The new loyalty programmes?
South African consumers have time and time again proved how much loyalty programmes mean to them. It is key but 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 currently.
To be effective, loyalty programmes need to ensure a deeper level of engagement and personalisation and should become part of consumers’ conversations. We live in an era when consumer expectations and behaviours are changing, as is the landscape in which brands and retailers operate. When it comes to retailer/brand loyalty, transaction-based relationships are no longer enough. Consumers want meaningful, personal relationships and are seeking perks from brands that include expanded buying power, new benefits, exclusive access to sales and discounts and so on.
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.
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 in the physical and online, 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.
In the case of hotel group, 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.
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 - members of Discovery Health Care are prime examples of this - 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.
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. 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.
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.
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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Article Credit: Neal Jones