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The Future of Customer Engagement and Loyalty
In these challenging economic times, customer engagement and subsequent loyalty is far more important than ever. Companies strive to build closer and longer relationships with their customers, while customers look for trusted brands that recognise them as individuals and add value to their lives through status-enhancing, timely and relevant experiences. With this in mind, Collinson and Salesforce – global leaders in customer loyalty and benefits – conducted The Future of Customer Loyalty research earlier this year to help reveal the strategies and tactics leading brands are employing today, and investing in, for the future.
Direct insights from over 350 Asia Pacific-based brands focused on enhancing customer loyalty
Technology is increasingly seen as important for enhancing customer loyalty programmes in Hong Kong, where companies are prioritising investing in technology infrastructure (78%) and data analytics (59%). That’s significantly higher than firms in Singapore (62% and 36% respectively) and Australia (43% and 21%). Companies in Hong Kong are also ahead of their regional peers in embracing innovations such as blockchain, artificial intelligence (AI), and environmental, social and governance (ESG) benefits.
Loyalty programmes come in many shapes and sizes, and our research uncovered clear regional differences in the ways those programmes are viewed and supported. Some companies focus on enhancing their customer loyalty programmes with analytics-driven tools like a single customer view, supported with heavy investment in technology. Others believe existing loyalty programmes are adequate, instead preferring to focus on offering new customer experiences and delivering innovative rewards. The latter is more likely in markets like Australia with dominant brands that are focused on domestic customers. However, global companies in Singapore and Hong Kong recognise that the loyalty of increasingly discerning customers is critical to business expansion and competitiveness – and are resourcing their customer loyalty functions accordingly.
You’ve indicated that your company does not have a formalised and active loyalty programme. What is the main reason for this?
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Respondents included over 350 organisations across the banking, insurance, retail, travel, transport and hospitality industries located in Australia, Singapore and Hong Kong; with job profiles being spread across every business function involved in delivering customer loyalty programmes: from marketing to customer relationship management and IT. The research was designed to explore loyalty programmes from a range of perspectives. For example, what executives perceive as value in a loyalty programme and how companies use technologies to improve the reach of their loyalty initiatives. It also evaluated respondents’ plans for future programmes as they seek to build long-term relationships with their customers.
Different customers, different strategies
When asked to rate the maturity of their loyalty programmes, 81% of respondents said their companies were at a mid-range or highly developed stage. But three-quarters are still far from introducing advanced loyalty strategies that include hyper-personalisation, time-relevant incentives, partner-based value add, and new platforms like the metaverse.
Spending on loyalty programmes varies considerably between countries. For example, 79% of Hong Kong companies spend $5 million or more annually, compared with 58% in Singapore and just 27% in Australia. One-third of respondents in Australia spend less than $1 million each year, and 13% spend nothing at all on loyalty programmes.
Overall, 64% of respondents see a seamless customer experience as the most promising way of increasing returns from loyalty programmes. But there are differences in strategies between countries and industries, with many companies still focused on pragmatic benefits, such as rewards points and discounts, and others moving to more emotional offerings, like special-access and personalised experiences.
Key findings
How companies are rewarding loyalty today
Asia Pacific brands are using a variety of strategies to build and maintain customer loyalty. The most popular include discounts on company products, discounts on products and services from third-party partners, rewards points or miles, and non-monetary rewards like value-added experiences and special-access benefits. Retailers are most likely to offer discounts on their products and digital content. Insurance companies are least likely to offer rewards points, favouring non-monetary rewards like value-added experiences. Many companies are increasingly exploring other options to stand out, including sustainability-focused benefits such as carbon offsets, and digital rewards like cryptocurrency, non-fungible tokens (NFTs) and special digital content.
Although loyalty programmes are widely used, respondents confirmed that the maturity of those programmes varies greatly. We asked them to identify the stage of maturity of their company’s programmes, on a scale of 0 (transactions only) to 6 (sophisticated, partner-driven loyalty programmes extending into new customer interaction spheres). We found that the average maturity level is 3.6, with 56% of respondents nominating their maturity as being either stage 3 (loyalty programmes) or 4 (targeted and personalised marketing). Significant regional differences are evident between countries. Around 80% of companies in Hong Kong nominated a maturity level of 4, 5 or 6, compared with 62% of companies in Singapore and 39% of companies in Australia. Only one in four companies overall had progressed to higher maturity levels, confirming that most companies still have considerable work ahead of them to achieve the most from their loyalty programmes.
The evolution of loyalty programmes
Only 1 in 4 companies overall had progressed to higher maturity levels
The average loyalty programme maturity level is 3.6 out of 7 for organisations across Asia Pacific
Running a customer loyalty programme requires a range of resources and investments. Although the cost split is generally similar across geographies, the survey identified a few standout differences. For example, companies in Hong Kong spend 51% of their loyalty programme budget on supporting technology and infrastructure – more than 10 percentage points higher than those in Singapore or Australia. But companies in Hong Kong spend almost half as much, proportionally, on providing service benefits. The results highlighted variations between sectors. For example, financial services firms reported that providing service benefits is a relatively low-cost exercise, while insurers spend little to nothing issuing rewards points. Understanding these results may help companies benchmark their operations and consider how changing their loyalty strategy may reduce overall programme costs.
Where the money goes
Which stage on the following engagement and loyalty curve is closest to your businesses’ customer engagement and loyalty situation?
Customer engagement and loyalty
What are the main benefit or reward features of your loyalty programme?
While many companies spend millions of dollars each year on technology-driven customer loyalty programmes, many others are doing loyalty in different, less formal ways. The benefits of these informal methods can be difficult to quantify. Indeed, 13% of companies in Australia said they have no annual budget for loyalty programmes. Their reasons varied, ranging from lack of technology infrastructure, skills and human capital, to a belief that a formalised, active loyalty programme doesn’t make commercial sense for their company. Yet even these companies recognise the value of customer loyalty, with 29 per cent indicating that they had implemented other initiatives to drive customer loyalty, such as customer feedback initiatives, sending recognition or thank-you notes, offering real-time discounts, special events or VIP initiatives, vouchers or gifts. Given the costs of providing these rewards, and the relative difficulty in measuring their effectiveness, it’s a good time for these companies to revisit their strategies.
Why companies don’t have loyalty programmes
Which element of your loyalty programme is the costliest?
You’ve indicated that you have other initiatives in place to drive loyalty. What are they?
Our survey showed that programmes deliver value in a broad range of ways. For instance, there’s tangible value in maximising service to the most-profitable customers, and intangible value in strengthening perceptions of a company’s brand. Brand perceptions have proven particularly important as global economies emerge from the massive disruption of the COVID-19 pandemic. Consumers favour familiar brands that can help them navigate the growing complexity of increasingly disrupted economies. The survey results confirm that programmes’ value takes on different forms for different companies. Programmes vary in the benefits they offer customers and are shaped by companies’ objectives, along with the industry and region in which they operate. However, the results also show the management and implementation of loyalty programmes are important in delivering value to both customers and the business.
The value of loyalty programmes
Customer retention is the most common goal, identified by 51% of respondents as a top-three priority. That is followed by improving levels of engagement and member activity (46%). Given the cost of attracting new customers, companies are aiming to increase the value of existing customers through directly attributable sales and revenue (44%) and increasing customers pend with cross-selling and upselling (35%). By contrast, just one in four are concerned about the total number of enrolled members.
The research revealed that loyalty programmes generally deliver a fast return on investment (ROI), with 47% of respondents saying their programmes had delivered a positive ROI within three years. Another 31% said that it had taken three to five years to recover the investment.
Loyalty programmes offer several benefits for companies, according to our survey. Extracting customer value was cited as a top-three benefit by 63% of respondents, followed by improved customer analysis (60%) and branding (51%).
The most common benefit of implementing customer loyalty programmes (reported by 63% of survey respondents) is extracting additional customer value, through cross-selling, upselling and encouraging profitable customer behaviour. The next popular benefit (nominated by 60% of respondents) is the ability to enhance customer analysis. Loyalty programmes enable companies to identify and profile loyal customers, and better understand their needs and wants. That’s followed by improvements to branding (51%), as customer loyalty programmes create a competitive differentiator for the brand and help build a customer-first culture. Other benefits include monetising customers, opening new direct-to-consumer sales channels, and improving data management. The latter, which involves identifying and resolving data gaps in governance and compliance, was flagged as the most valuable benefit by Singapore companies.
Where the value is
feel the most common benefit of implementing a customer loyalty programme is extracting additional customer value
The research revealed that loyalty programmes generally deliver a fast return on investment (ROI), with 42% of respondents saying their programmes had delivered a positive ROI within one to three years. Another 32% said that it had taken three to five years to recover the investment. Companies in Australia were nearly four times as likely to say that their programmes had returned a positive ROI within one year, possibly due to their relatively low average spend. Companies in Australia also tend to have the longest running loyalty programmes, with 44% of respondents reporting that their schemes had been in place for over five years, compared to 34% in Hong Kong and just 13% in Singapore. Another significant consideration is whether companies charge customers to participate in their loyalty programmes. Whereas 69% of companies in Australia reported their loyalty programmes are free, just 48% in Singapore and 44% in Hong Kong said the same. Nearly a third (32%) of companies in Hong Kong have adopted a hybrid approach, offering a mix of free and charged programmes. This approach is less popular in Singapore (20%) and Australia (14%).
The fastest and best returns
How long did it take to achieve a positive ROI on your loyalty programme?
0-1 year 1-3 years 3-5 years More than 5 years Prefer not to say Not achieved yet
A formal customer loyalty programme can measurably improve customer satisfaction, retention and profitability, while contributing to a comprehensive customer engagement initiative.
Companies in Australia were nearly four times as likely to say that their programmes had returned a positive ROI within one year
In many cases, generating additional revenues is of secondary importance to broader goals of customer engagement and retention
Why do companies implement customer loyalty programmes in the first place? Survey respondents revealed their company’s goals by sharing information about the metrics they use to judge programme success. Customer retention is the most common goal, identified by 51% of respondents as a top-three priority. That is followed by improving levels of engagement and member activity (46%). Just 28% of respondents said tracking advocacy and social referrals is a high priority, while one in four are concerned about the total number of enrolled members. Interestingly, most companies nominated increased revenue as their second highest priority and increased spending (through activities such as cross-selling and upselling) as their third-ranked goal. This suggests that, in many cases, generating additional revenues is of secondary importance to broader goals of customer engagement and retention.
How companies measure success
Companies in Singapore and Hong Kong are harnessing cutting-edge technologies like blockchain and NFTs
As well as taking stock of participants’ current loyalty programmes, we also asked them about their plans and expectations for future programmes. The results highlighted the ongoing importance of building closer relationships with customers, particularly driven by investments in data analytics and other relevant technologies. Companies in Singapore and Hong Kong are harnessing cutting-edge technologies like blockchain and NFTs, which can deliver substantial new value for customer loyalty programmes. With many economic, societal and other factors buffeting customers on a daily basis, programmes that offer benefits to loyal customers have never been more important for companies and the customers they serve. By understanding how they can use loyalty programmes to improve customer service and reinforce brand recognition, companies can best target their investments and ensure they remain attractive and relevant in increasingly competitive markets.
The future of loyalty programmes
Customer expectations are higher than ever – and with few exceptions, the surveyed companies are investing to ensure their loyalty programmes continue to meet or exceed those expectations. Companies across all three countries plan to invest in technology infrastructure, including data management architectures and loyalty management systems. However, companies in Hong Kong are far more enthusiastic about it, with 78% expecting to spend on technology, compared with just 43% of companies in Australia. Similarly, 59% of companies in Hong Kong expect to invest in data management, analytics, and centralised platforms to provide a single customer view – nearly three times the proportion of companies in Australia that are planning to do the same. Companies in Australia are also far less likely to invest in providing more loyalty rewards points or miles than their Singapore counterparts, preferring to put their resources into improving the customer experience and journey. The survey also revealed employment opportunities around loyalty programmes. About one in five companies expect to hire staff to manage their loyalty programmes, and one in 10 expect to outsource programme management in the future.
How companies are investing in the future
Which element(s) of your loyalty programme are you planning to invest most heavily in over the next 2 years?
Surveyed companies were asked how they would change their loyalty programme if they were given the chance – and results varied widely. For example, almost two-thirds of Singapore and Hong Kong executives said they would like to introduce a new currency for loyalty rewards points. In addition, 42% in Singapore and 34% in Hong Kong are using blockchain technology in their loyalty programmes. In Asia at least, it seems brands see a strong future in using distributed-ledger technology like blockchain to manage customers’ loyalty programme activity. Executives in Singapore and Hong Kong are also very interested in providing additional tiered benefits for high-value customers, as well as ‘surprise and delight rewards’. Executives in Hong Kong see great appeal in providing third-party discounts. Meanwhile, offering more value-added experiences is particularly popular with Singapore executives, who are twice as likely to be planning to implement such experiences than their Australian counterparts. Significantly, 23% of respondents in Australia indicated that they wouldn’t change anything about their loyalty programmes. Paired with their relatively low spend and strong domestic focus, it seems that many companies in Australia are overall quite happy with the structure of their current programmes, and feel that they’re meeting objectives without requiring major changes.
Loyalty programme wish list
How companies are innovating with loyalty programmes
Which, if any, of the following innovations are you considering integrating into your loyalty programme?
Technology is inextricably linked to loyalty programme delivery and performance. To understand this further, we asked respondents which innovative technologies their companies had added, or were considering adding, to their loyalty programmes. The results revealed that a broad range of innovations have already been implemented or are currently being implemented. These range from ESG elements and paid loyalty strategies to specific technologies such as blockchain, AI, cryptocurrency, metaverse platforms, NFTs and zero-party data collection. Consistent with their reported satisfaction with their existing loyalty programmes, respondents in Australia were less likely to be considering integrating new innovations than respondents in the other countries. ESG is a significant focus in all markets, and progressive companies are integrating this focus into the way they shape loyalty programmes for customers that see it as a crucial issue. Over a quarter, 26% of companies in Australia are considering integrating ESG elements into their loyalty programmes where they don’t already today, for example, while Singapore (53%) and Hong Kong (46%) firms recognise the need to invest in ESG increasingly. With customers demanding more progressive ESG credentials from the firms they frequent, expect these numbers to increase significantly in coming years.
Aligning customer loyalty programmes with overall business objectives remains a critical part of companies’ value proposition. A well-designed programme can reinforce the company brand by emphasising core values like environmental commitments. Similarly, a poorly aligned programme can become a liability if customers feel let down by a brand that they feel is not acknowledging their loyalty. Companies in Singapore and Hong Kong are most likely overall to connect their loyalty programmes to their overall brand value proposition. Most respondents in Australia said their programmes are somewhat related and that customers understand the connection – indicative of a market with several dominant, well-recognised brands. Significantly, 24% of respondents in Australia said their company’s loyalty programmes are integral to consumers’ experience of their brand – ahead of those in Singapore (17%) and Hong Kong (15%). Retail, travel, transport and hospitality operators were most likely to report this strong connection to brand experience. These figures are a reminder that the best loyalty initiatives don’t operate as independent programmes but are embedded across every department and touchpoint to enable customers to be truly recognised for their loyalty. Close cooperation among departments will also ensure that the programmes remain flexible enough to accommodate changing corporate and social priorities. Companies in Hong Kong are nearly three times as confident about their ability to do this than their peers in the other countries.
Aligning loyalty plans for success
A poorly aligned programme can become a liability if customers feel let down by a brand that they feel is not acknowledging their loyalty
Different customers respond to different loyalty programme features in different ways. That led to a range of responses when survey participants were asked which elements of their loyalty programmes would drive the greatest return in the future. 64% of respondents said creating a seamless customer experience was the most promising way to improve returns from loyalty programmes. In an age of rapid digital transformation, this often means investing heavily in cloud-based services from outside providers. A large proportion of respondents also see value in embedding the loyalty programme as a core business function. Businesses in Australia are generally enthusiastic adopters of cloud technologies, with almost a quarter of respondents seeing cloud-based loyalty ecosystems as important in the future.
Where will the ROI come from?
What elements do you think will drive the greatest return for brands who operate loyalty programmes in the future?
One-third of respondents said that deploying cloud-based ecosystems will enable them to drive the largest return in the future.
What does the future of loyalty look like? Based on the findings of this survey, brands across Asia Pacific are actively reviewing the benefits of their existing loyalty programmes to identify new opportunities to strengthen relationships with their customers. Particularly in an era where customer expectations are increasing, brands are building holistic loyalty programmes that leverage cutting-edge technologies that provide a 360-degree view of their customers. By understanding their customers in more detail, companies are better positioned to enhance their loyalty programmes with new offerings that align with growing expectations in areas like ESG. They can build enhanced consumer experiences that reinforce the value of the loyalty programme, keeping customers long-term and increasing their overall value to the brand. Based on the respondents’ stated intentions in the next few years, customer loyalty will continue to be a dynamic and progressive part of the business. New technologies such as AI and NFTs will extend customer incentives and experiences in completely new ways – but we’re not there yet. As businesses reshape to accommodate the rapidly changing world, getting the basics right will be critical. By aligning customer loyalty programmes across the business, and implementing loyalty management technology, companies can build a holistic, 360 degree view of their consumers; in turn, ensuring that they meet overall strategic objectives, support the brand, and lay the foundation for next-generation customer engagement that is more effective than ever.
Conclusion
Salesforce and Collinson – a true power couple – are dedicated to helping you to deepen the lifetime loyalty of your most valuable customers. The power of the Salesforce platform is unlocked by Collinson’s almost 35 years of full-spectrum loyalty expertise. Through working in partnership with you and your brand, we’ll create an insights-driven loyalty strategy that’s consistently analysed and enhanced by our teams of experts – ultimately enabling your brand to remain ahead of your customers’ ever-evolving expectations.
Build life-long loyalty amongst your most valuable customers
Collinsongroup.com
"When a brand delivers meaningful, increasingly relevant experiences, customers will be willing to share even more personal information"
When you’re transparent and honest in your use of data, and you deliver meaningful, bespoke interactions and recommendations based on this data, your customers will learn to trust you and will be willing to share even more information; ultimately enabling perpetually enhanced brand encounters. It is a mutually beneficial value exchange that, over time, enables you to build increasingly richer customer profiles and create better, more relevant experiences. This is the virtuous circle that all brands should aspire to.
There is also an opposite phenomenon – a vicious cycle. If a brand misuses data, is not transparent, does not provide a worthwhile value exchange, or breaches data regulations, they run the risk of their customers mistrusting their brand and withholding their personal details. To avoid this, leading brands ensure permission to collect and retain data is sought and received, and in turn only use data in the way their customers have permitted. In the context of loyalty, this means providing superior and purposeful experiences in the context of a fair value exchange that benefits the customer at least as much as, if not more than, it benefits the provider.
Transparency is key
"Successful brands will know that the hyper-personalisation of customer journeys may involve consumers’ desire to associate with a like-minded community or ‘tribe’"
Looking to the future, over the coming two to three years, successful brands will know that the hyper-personalisation of customer journeys may involve an individual consumer’s desire to associate with a like-minded community or ‘tribe’, and to share experiences that are relevant and meaningful to that community. Some organisations will also focus on an authentic, transparent set of values that they share with their customers. This alignment of values enhances the sense of community, so customers feel that their relationship with the brand transcends their commercial transactions.
Expedited by the pandemic, customers’ behaviours and expectations have dramatically changed. The modern consumer today is highly sophisticated, demanding frictionless and tailored interactions, making loyalty marketing far more challenging than before. How can businesses gain an advantage, especially in such a saturated retail landscape? The key is to focus on building strong relationships by delivering intelligent experiences, while respecting and protecting privacy. In the second instalment of our 5-part eBook series that aims to explore what it takes to win in loyalty in today’s world of choice-rich consumers, the importance of a fair value exchange takes centre stage. Consumers are more aware than ever that their personal data has value. Choosing to share their information has become a deliberate exchange and in return, they expect businesses to use their data to create experiences that are personalised and add value. Businesses will need to ensure they do just that; reward and delight your customers but respect their data too.
The crux of it: Loyalty redefined
The Importance Of A Fair Value Exchange
Is Your Loyalty Strategy Future Fit?
2 of 5-part series
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Taking this one step further, businesses should also start thinking about taking an integrated, interconnected approach to truly achieve long-term customer loyalty. This means creating a seamless loyalty ecosystem that rewards customers for sharing information by partnering with complimentary brands to breakdown data silos.
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As customers continue to think long and hard about sharing their information, especially with rising concerns around privacy and security, the way in which brands use customer data will inherently become a differentiator – with the ideal scenario for consumers being that the value provided to them is always greater than that provided to the brand – a fair value exchange.
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The key is to maintain trust by providing a fair value exchange and be transparent by ensuring the value is clearly spelled out. Leading brands will respect access to personal data, only using it to provide meaningful, personalised experiences. In turn, trust and a deeper engagement will build through additional data sharing.
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Relevance and convenience have become essential in a hyper-connected and fast-moving world. Customers expect nothing less; but at the end of the day, it requires them to share their data. This data helps to deliver real insight that, in turn, enables businesses to develop tailor-made connections with their customers.
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Build a mutually-beneficial relationship
Keen to learn more about deepening customer loyalty? Read the third instalment in our five-part series, From Siloes to Multi-Brand Ecosystems
Our consultative partnership approach combines market-leading technology with more than 30 years of loyalty expertise to deliver customer experience strategies that adapt and scale for ongoing relevance.
For more than 30 years, Collinson has been at the forefront of loyalty innovation, continually evolving and building loyalty to meet the changing needs of our clients and their customers. We help enhance and run the customer loyalty programmes for some of the world’s largest airlines, banks, hotel groups and technology companies. Our global team of experts work with you to understand your goals, unlocking data from multiple sources, enabling you to transform your overall customer experience. This is delivered through innovative, multi-channel, highly personalised global customer rewards programmes that shape customer behaviour and customer loyalty. From an individual project, off the shelf or e-commerce solution, we drive engagement, value and customer loyalty.
Let Collinson help you stand out in a crowded market
Human led, data informed
Consultative partnership
Data-driven insights underpin your bespoke strategic communications blueprint to ensure context remains at the heart of your loyalty programme
Bespoke reporting proves the effectiveness of your strategies ,enabling you to adapt and scale your strategy to ensure it consistently delivers against your objectives
Bespoke reporting proves the effectiveness of your strategies, enabling you to adapt and scale your strategy to ensure it consistently delivers against your objectives
Contact us
Visit collinsongroup.com to learn why the world’s most demanding brands count on us to deliver meaningful experiences that maximise the lifetime value of their customers.
From Siloes to Multi-Brand Ecosystems
3 of 5-part series
In the post-pandemic landscape, brands have had to rebuild relationships with their customers, presenting unique opportunities and challenges like never before. Ensuring that we can deliver relevant offers to our customers remains vital in driving deeper brand engagement, loyalty and sales. In our previous two eBooks in this series, we’ve talked about hyper-personalising experiences to win hearts and minds and the importance of creating a carefully balanced value exchange with your customers. What’s next? Consider boosting your value proposition with third party partners. In fact, some of the best loyalty programmes rely heavily on partnership models with third parties. This brings us to the third instalment of our 5-part eBook series which aims to explore what it takes to win in loyalty in today’s world of choice-rich consumers and key actions that businesses can take to gain back control.
For organisations to future-proof, loyalty must be placed at the heart of business strategy. It’s all about continuously learning about your customers through data and insights, as well as encouraging regular feedback and dialogue to better understand their behaviour and in turn, better contextualise and deliver relevant rewards at the right time and in the right place. Previously, many organisations viewed their customer loyalty strategy as a nice to have, almost peripheral component of their marketing plan. It could be a distinct programme managed by a handful of employees, and would affect only those customers who might be convinced to become programme members in exchange for points and prizes. Today, loyalty must be a prevailing organisational focus, involving every department and job function. Leading brands position loyalty as an important agenda item in boardrooms and an organisation-wide priority rather than a separate, siloed function. Every interaction a consumer has with an organisation – from initial brand awareness to product or service research, transactions, consumption and follow-up service – will contribute to their overall customer experience and the degree of loyalty they will feel over the longer term. Increasingly, organisations are viewing happy, retained, loyal customers as their most valuable assets – devoting a significant portion of their time, investment and thinking to maintaining and maximising the satisfaction of these customers. Much investment is also being channelled into achieving a single customer view across the organisation, enabling the delivery of integrated, personalised, timely experiences at every relevant customer touchpoint.
Delivering value and loyalty through partnerships
"The character of each loyalty ecosystem will be fluid, taking the form of decentralised communities where each customer can curate the combination of brands they wish to interact with"
Single-brand experiences are also becoming the exception rather than the rule. Leading organisations are already regularly collaborating with other like-minded brands, often across industries, to create blended loyalty ecosystems where compelling experiences are crafted to match the needs and specific lifestyle profiles of individual customers. The character of each ecosystem is fluid, taking the form of decentralised communities where each customer can curate the combination of brands they wish to interact with. The notion of brand integrity, and even the alignment of different brand images, will become less important than the ability to deliver the personalised experience each customer desires; as long as that experience maintains the loyalty of the individual to all the brands within the ecosystem.
The rise of blended loyalty ecosystems
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With the continuing development of artificial intelligence and automation, the opportunity for brands to help connect like-minded individuals through ‘tribes’ will enable ‘segment-of-one’ marketing and further re-pay customers for enabling data sharing in the future.
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When more data, automation and artificial intelligence are used, more customers will come in, and more value will revert to the partnered brands. As more analytics are employed, more meaningful information can be generated, enabling more customers to be matched to more partners and more enhanced experiences enjoyed. And so on.
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The most powerful loyalty ecosystem will be one in which more partners joining will lead to a more complete picture of your joint customers through access to more data points and in turn, more content being produced and more touchpoints for engagement.
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What could they offer your members that would complement your services? It’s important to choose the right partner for loyalty collaborations based on your customer profiles and target audience. In a world of decreasing attention spans and increasing variability of content, the right partners will help create competitive advantage and boost brand equity.
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You don’t necessarily need to find all loyalty benefits from within. The ability to identify and forge symbiotic partnerships with complementary brands to deliver the personalised experiences customers expect will increasingly take prominence.
Upgrade your loyalty programme
Stay tuned for the fourth part of our eBook series, where we continue to explore new ways to unlock the loyalty code in today’s challenging and dynamic landscape, with a focus on looking beyond the traditional one-dimensional points and rewards platforms.
Keen to learn more about deepening customer loyalty? Read the fourth instalment in our five-part series, Beyond Points and Rewards: Why Status-enhancing, Value-aligned Experiences Win Hearts and Minds
Beyond Points and Rewards: Why Status-enhancing, Value-aligned Experiences Win Hearts and Minds
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In today’s challenging business environment where brand promiscuity is rife, unlocking the loyalty code will require an even deeper understanding of your customers on an individual and personal level. Businesses will need to work harder to attract and manage long-term loyalty, particularly when customers expect brands to know what they need next – before they even know themselves. Despite continuous efforts to innovate with promotions and offers, many businesses struggle to retain their customers. What makes customers truly loyal? Beyond points and rewards, experience still matters; but what does this really mean, and are you getting it right? We take a closer look in this fourth edition of our 5-part eBook series, which aims to explore what it takes to win in loyalty in today’s world of choice-rich consumers.
Any loyalty programme must, at its heart, be a carefully created and even more carefully calibrated value exchange mechanic between a company and its customers. It requires a balancing act, with a harmonised level of desirability and affordability on both sides. Customers need to feel that they’re gaining from the benefits available via a loyalty programme – a true high perceived value-add that enhances their lives, or makes life easier – which can then be used to motivate profitable customer behaviours. In order to achieve this, it’s necessary to understand what your customers feel is valuable to them as individuals. With the growing digitisation of customer interactions, in part due to the pandemic, there will be even greater opportunity to collect new data, in turn allowing brands to get to know customers’ wants, needs, preferences and expectations all over again. Loyalty is therefore a long-term strategy; complex, integrated and a bespoke fit for your specific business needs and opportunities – which align to and are led by the values your customers hold. Providing consumers with access to money can’t buy, VIP or sustainable experiences (particularly those that enable consumers to better support a cause that resonates with them) help create value that can’t be copied or reproduced by another brand.
Finding the sweet spot
"There will be a strong emphasis on inspiring confidence, where customers will choose brands that can deliver happiness, recognition and status benefits"
Finding the ‘wow’ factor – or high perceived value – today means looking beyond just rewards. Experience is everything, customers will remember their experiences with a brand over discounts or similar financial benefits. Customers will choose brands that can deliver happiness, recognition and status benefits.
In a highly competitive landscape where loyalty can be fickle, VIP or ‘money can’t buy’ rewards will prove fundamental for brands. Focus on looking to help raise your customers’ status – and in turn, their loyalty level.
Attention to continual evolution and improvement is key when looking to retain your most valuable customers. The journey doesn’t end once you have determined your pertinent set of customer groups. Timely, relevant interactions need to be provided to your most valuable customer groups in order to obtain – and most importantly, retain and grow – their loyalty and engagement.
Build emotional loyalty, with two-way interaction, personalisation and combining a human touch with data and analytical rigour. By showing that you understand and care about your individual customers’ unique interests, needs and values, a deeper emotional bond between brand and buyer is established; in turn ensuring they continue to choose your organisation long into the future through truly valuable, life-enhancing and well-timed experiences.
Consumers increasingly engage with brands today to access a lifestyle or experiences they otherwise don’t have access to. Loyalty programmes that have fallen victim to one-dimensional, points exchange platforms have the opportunity to enhance their approach by switching to status recognition-led programmes.
Raise the loyalty bar
Keen to learn more about deepening customer loyalty? Read the fifth and final instalment in our five-part series, The New Era of Loyalty: An Innovative and Frictionless Future
The New Era of Loyalty: An Innovative and Frictionless Future
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Many brands today are already taking a different approach to their loyalty offerings. Embracing digital innovation and the Internet of Things (IoT) are no longer nice to have, but a necessity to survive. In this competitive digital environment, unique and innovative experiences will disrupt the world of loyalty like never before and become a powerful engine for growth. We’re talking about enhancing the real-world with home automation, wearables and, increasingly, multi-realm experiences. Brands must act now to avoid falling behind in the pursuit to nurture their most valuable customers in the new era of loyalty.
"Consumers will embrace smartwear and home automation in search for more personalised experiences"
With consumers increasingly becoming comfortable with digital disruption and engaging with innovative technologies, brands continue to integrate smartphones and wearables to deliver experiences that build loyalty. These same organisations are also investing in technology that, in future, will blur the lines between realms. For many, the metaverse and Web 3.0 remain a future concept. However, in the not-so-distant future, it is anticipated that almost everyone will be living in across-realm or multi-realm environment. Fast-forward to next year, and almost all industries will be experiencing the convergence of the physical ‘real’ world and online. The experiences of leisure, socialising, business, retail shopping, tourism, escapism and activities that enhance status will occur in any and all realms. Retaining loyal customers in the metaverse will therefore be as important as it is in the physical realm. Today, loyalty best practice is increasingly involving the use of non-fungible tokens (NFTs) as a mechanism to tokenise offline, online and metaverse experiences, status and rewards with irrefutable ownership. The smart contracts offered by NFTs give consumers access to unique value. With many brands suffering from ‘bland loyalty’ – cookie-cutter programmes that threaten to devalue even the most stand-out brand marketing efforts – providing consumers with access to money can’t buy, VIP or sustainable experiences (particularly those that enable consumers to better support a cause that resonates with them) help create value that can’t be copied or reproduced by another brand. While points and prizes will remain relevant for the foreseeable, programmes centred purely around this will play a decreasingly important role.
Loyalty transformed: Multi-realm experiences and more
"Loyalty best practice will include NFTs as a mechanism to tokenise offline, online and metaverse experiences, status and rewards with irrefutable ownership"
With the evolution of Web 3.0, the blockchain, decentralisation, crypto-entities, the metaverse and token-based economics, loyalty will increasingly become a diverse, sometimes complex undertaking. The trend will, of course, raise as many questions asanswers about the ongoing relationship betweenbrands and consumers. Questions could arise around whether consumers will have the power and autonomy to decide for themselves if they’re a brand advocate or not – as well as who ultimately owns that personal data, the consumer or ‘Big Tech’. It might be necessary to introduce new regulations – similar to those now in place around ‘open banking’ in the finance space – that enable consumers to share their personal data with a range of accredited providers to potentially improve their experiences.
NFTs also have the potential to promote the development of communities, such as tribes of fans who follow famous personalities. For example, an NFT that represents partial ownership of a singer’s new album might be a highly-sought-after item among the members of that singer’s fan base. Increasingly, consumers’ cars, refrigerators, washing machines, heating controls, showers, doorlocks and lights – alongside their smartwatches, fitness trackers, and soon even the shirts on their backs – will feed data to their smartphones and ultimately into the cloud storage of big technology companies like Google, Apple and Samsung. These companies will then have a 360-degree view of each consumer’s purchasing activity, content consumption, daily schedules, visited locations, as well as their shared preferences and expectations – a view that will eventually lead to even more personalised relationships.
With Google’s undertaking to phase out third-party cookies, the value of high-quality first-party and zero-party data is increasing exponentially. The effective management of data – and appropriate related technology solutions – will play a greater role in enhancing and personalising the customer experience, but only if applied in conjunction with relevant human skills and processes.
Organisations that deliver multi-realm experiences via digital channels will need to remember that consumers are people – they still crave human interaction, not just automation and convenience. It’s a careful balancing act, but if done correctly, will achieve a value-exchange that enhances lifestyles while generating a true connection that benefits both parties.
Prepare to curate unique multi-realm environments – enhancing reality with virtual elements. Consumers are confidently starting to embrace Augmented Reality (AR), VR, IoT, smartwear, and home automation with voice connectivity. They will be loyal to the brands that use these technologies to seamlessly deliver personalised services and experiences over and above the physical world.
While still a future concept for many, Web 3.0 is increasingly pervading our day-to-day lives, and as such, consumers’ expectations regarding digital innovations enhancing all stages of the customer journey are ever-increasing. Invest in embedding consumer-grade innovations to ensure even the most demanding customer expectations can be met.
Harness the power of digital
In conclusion, loyalty is ever-evolving as it’s led by human activity and interest. For brands to provide relevant, impactful loyalty programmes, an understanding of customer needs – and an ability to react to these needs and evolve – is essential. Enriching your customer interactions with hyper-personalisation is key, as well as building trust and delivering fair value exchanges – uniting with relevant brands to further boost insights on customer desires. Increasingly, looking beyond points and rewards to elevate experiences and enable the lifestyle your customers aspire to is the route to take, while harnessing the power of digital to stay at the forefront of change.
Achieving life-long customer loyalty
Revisit our earlier instalments on the key loyalty must-haves to win in today's world of choice-rich consumers
The Power of Personalisation
The Importance of a Fair Value Exchange
