BrazilIn the age of choice, brands must earn consumer loyalty
In today’s competitive, fast-paced business environment rich with options, brands must not only attract consumers, but earn their loyalty, writes Johann Suchon, Senior Vice President Loyalty Solutions at Mastercard.
In the last few years, loyalty has shifted to focus on making meaningful connections, understanding consumer behaviors, and adapting to a changing loyalty landscape. To do so, businesses must build, innovate or even reboot their loyalty strategies. Whether it be bringing together technology and tradition, leveraging data or highlighting the value of their rewards, brands are interacting with consumers in different ways and putting loyalty at the heart of the conversation.
Three main steps retailers can take to gain consumer loyalty:
Complement the traditional loyalty program
Digital adoption has rapidly accelerated among businesses. Most brick-and-mortar stores now have an e-commerce presence and in many cases, an app specific to their brand. As usage is moving more towards online, businesses now have better ways to understand their consumers and they’re seeing a fast convergence of digital and loyalty.
For example, a major multinational hospitality company has started to focus on complementing the hotel booking experience by also suggesting time and location-based opportunities. Along with earning traditional point bonuses, consumers are further engaged with packages around holidays like New Year’s Eve or local sporting events where members are given rates exclusive only to the digital app.
In addition, brands are transitioning traditional loyalty programs to be more socially oriented. Many are investing more in social channels, collaborating with influencers and engaging with younger consumers. As businesses understand and recognize more of their consumers through various channels, the not-so-traditional loyalty program evolves along with it.
Leverage data for personalization
Data-driven marketing drives incremental value. With the increase of a digital presence comes a greater availability of data, but all that can quickly become a bottleneck if it’s not responsibly collected and managed, and unified and optimized.
When properly activated, data can power personalization campaigns that deliver more relevant offers and engagement to a consumer increasingly seeking just that. A brand could be running thousands of promotions at once, but when a consumer feels that they are being communicated to directly in a way that they control, they are more connected to the brand and can feel the real value the brand provides.
A loyalty program that provides a personalized experience puts the data into relevant action, words and connection.
For instance, a global luxury retailer group uses consented consumer-provided data to directly address shoppers, adapting the content and product offerings so that it’s culturally relevant and appealing to each individual. Those consumers are then also linked to the same global loyalty program, allowing for more seamless earning and redemption.
Brands can provide significant value through personalization, easing the consumer journey to foster loyalty.
Highlight the value of rewards with ease and transparency
Loyalty comes with great expectations. Consumers expect flexibility, choice and value. Loyalty programs help businesses meet those demands.
Many brands reward with points. Points themselves are simple to understand and reward small and large behaviors, but at times, consumers don’t realize their value immediately. Some earn a ton of points and never redeem them. This is actually a sign of a poorly functioning program and it’s on the business to make redemption easier, more seamless, and above all, valuable.
Increasing redemption frequency comes down to design, making it easy to redeem, communicating often where it is relevant and being transparent with point value.
Brands that have a thoughtfully designed program:
Encourage active redemption
Instead of discounts applying automatically and points auto-deducting at checkout, ensure there is a purposeful ‘tap’ with a follow-up notification in real time or email reinforcing the redemption. If an opportunity has been missed, a thoughtful “Would you still like to redeem?” message goes a long way.
In fact, there is growing interest in allowing “Pay with points” redemption options. For issuers and co-brand programs, this is a simple, straightforward way to leverage redemption and burn small points pockets. Frequent redemption, often for lower value rewards, results in a more engaged – and therefore profitable – consumer.
Provide more choice and value with partners
Whether it be through co-brand cards, coalition loyalty programs or other means, having a partner expands redemption choices. More and more companies are looking for their currencies to move outside their own ecosystem to give consumers the choice and opportunity to hub their points where they want. This does not take away loyalty from the original brand where the points were earned, but rather provides greater flexibility – especially for those programs where earning opportunities are less frequent.
Successful businesses are taking this lesson to heart. A major Asian program allows its loyalty members to earn and use their points at over hundreds of partners with the ability to convert to other brand point programs and travel miles. Their consumers can do this right in the mobile app. Conversion rates are clearly spelled out and the transfer process is smooth, frictionless and rewarding.
Easy-to-use, transparent redemption can be the foundation of the value exchange between brand and consumer, enabling a loyalty program that accelerates spend and compounds rewards. This is especially true for brands that have high-frequency purchases like grocery and fashion retail. Consumers benefit from something that they are purchasing regularly, fortifying a habit and strengthening loyalty.
Conclusion
For businesses, a loyalty program is a valuable asset. It can’t fix a defunct product or service, but it can enhance very commoditized ones. In particular, it gives the brand a vehicle to talk with consumers on a regular basis and use their consented information – which they are willing to exchange for rewards and recognition – to enhance its offering.
As data proliferates and the opportunities to partner with different brands emerge, loyalty strategies and programs will continue to embrace broader ecosystems to extract value and choice for their loyal consumers and in doing so, attract new consumers to begin the loyalty cycle all over again.
