Loyalty programmes need to offer more than just points
By Lynette Dicey - Aug 24th 2018, 08:21
Modern loyalty programmes need to offer a lot more than merely points if they are to elicit any interest from cynical consumers, who have become jaded by the generic perks offered by most loyalty programmes.
To be effective, loyalty programmes need to ensure a deeper level of engagement and personalisation and should become part of consumers’ conversations, believes Neal Jones, chief sales and marketing officer for Middle East and Africa at hotel group Marriott International.
“Earning and burning points is a thing of the past,” says Jones. He believes that, particularly in the hospitality industry, a good loyalty programme is the backbone of a good business strategy. However, we live in an era when consumer expectations and behaviours are changing, as is the landscape in which brands operate, and he says brands, marketing companies and advertising agencies need to aware of this when determining marketing strategies.
“When it comes to loyalty, transaction-based relationships are no longer enough,” he says. “Consumers want meaningful, personal relationships and are seeking perks from brands that include expanded buying power, new benefits, exclusive access to smart apps and the like.”
There’s no doubt that a well-executed loyalty programme can bring significant advantages to brands. According to an article posted on www.forbes.com, they can lead to a 30% increase in customer lifetime value, with a greater amount of consumer visits as well as greater spend per visit, even attracting lost customers back to the brand.
According to Netherlands based company, the Dentacoin Foundation, a company providing blockchain-based applications to the dental industry, today’s market makes it challenging to establish consumer loyalty, despite the plethora of online marketing tools, marketing sites and other methods available to communicate with consumers. Digitally empowered consumers think nothing of switching brands if something else grabs their attention, or if they are dissatisfied with the service they’re receiving. Research undertaken by Access Development, a company that provides information about discounts and reward programmes for retailers, says 79% of customers will go to a competing brand within a week if they are not satisfied with the customer service they’re receiving, resulting in millions worth of lost revenue.
And consumers are not short of choices either – they’re bombarded with brand messages, discounts, promotions, banner ads, e-mail marketing and brand experiences, all of which are designed to influence their purchasing decisions. A strategically developed loyalty programme that is seamlessly executed to meet the needs of consumers will provide them with tangible incentives to purchase and will at the same time cement the brand in their minds, the Dentacoin Foundation reports.
In the case of Marriott International, the brand provides a flexible programme that emphasises the creation of an emotional connection between it and consumers by enabling them to use the points they have earned for experiences, both on and off the hotel’s properties, that are personalised. It’s an approach that has worked well, as the programme has over 100 million members.
On the other hand, says Jones, some of the main reasons for loyalty programmes not to work are when it takes too long for consumers earn their rewards or when redeeming points is too complicated.
Members love reaching a certain status that makes them eligible for additional perks and benefits, Jones says, which is why communication is a crucial element of a winning consumer programme. People appreciate testimonials, personalised articles and experiences that will reaffirm their belief in the brand. And if they’re members in order to gain access to deals, they want to hear about special offers early and often, and these must be clearly communicated. If customers are not receiving this type of specialised communication, they may feel that the programme is not what they’re looking for.
For Jones, customer loyalty programmes have become proven methods for growing and sustaining market share across businesses. “Customers who are already enthusiastic about a brand are more likely to continue buying and are prime targets for new products and services if they belong to a loyalty programme,” he says, adding that it is far more profitable and beneficial to retain existing clients than acquire new ones.
In a constrained economy, many brands will raise prices in an effort to retain revenue – a particularly ineffective approach when one considers today’s price-savvy consumers, most of whom by necessity are more cautious in their spending. In this environment, loyalty programmes can work better to increase customer retention, purchase frequency and volumes of transactions says the Foundation’s report.
Tailoring company and brand objectives to meet the evolving expectations of consumers is no longer a matter of choice, the Dentacoin Foundation warns. Loyalty programmes provide a source of repeat business for brands, and in many cases, determine the brands that will continue to grow in today’s extremely competitive market.
Jones cautions that old behaviours and consumer patterns no longer hold true in the current marketplace. While loyalty programmes can work as a brand’s most powerful tool in terms of engaging with loyal customers and driving market share, they must be simple to access, relevant to industry trends and appealing to today’s digital consumer.
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