Beyond the Basics: Four other Loyalty Drivers

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Beyond the Basics: Four other Loyalty Drivers

  1. 1. Beyond the Basics:Four other LoyaltyDriversWelcome Real-timeRetail banks today are 01. The level of ‘social integration’ between consumers is also now at an unprecedentedracking their brains on Is loyalty an attitude or a level. Social media networking is resulting inWelcome to stand out fromhow best Real-time behaviour and does it matter? a dramatic enlargement of the social circlesthe crowd when it comes that each consumer can influence as a result of their ‘attitudinal loyalty’. It’s therefore hardlyto retaining the loyalty of Marketing practitioners commonly discuss surprising to see new loyalty programmestheir customers; and more consumer loyalty in terms of ‘attitudinal’ focusing their primary attention on ‘socialspecifically, their payment and ‘behavioural’ traits. ‘Attitudinal loyalty’ is influencers’ rather than repeat purchasers.card customers. the predisposition of a consumer to prefer A good example of this is the ‘AHA Life a particular brand or product.‘Behavioural Influencer Network’ recently launched byNo longer is a loyalty programme with rewards loyalty’ is the actual behaviour exhibited by the online retailer AHALife.via points or cashback considered exceptional. consumer, most typically measured in terms ofBut the harsh reality is that if you don’t have this purchases made. As Winston Churchill so aptly put it: “Attitudeas a basic part of your programme, no matter is a little thing that makes a big difference”.how ‘uninnovative’ it’s considered by today’s Conventional wisdom leans more towards The next milestone for loyalty programmes liesstandards, you will not retain your position in the ‘behavioural loyalty’ as the most effective in effectively nurturing and harnessing ‘attitudinalplaying field of payment cards. measure of consumer loyalty, due to the ease of loyalty’ to maximise the levels of social influence measurement and immediate financial benefits amongst connected consumers.The front runners are now looking even further realised. But while this approach is practical, itahead; trying to grasp what it is exactly that fails to take into account the changing nature ofmakes their cardholders put their bank card both the consumer and retail environments.top of wallet. Today’s retail environment is dominated byLet’s take a look beyond the basic loyalty price-sensitive consumers with access todrivers of points accumulation, cashback or perpetual ‘daily deals’ and ‘discount-relateddiscounts. Let’s take a look at four other drivers offers.’ As a result, it has become increasinglythat are increasingly important and yet relatively difficult to separate genuine ‘behavioural loyalty’untapped today. from casual and coincidental relationships.
  2. 2. 02. Higher-value consumers expect differentiated rewards and privileges from the masses; it is ‘Soft’ rewards, on the other hand, are more likely to nurture and strengthen the emotionalOffering consumers relevant an essential component in delivering a loyalty bond with the consumer, whilst also servingrewards they actually want programme that is attractive across the board. to reduce the incidence of effort-reward value These consumers know how valuable they are comparisons against other loyalty programmes. and expect to be treated accordingly, failing Such rewards can be in the form of priorityThe modern consumer anticipates an which they are likely to defect to someone who lanes, personal concierge / shopper services,increasingly personalised service, from ‘highly does recognise their value and commitment. lucky draws or even invitations to exclusivetargeted’ advertising when surfing the web, events. In all cases these rewards should beto ‘relevant’ product recommendations while Research conducted in this field by Dreze given selectively to emphasise to the consumershopping online. As a result, our lives are now and Nunes has shown that tiered loyalty that their value has been recognised and,inundated with targeted and more relevant offers programmes are perceived to be more therefore, rewarded accordingly.and information. attractive, not only by the consumers who earn the extra rewards and privileges, but also, When considering ‘soft’ rewards, an effectiveMany loyalty programmes still fail to offer surprisingly, by those consumers that do not. It approach is to offer rewards that ‘money‘relevant’ redemption choices specific to various seems that bottom-tier consumers also prefer cannot buy’. This maximises the perceivedconsumer segments. Those that do offer more having something to aspire to, even if they know value to the consumer and increaseschoices, often leave the consumer to trawl that they are unlikely to qualify to a higher tier. stickiness as the consumer is more likely to trythough catalogues looking for something of to retain their ‘special perks’ over time.interest to them. This risks the consumer losinginterest and quitting before managing to find 04. A good example of a ‘money cannot buy’something relevant. Providing the right blend reward is exclusive ‘VIP backstage concert of ‘hard’ and ‘soft’ rewards passes’ that simply cannot be purchased onTo really maximise engagement, loyalty the open-market and thus have a perceivedprogrammes need to reframe the redemption value that far outweighs the underlying financialprocess and proactively guide the consumer cost of the reward. This type of exclusive reward Most loyalty programmes reward consumerstowards redemption choices that are relevant could be offered to exceptional customers, with ‘hard’ rewards, typically in the form ofto them. To do this they need to take into auctioned off to the highest bidder, or simply discounts, gift certificates, free merchandiseaccount traditional segmentation criteria such awarded to the winner of a prize draw. and cash-back. As these rewards areas life-style and life-stage. More importantly, tangible in nature, they are easily copiedloyalty programmes should dynamically adapt by competitors and consumers often jumpto reflect the actual redemption behaviour of from one brand to another as soon as new So the next time you are consideringcomparable consumers. programmes offering a better rate of reward your loyalty programme, look beyond appear. Highly competitive sectors such as the obvious. Simple tweaks can03. grocery, fuel and credit cards are especially differentiate between becoming another prone to this type of leakage, unless they areThe value of differentiated ‘me too’ programme versus standing able to establish a sense of ‘emotional’ loyaltyrewards out as an innovator. with the consumer. Welcome Real-time is a pioneer and One of the most prominent illustrations of thisWith the exception of the airline and hotel type of behaviour can be observed by looking leader in card loyalty programs aroundindustries, most loyalty programmes focus at the often hyped ‘daily deal’ promotions that the world, supplying and managingmore on rewarding ‘frequent shoppers’ rather are becoming increasingly popular. Whilst ‘daily the loyalty systems of some of thethan loyalty in the traditional sense. The majority deals’ are an extremely effective advertising biggest banks in each country. 300,000fail to differentiate truly valuable consumers tool, a consumer who visits a restaurant simply transactions across 1 million merchantsfrom the masses. because they are running a discount promotion and 50 million cardholders run on one is just as likely to visit a different restaurant next unique platform: Welcome XLS.Tiered loyalty programmes that provide week for the very same reason.differentiated rewards and privileges based onthe level of commitment exhibited by consumers That said, it is important to remember thatare now gradually appearing in mainstream ‘hard’ rewards are an essential part of anysectors. Well known brands such as Starbucks, loyalty programme, but it is imperative that theySafeway and Timberland all have tiered loyalty are given to the right consumers at the rightprogrammes in at least one of their respective time and for the right behaviour. Failing to domarkets, and more brands are likely to follow in so results in these rewards simply becomingtheir footsteps in the not so distant future. normal and expected by the consumer, losing their effectiveness over time. Let us help you to turnaround your cards business. Visit www.welcome-rt.com or email us at marketing@welcome-rt.com© 2012 Welcome Real-time. All rights reserved. Content in this presentation is provided for general information purpose only and is owned by Welcome Real-time. It does notconstitute a contractual document and may be amended or updated by Welcome Real-time from time to time. This content shall not be copied or reproduced or otherwise used for anyreason, except for your own business purposes and/or personal use.

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