Loyalty program members expect companies to offer compelling, individualized rewards and recognition as well as interactivity – particularly through social and mobile channels, according to Kevin Yeow, president of ICLP Americas, who discussed Crossing the Loyalty Chasm in a Loyalty 360-hosted webinar.
ICLP looked at how brands are shaping up against expectations in recent research conducted in conjunction with Forrester Consulting. The research conducted a worldwide survey of consumers across different industries.
Price sensitivity
“The economic matters, particularly in the more mature markets, have come to the forefront of the purchasing evaluation of consumers, even where strong loyalty exists,” Yeow said. “Consumers are not willing to pay a premium for products and services. Over half are willing to switch to a competitor, despite their loyalty to the brands.”
Premiums are a key factor in terms of price and people tightening their belts, Yeow added. At the same time, there’s also the emergence of comparison sites which makes it easy for people to compare and switch brands.
Due to economic factors, there’s a greater demand for discount vouchers and coupons. That’s partly driven by people being more price sensitive in terms of seeking greater value, Yeow said while also cautioning brands about discounting. “One of the fundamental areas of a program is to look at influencing behavior and changing behavior. You want to make sure that you’re trying to change your customers’ behavior to your benefit and not discounting something that they would have already purchased. It can be encouraging a customer to try a new product, if you need to reduce distressed inventory or increase sales in a given period of time.”
“Increasingly, consumers are more demanding in expectations, [want to have] have more choice, and also, competitors are making it very easy for them to switch,” Yeow said. “Consumers are looking at firms to get smarter, to treat them more as individuals and allow them to have more control with a brand’s loyalty program.”
Quality Important
Among those expectations is the ability to redeem rewards quickly. In the ICLP/Forrester Research, 75 percent of consumers from every country indicated that instant savings and discounts are important to them.
Customers also need to be satisfied with the product or service according to the research. Nearly four in five (79 percent) customers have the propensity to repurchase from a brand that they are loyal to, but only if it meets quality expectations, Yeow said. “If your product or service is not good enough, then it is very unlikely that your program is going to succeed in driving that loyalty.”
Importance of Accessibility
Accessibility is another important factor in driving brand loyalty, Yeow said. “We think that real-time engagement and mobility is key. There might not be great adoption in some markets at this point in time but I’m pretty sure that over time mobile will become the dominant channel with which to interact from a program perspective, whether it’s to shop, book, to track accounts, [or] make program redemptions. Singapore Airlines just launched redemptions on the company’s mobile app. There are many programs that do this well already.”
Yeow added, “We’re living in a world that is very much driven by technology. This has been accelerated with generation Y consumers who have grown up in a digital world facilitating their communications and relationships with brands and programs through social media platforms such as Twitter and Facebook. They no longer want to wait for crediting of miles or points based on making the transaction, waiting for the points to accumulate, waiting for the statement, and then looking at rewards or the redemption process that actually might be quite prolonged. They are looking at all of this being seamless and instantaneous in nature. That’s something that programs need to look at. Some industries find this easier than others. Some airlines and hotels have legacy systems. There’s an expectation from consumers that this is something that programs really need to look at.”
Only 30-35 percent of those in the U.S. interact with brands through social media or mobile at the today, but that figure will grow, Yeow said, adding that there is particular interest in these technologies in emerging markets.
Emerging markets should also offer good growth potential for loyalty programs, which are just starting in many of these countries.
Mobile could be enhanced to look at the consumer journey with various tracking features (e.g., a customer’s trip to, through and from the airport) to further drive customer engagement, according to Yeow, though he admitted that there were some privacy concerns with this.
One of the key benefits of mobile is improved accessibility, according to Yeow. “I fly a lot, one of the best applications that ties in loyalty and brand accessibility for me is United Airlines Mileage Plus application. It seemed to be fairly important to encourage friends and family to buy from brands. We see this from Brazil, India and China, where they are loyal to products. But again loyalty is something different from the more mature markets where it’s status and trend driven.
“Brands cannot get complacent, even if they have loyalty from consumers,” Yeow added, pointing out that the “four Ps” -- price, product, placement, promotion, were cited as important by consumers in all markets. Customer service was cited as well, but rewards weren’t given high importance.
“The key here is to look at the program and not just look at it from a perspective of delivering currency on incentives, but also look at the program and leveraging the insight that you have from the data in the program to address many of the points, either directly or indirectly,” Yeow said.
Loyalty programs also have to deliver customization options for members – not just in terms of language and channel preferences, but also for type of rewards, redemption and other options. In major markets, local customization options are also important.
“Members are also looking at themselves across the board in being treated more as individuals. This has also been driven by general consumerism,” Yeow added, pointing to the one-color iPod that was introduced 10 years ago. Now they are available in several colors. Customers want a similar ability for individualization from their loyalty programs.
“In terms of relevancy, it’s important to get the right message to the right customer at the right time. A key point here is the global aspect of programs. What may be relevant in one market may be quite different in another market,” Yeow added.
Another factor in terms of relevancy is based on provision and communication. Consumers understand that companies benefit when someone joins a loyalty program, even without purchases, due to their engagement as a member of a program, whether that is profile data, conducting surveys, interacting with the social media base and providing peer to peer contacts. Consumers are saying: ‘We want something back. Don’t just collect our data, we want to be rewarded for that.’”
Yeow concluded, “Identify your gaps; look forward but act today. Standing still is not an option for tomorrow’s successful brands. Technology will evolve and markets will mature. There will be a new breed of consumer [and] need for effective relationships with consumers based on loyalty.”
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