Powering Consumer Engagement With Digital-First Loyalty Experiences

By Aqilliz  

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Digital first loyalty experience

It’s 1929: Baking mix brand Betty Crocker starts printing box tops — or coupons — on its packaging which can then be used to redeem premiums from a list of items in its catalogue. Over time, the coupon redemption programme becomes ubiquitous and successful and is inherently woven into the fabric of American family life. Mothers would start building a collection of gifts from the catalogue for their daughters. 77 years later, the household brand would retire one of the most well-known loyalty programmes of the 20th century.

Today, box tops are relics, but loyalty programmes have cemented their place in companies’ marketing strategies. Just last year, the loyalty management market was valued at US$6.79 billion, and is slated to grow to US$17.6 billion by 2028.

But just how much of this truly translates to increased — and, more significantly, sustained — customer engagement? In terms of loyalty programmes, a Capgemini study found that the average household in the US actively used only 44 percent of their memberships, and more than half of the respondents surveyed said they stopped using at least one programme entirely. How are loyalty programmes missing the mark, and why is it important that marketers get it right?

Brand promiscuity in the digital age

It goes without saying that consumer needs have evolved with the digital age. With the rise of mobile, customers now expect round-the-clock access to an endless choice of products and services. The ways in which customers engage with brands have also been completely upended as a result — the sheer number of choices and amount of information available online would naturally encourage customers to readily and easily switch between brands.

Rather than having to walk into a store to browse through its products before entering another to compare between the two, a quick Google search for product reviews, a seamless check-out process, or even a simple user interface on a store’s website is enough for a customer to make a purchasing decision. Throw a global pandemic into the mix, which inevitably led to an influx of e-commerce customers, and the issue of brand loyalty becomes an even more pertinent one to address.

Get aligned or get left behind

As consumers spend more time on their mobile phones and across various digital channels, keeping the customer engaged has become extremely difficult. Unfortunately, brands continue to preserve a transactional mindset — one that only rewards a customer once a purchase has been completed.

Capgemini found that this model accounts for a shocking 97 percent of loyalty programmes, out of which 77 percent fail in the first two years, and that many opportunities for engagement are overlooked in the process — few programmes offer rewards for rating, reviewing, and referring.

Additionally, the gap between offline and online channels is rarely properly bridged — few loyalty programmes allow for the redemption of rewards through the very mobile channel it is offered on. In an increasingly crowded environment where a seamless customer experience would separate the wheat from the chaff, brands need to consider the importance of an integrated approach to loyalty programmes that also prioritise digital.

The impact of integration

With 19.3 million active users in October 2020 at the height of the pandemic in the US alone, the Starbucks Rewards Programme is often lauded as one of the industry’s most effective. The coffee chain giant had built its rewards programme into its mobile app, which also offers mobile payment capabilities, resulting in access to a tonne of customer data. With this data, Starbucks can then develop personalised, timely offers for their customers based on their past purchasing habits — think of a strategically timed coupon offer for a tired commuter on Monday mornings.

Similarly, Nike’s membership programme offers rewards through its main mobile app, which has seen the acquisition of more than 70 million new members globally last year. The sports brand giant does not stop there, however — it also offers other apps such as Nike Run Club and Nike Training Club, which create value for its members through resources such as expert training advice. It comes as no surprise that studies have shown that advocacy and education tend to be the most valuable loyalty programmes.

On top of that, Nike, like Starbucks, does not miss the opportunity to collect valuable data through its integrated app. For example, Nike Run Club users have the option to record the date they start wearing a new pair of running shoes, enabling Nike to send personalised recommendations on when it is time to swap out the shoes for new ones based on the total distance clocked, as well as the type of terrain the user tends to run on.

That said, the impact of data and digital isn’t without its risks. Innovations in emerging technology such as blockchain can allow data to be deployed across an immutable ledger of transactions, with preserved records of every transaction ever made while ensuring that they can’t ever be tampered with. This can prevent double spending, fraud, as well as any form of manipulation of loyalty points. When deployed across a broader network, these points can then also be implemented across a broader network of brands and retailers — consider the model posed by airlines and hotels.

If the successes of Starbucks’ and Nike’s programmes are any indication, the value of a good product can only take one so far. To maintain relevance, marketers need to integrate their loyalty programmes throughout the entirety of the customer journey. In taking on a more data-led approach, brands can hope to drive more sustainable consumer engagement and build brand loyalty fit for the digital age.

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