Rewarding loyalty in an age of choice

To say that today’s consumers have endless choices is more fact than hyperbole. In a competitive, fast-paced business environment rich with options, brands must not only attract consumers, but earn their loyalty. 

In the last few years, loyalty has shifted to focus on making meaningful connections, understanding consumer behaviours 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. Below are some steps retailers can take to gain consumer loyalty:

Digital adoption has quickly accelerated among businesses. Most brick-and-mortar shops 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 programmes to be more socially oriented. Many are investing more in social channels, collaborating with influencers and engaging with younger consumers. As businesses understand and recognise more of their consumers through various channels, the not-so-traditional loyalty programme evolves along with it.

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 optimised. 

When properly activated, data can power personalisation 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 personalised 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 programme, allowing for more seamless earning and redemption.

Brands can provide significant value through personalisation, easing the consumer journey to foster loyalty. 

Loyalty comes with great expectations. Consumers expect flexibility, choice and value. Loyalty programmes help businesses meet those demands. 

Many brands reward with points. Points themselves are simple to understand and reward small and large behaviours, but at times, consumers don’t realise their value immediately. Some earn a ton of points and never redeem them. This is actually a sign of a poorly functioning programme 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 programme:

• 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 programmes, 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 programmes 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 programmes where earning opportunities are less frequent.

Successful businesses are taking this lesson to heart. A major Asian programme allows its loyalty members to earn and use their points at over hundreds of partners with the ability to convert to other brand point programmes and travel miles. Their consumers can do this right in the mobile app. Conversion rates are clearly spelt 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.

For businesses, a loyalty programme is a valuable asset. It can’t fix a defunct product or service, but it can enhance very commoditised 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 programmes 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.

Interested in improving your loyalty interactions with consumers? Click here to request a meeting with our experts to see how Mastercard works with organisations on loyalty programmes.