and the app acts as a rewards program and a mobile payment method. Members will soon be able to choose how they would like to redeem their "stars" for a wider range of rewards. The app is a utility to drive customers in-store and bridge the loyalty gap across the digital and physical environments. Other loyalty programs also reward points on social media shares and referrals as it helps drive new customers and grow revenue - rewards are now almost endless. With the rise of digitisation consumers now expect more for their loyalty - the big question they are asking is how is the brand being loyal to me? Customer loyalty is about the company acting loyal to its customers, not just the vice versa.
The 3 Customer Tenets
The true source of modern loyalty is to create lasting customer relationships and to recognise and reward them as individuals; not as nameless, faceless point collectors. To demonstrate your commitment to the customer beyond just purchases it’s time you start delivering on these three key tenets:
1. Be Responsive
Relationships are built on two-communication. Today’s consumer wants to be part of a loyalty program that cares about what they have to say and responds to them on their preferred channel. With so many digital experiences available at their fingertips, customers have grown accustomed to good design and responsive interfaces. Providing access to your program via both website and mobile app has a significantly positive effect on customer satisfaction. More than 60% of consumers in Asia Pacific are now able to interact with their loyalty programs online. This implies that 40% of consumers can’t interact with their loyalty programs on their channels of choice^.
Loyalty programs should offer members a succession of experiences from the moment they join to the time they first earn points, first receive a points statement, and redeem and beyond. Each of these experiences presents as a moment of inspiration and can have a very meaningful impact on how a member perceives and engages with a program.
In order for brands to provide these experiences, they need to be able to respond instantly to any customer data signal, such as demographic, preference, behavioural or location. Businesses need access to this data in real-time so they can activate this data and communicate at the moment.
2. Be Relevant
In a recent whitepaper created by MasterCard, when consumers were asked whether they will be willing to share personal information with their loyalty programs in order to receive a more relevant experience or benefits, 71% reported being willing to do so. Positive personalised experiences for a member is what it is all about, however, only 36% of consumers are highly satisfied with the level of personalisation in their current loyalty programs^.
Companies need to start treating data like it’s a precious gift; customers need to be aware of what data you have about them and how you are using it. You will be surprised at how much information a customer is willing to share if you just ask them the question and share the benefit. It’s time to step away from the basic first name, last name, gender personalisation and start looking at the things that really matter.
Companies need to start treating data like it’s a precious gift; customers need to be aware of what data you have about them and how you are using it.
Use data to provide useful content, personalised offers and lucrative rewards based on the customer's data signals. Present opportunities for customers to respond to a wide range of challenges from photo, video and social challenges to polls and surveys, contests, games and sweepstakes. All these engaging brand experiences can be activated by leveraging your data and communicating through the customer's channel of preference, whether it be through email, mobile push, mobile wallet, SMS, social, website or in-store via point of sale.
3. Be Rewarded
While your customers might be interested in the same types of products, they’re not all interested in the same kinds of rewards. Loyalty programs which offer only one type of reward can box itself into a corner by lowering its perceived value for prospects, especially in highly competitive discount-driven markets such as retail or cosmetics.This might be showing my age, but I remember the excitement of being able to choose my toy when purchasing a Happy Meal at McDonald's. I get the same enjoyment today when looking at the Virgin store and deciding what to spend my points on. The opportunity here is how can all businesses apply that capability to their existing loyalty programs. Smile.io’s Kristen Burkard says that
Combining transactional rewards with experiential ones will help your program stand out.
The types of rewards can differ based on the customer like discounts, free swag and less tangible but equally valuable rewards like VIP access to sales. Sephora does this well with their ‘Beauty Insider’ program by allowing members to redeem their points in rewards.
Find a unique way to add this to your loyalty proposition and give customers a choice on how they want to redeem their points. This gamification element will automatically increase the appeal of joining your program and add a level of personalisation that customers crave.
^ Achieving Advocacy and Influence in a Changing Loyalty Landscape - A MasterCard Asia Pacific Study
Billy Loizou has over 10+ years experience in design, technology and marketing; he has worked with some of the world's most renowned and respected brands, helping them improve their customer experience and driving profitability.