Innovation in customer loyalty

Steven Morris discusses how today’s instant reward programmes can deliver better customer engagement

Every consumer business faces the same challenge: delivering a positive experience for their customers in order to encourage engagement and loyalty. This will ultimately help them to sell more and grow faster. Research shows, however, that traditional loyalty schemes are no longer as effective as they once were. This is not only because of changing consumer expectations but also because they have become expensive to run and difficult to unwind. It is also not always clear whether customers understand and appreciate the value of what they have been rewarded with.

Here we have digested recent research into four trends that will have an impact on customer loyalty and that we think every consumer-facing organisation needs to consider when planning a reward scheme.

1. Customer loyalty has evolved – the majority of consumers consider being rewarded for their loyalty as the norm but not a differentiator*

In a recent Deloitte survey on customer loyalty, almost half of the respondents indicated they needed “more than just points or discounts” to shop with a brand.

Securing a customer’s loyalty goes beyond having a loyalty programme. Rather, loyalty programmes need to focus on the role they can play in the overall customer experience to help forge a relationship between the customer and the brand for the long term.

Brands therefore need to see loyalty in emotional terms and not just reward customers for purchases. Transactional loyalty is no longer relevant in today’s marketplace. With many millions of pounds worth of dormant loyalty points in the UK alone and a switching economy worth £221bn, reward schemes must act as more of a differentiator for brands to build long-term, valuable connections with customers than they currently do.

Crucially, loyalty is much harder to achieve when every consumer has different expectations and responds to different triggers and touchpoints on the consumer journey.

Getting the customer ‘experience’ right has therefore become the differentiating factor for many successful business models. Good marketers understand how to use experience and relationship to appeal to the emotional side of consumers, providing something of real value. Only then will brands have earned the privilege of longer-term loyalty and the value that comes with that.

How can instant reward help?

Many of the current schemes just reward normal behaviour or routine, not loyalty. Loyalty is often tied to routine, so any innovation that simplifies a routine while enhancing the customer experience is a reward in itself. While rewarding customers for their repeat purchases is important, it is the overall experience that matters the most.

Instant reward will increase the chances of your customers remembering their experience with a brand long after they have forgotten receiving a discount. This applies not only to the type of reward given but also to its delivery to the recipient. The option to personalise delivery for each customer at the simple touch of a few buttons will make the reward feel all the more considered and special and therefore much more effective.

*source: The Deloitte Consumer Review, June 2017

2. Meeting customer needs and expectations – 89% of British consumers are a member of a loyalty scheme but among the least likely in the world to actually use it.*

And only just over half of those surveyed (51%), well below the global average of 67%, said they buy more from retailers and brands with a scheme over one without, if all other factors were equal.

The most likely explanation for this dichotomy is the hugely competitive retail market in the UK and, importantly, the sophistication of UK consumers. Consumers want reward schemes that are linked to customer experience and customer service. The best schemes offer them what they want, engage with them and stretch brand equity in the process.

Since price is no longer the key differentiator, brands therefore need to differentiate with experience to become personalised and connected.

How can instant reward help?

The research shows clearly that flexible and personalised rewards are becoming increasingly popular, with 71% of consumers citing those elements as the most appealing loyalty feature for a brand.

Given the expense associated with developing and running a reward programme, it’s also essential that a brand feels it is getting the most out of them. To do this, programmes need to evolve and become more instant in line with customer expectations.

This means avoiding blanket promotions, which feel more like spam to consumers, and focusing on customising the experience as much as possible.

A wide range of instant rewards and incentives will give your consumers the ultimate in choice and flexibility and demonstrate to them that you understand and respect their different priorities and needs.

*source: Nielsen survey, December 2016

3. Appealing to customers in the digital era – 44% of consumers want the option of personalised rewards based on their purchase history.*

In the fast-paced, hyper-connected world we live in today, consumers not only want to be rewarded based on their personal tastes, they also want to choose how they interact with a brand, expecting them to be more relevant in the way they communicate and engage with them.

We have all become used to an online world where everything we engage with is easy, fun and immediate, leading to instant gratification.

As a result, today’s tech-savvy consumers have high expectations of all their daily interactions and very little patience for bad user experiences. A positive experience, by contrast, acts as the ultimate motivator.

How can instant reward help?

In the digital era it is important that loyalty programmes give consumers some control over curating and selecting the rewards and level of interactions they have with a brand. Brands that build loyalty programmes collaboratively with their customers can lower the risks and increase their chances for success and a better ROI.

Take advantage of the rise in automation and technology to make your reward offer appealing and accessible anytime, anywhere. If it can fit seamlessly into your customers’ shopping experience and lives in general, their engagement with it will be far better.

Life stage will of course impact on this, with personalisation choice, immediacy and fun being a higher priority for today’s teenagers, Generation K and millennials, for example. Having a fully adaptable scheme in place that takes these preferences into account is therefore essential.

Ensure that all the touchpoints of your reward programme are designed, communicated consistently and delivered in a way that provides choice and immediacy so that each individual customer can engage with it in the way and time that suits them best.

*source: The Deloitte Consumer Review, June 2017

4. Simplicity and cost-effectiveness of reward – traditional loyalty schemes can become a financial liability for business.*

Loyalty programme innovation can be risky and expensive, whether become of cost, fear of alienating the current membership base or doing it inefficiently. But investment in loyalty initiatives is on the increase, so there’s a greater need than ever to get it right.

Businesses need to consider a customer-built product for implementing their loyalty strategy as opposed to an off-the-shelf solution, giving them greater control over their data and the flexibility to innovate as their customers’ needs and expectations change.

Also worth considering is that attracting a new customer can cost five times as much as keeping an existing one, so companies need to pay as much attention to retention as they do to acquisition. Boosting customer retention rates by just 5% can increase profits by between 25% and a very significant 95%.

How can instant reward help?

Instant reward mechanics that integrate seamlessly into existing company systems and that can be managed from one central point – regardless of the complexity of the different branding and messaging – will be more cost-effective, simplify the administration process and increase engagement by the recipient.

Instant delivery of the reward, by email for example, with redemption options that are fast and easy offers real-time visibility of redemption activity and allows for accurate measurement of the process and its success.

Combining this with behavioural data and psychology enables a business to develop and optimise their reward scheme in line with the changing nature and definition of loyalty, using feedback and data to continually assess what behaviours they reward and whether these suit the unique demands of their target audience.

*source: The Deloitte Consumer Review, June 2017

To find out more about our Compliments Select eReward codes and how they can help you deliver customer engagement, contact 0333 400 5311

Steven Morris, is Director of Key Accounts at Edenred UK.


Author: Andy Philpott | Category: Blog | 19/09/2018 | 0

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