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By Aqilliz
Published on July 20, 2020
For centuries, loyalty programmes have been intrinsic to retention measures in the retail sector. Beginning with the copper tokens that a New Hampshire retailer gave to customers to the “points for discounts” model in today’s leading ride-hailing mobile apps, loyalty has certainly come a long way—all the while, paying tribute to its past.
From copper to paper and plastic to pixels, the medium may have changed but the intention remains the same: to capture a consumer’s long-term interest by rewarding them for engagement. And over the years, it's safe to say that the appeal for loyalty programmes has remained.
Yet, despite this enduring popularity, concerns remain. According to Bond’s 2019 Loyalty Report, the average consumer belongs to 14.8 loyalty programmes, but is active in less than half of them. Naturally, as today’s commercial landscape only continues to grow and brand interactions become increasingly fragmented across omnichannel customer journeys, the compounded effect of ubiquitous loyalty programmes runs the risk of imparting less and less value.
So what do brands need to do? In this blog post, we’re going to be focusing on the importance of personalisation and relevance, the relationship between the two, and the critical role that they play in optimising your loyalty programmes.
The customer is always at centre stage
At Aqilliz, one thing we like to consistently highlight is the power of customer centricity. On the face of it, this means putting your customer at the heart of everything you do. Easy enough to understand, right? Marketers live and breathe to be able to connect with customers in a meaningful way—from awe-inspiring creatives to a strong understanding of what makes them tick, we’d all like to think that everything we do is for our customers.
However, this must extend beyond direct, external interactions with your customers and go one step further—what happens after? In every interaction within your brand’s ecosystem, you gain valuable data points directly from customers themselves and patterns discernable from their behaviours. Yet, when you collect customer data, are you collecting just what you need or more than that? When you look at your tech stack, does privacy underwrite its design?
Customer centricity is more than just about being able to deliver on the promise of personalisation. It’s also more than being able to provide the experience that your customers have grown to appreciate, whether it’s the ability to catch them at their preferred touchpoints or projecting the right marketing messages that address their needs. Customer centricity also means making deep, far-reaching changes to the way you work as an organisation and how you engage with your customers behind the scenes—it means knowing when too much data is actually redundant data, making the difficult (and often costly) decisions to overhaul your existing ad tech toolkit if it isn’t meeting data compliance requirements.
Personalisation and relevance certainly go hand-in-hand—the latter, of course, being the byproduct of the other. When done well, customer centricity is the ideology that underpins efforts at ensuring both personalisation and relevance.
Prioritising personalisation
Today, compelling products simply aren’t enough to keep shoppers from returning. A 2017 study commissioned by global digital agency Wunderman found that 79 percent of American consumers aged 18-65 are looking at a new metric to judge brands by: “wantedness”. Consumers voiced that brands needed to demonstrate that they understood and cared about them before considering a purchase. Three years later, the results of this study are certainly still relevant and especially so when placed in the context of loyalty and rewards programmes.
Without a clear understanding of your customers, it’s easy to fall into the trap of offering generalised rewards and incentives that fail to take your customers’ needs into account, leading to frustration and decreased engagement across the board. This is a shame, as personalisation can create up to a 6.4x lift in member satisfaction, driving increased spending and a long-term relationship between consumers and the brands they care about.
To support efforts at personalisation, brands need a strong customer data strategy, allowing them to tap into valuable insights that can be gained from past interactions across all touchpoints while reconciling that with transactional information such as past purchases, website visits, customer service communications, and other forms of publicly available data. When these data points are fully reconciled in a customer data platform (CDP), marketers can have a single, holistic view of a customer and are better positioned to optimise their programmes accordingly.
That being said, within loyalty programmes themselves, more needs to be done to untangle an increasingly complex supply chain across programme owners, participating merchants, and the wider programme ecosystem. With data silos across different programme stakeholders, it’s hard to have a full picture of how loyalty points are earned and later redeemed across a network of merchants. Emerging technologies such as blockchain can help to address this problem, by providing a single, unified view of the entire points lifecycle on a shared, transparent ledger. This means that programme owners and partners can benefit from full visibility in how consumers are behaving within the programme ecosystem, allowing for the increased personalisation and targeting of offers to boost engagement.
When blockchain is coupled with a CDP, designed to construct and consistently maintain each customer’s profile over time, brands gain access to a match made in heaven: an up-to-date data source and real-time behavioural insights, allowing for an increasingly streamlined model of personalisation.
Relevance: a matter of context and utility
Though closely tied, the importance of relevance goes beyond its relation to personalisation. Relevance is also about an adaptability to the external environment that impacts your customers—rewards that have been personally relevant to them several months ago may have little use at present. Consider the airline industry, home to hundreds of carriers each with their own frequent flyer programmes. These airlines often partner with one another as part of a group in order to inject greater liquidity in their programme ecosystems, giving travellers more opportunities to utilise their points across different carriers.
With the size and scale of the global tourism industry, these frequent flyer programmes are highly valuable and have proven to be a source of revenue for airlines—American Airlines’ AAdvantage loyalty programme, for one, is said to be valued at as much as US$30 billion and United Airlines recently announced that it would be raising US$5 billion by borrowing against its frequent flyer programme to weather the impact of the ongoing coronavirus pandemic. Indeed, the global health crisis has seen the revenue that would normally be accrued from frequent flyer programmes suddenly grinding to a halt, leaving customers stranded with points soon to expire and putting their cumulative hours of air travel to waste. This is where the importance of contextual relevance comes in.
Thankfully, airlines have been quick to pivot. Major airlines such as British Airways, Cathay Pacific, Singapore Airlines, and many more have opted to extend the elite status of their most avid travellers, some even through to 2021 regardless of miles flown. Others are injecting greater opportunities for redemption and spend through co-branded credit card programmes when shopping for necessities. For example, Delta’s American Express credit card offers 4x more SkyMiles per dollar when customers shop at supermarkets across the United States. By recognising the new reality underpinning their consumers’ lives, airlines have found ways to adapt their loyalty programmes to ensure that they remain relevant while assuring customers that their patronage hasn’t gone to waste
The lesson to be learnt from this is that flexibility is crucial. Having a sufficiently robust ecosystem that welcomes interoperability across different programmes can provide more opportunities for liquidity, enabling customers to ensure that they have ample opportunities for redemption. Eliminating platform or location-specific restrictions to redeeming points is also another way to ensure that programmes are sufficiently relevant, resilient, and easy to use, allowing them to scale in growth while retaining customers over a longer period of time.
Elevating the customer-first mindset
For any brand, achieving success at all efforts of consumer engagement is paramount. Within a rapidly growing online landscape, consumers have more choice than ever and positive brand interactions are crucial to set oneself apart against industry peers. No matter the strength of the competition, a strong dose of personalisation and relevance in equal measure will help to ensure that you’re able to rely on a healthy base of brand-loyal consumers who continue to return. With that, it’s clear that there’s more to customer happiness than competitive rewards but an experience that shows, “we know you, we hear you, and we understand you”.