There are thousands of reward and loyalty programmes operating all over the world today, with more than 2.6 billion memberships just in the US market. Retail, consumer products, banking and travel are today’s leading sectors in the UK. Many brands are moving from card-based programmes to mobile so as to engage with the digital generation and improve their customer experience.
For all that growth and popularity, Capgemini’s latest report on reinventing loyalty programmes for the digital age explains why traditional loyalty programmes just won’t cut it anymore for the brands that offer them today.
As much as these programmes can drive consumer behaviour through incentives, which can be more effective now from the smart use of customer data to personalise and optimise offerings, the irony as well as the challenge is that most of their members are only “loyal” at the transactional level when there are financial incentives. This means cutting margins and putting the brand equity at risk, and brands are still struggling to differentiate themselves.
Could partnerships make a difference and win the customers’ hearts beyond their minds? Yes, particularly now in the time of loyalty proliferation, fatigue of random irrelevant offerings and the rise of digital customer experience.
In coalition programmes, there are often redemption-focused partnerships and targeted partnerships which are now enabled by insights from customer data analytics. These initiatives are crucial in the competitive loyalty landscape today to ensure relevance and ROI. In the meantime, there are great opportunities in learning from innovative brands that are doing several things right with digital that made their loyalty programmes stand out and won customer loyalty on emotional levels:
1. Make your customers your partners too – engage and resonate via social partnership
American Express and Starbucks are leaders in social rewards. When AMEX launched a partnership with Twitter a couple of years ago, they turned tweets into dollars for both customers and its partners. Social rewards can help brands to have real conversations and resonate with customers, who will then be incentivised by being the brand’s advocates in their social communities.
Similarly, 21st Century Fox rewarded their members when they shared the “Kingsman” trailer with friends on Facebook, resulting in them going to see the movie
2. Geo-location and partner to enhance your brand message
If your brand message is about providing a five-star intuitive service, stick to it and partner up to demonstrate it. Marriott Hotels’ recent work with iBeacon has leveraged geo-targeted offers in the hotel, providing local partner benefits exclusive to loyalty members as they check-in via mobile. For a digital-savvy traveller checking into a new city this type of hyper-localised advertising and service is gold.
3. Keep it simple, empower customers and create a convenient experience
Some coalition programmes fall into the trap of being overly complex and confusing for customers to experience and appreciate, making them lose sight of what’s really important to its customers. Providing the convenience factor and making the user experience work well means you care and understand - that’s the basics of building emotional loyalty. Uber and Spotify’s partnership allowing members to take control of music during taxi rides did just that.
4. Gamified loyalty
Innovative brands are looking at ways to provide intangible or intrinsic rewards through gamification. It’s a great idea because, if designed well, it can create a strong sense of achievement for customers which goes beyond financial gain and helps build real, long-term connection with them. However, it doesn’t mean brands have to become game makers; the rewards mechanism should have the characteristics of games. Samsung’s partnership with Badgeville has encouraged a large amount of user-generated content by rewarding badges in its already highly populated online community Samsung Nation. Gamifying partnerships also works effectively in keeping partnering brands engaged with performance tracking.
These inspiring and digitally-enabled partnerships are changing customers’ expectations of loyalty programmes and brands should start from understanding their target customers’ digital behaviours first.
New technologies and partnerships are opening up a new world of possibilities but it’s easy to forget that it is the customer experience that truly provides the sense of belonging and emotional loyalty.
Angelina Yue is a consultant at Capgemini.