Talking Customer Loyalty and Mastercard in Australia

It’s always interesting and compelling for the Loyalty360 audience to gain a perspective on customer loyalty from another part of the world to see what things may be similar, what things may be different, and where the challenges lie.

Loyalty360 spoke to Blair Keenan, loyalty country lead at Mastercard Australia and New Zealand, about various aspects tied to customer loyalty.

Can you talk about the current state of customer loyalty in Australia?

Keenan: Australia is a very mature loyalty market. On average, Australian consumers are a member of approximately six different loyalty programs, most of which are run by retailers, banks, and airlines. However, this has created a situation in which consumers being inundated with choice, both in regards to loyalty programs, as well as the rewards they offer. As a result of this overabundance, we’re seeing the value that consumers associate with loyalty programs diminish making the competition between programs fiercer than ever.

How does Mastercard fit into the equation and with what type of offering?

Keenan: As well as having its own loyalty program for cardholders, Mastercard also works with banks, retailers and service providers as part of its Loyalty Solutions offering.

Working with over 200 customers across 36 different countries, Mastercard Loyalty Solutions helps its customers overcome many of the emerging challenges in both the Australian and international loyalty markets. To do this, it supports customers with everything from strategy and design, technology solutions, content and redemption management, and optimizing the performance of their loyalty programs, Loyalty Solutions focuses on helping customers deepen the level of consumer personalization and intimacy, ultimately enhancing engagement.

What is being done well in customer loyalty in Australia and where do the challenges lie?

Keenan: When we talk about loyalty in Australia, it is important to recognize the changing nature of consumer behavior in the 21st century. Technology is drastically changing the way people shop, purchase, travel, and communicate. The number of channels that we communicate and interact via has exploded as a result of this shift. This naturally presents challenges for businesses and their loyalty programs as the consumer attention they compete for is stretched more thinly than ever before. However, it also presents new opportunities to connect on a deeper personal level than previously possible. It’s not easy, but businesses that can negotiate this new, complex landscape and connect their consumers with the right content, in the right place, at the right time stand to see a significant uplift in the performance of their loyalty programs.

What effect/impact does the current interchange setup have on customer loyalty in Australia?

Keenan: Despite the revised regulation around interchange, it’s important to recognize that consumers have not changed as a result. The appetite for loyalty programs is still very much there. Consumers still want to, and expect to, be rewarded for their spending behavior.

However, where we are seeing change is around how reward programs, and their owners, continue to deliver value while navigating the recent changes and current environment. One of the big shifts here has been the move away from solely focusing programs around traditional monetary levers, like points. Instead, we’re seeing programs take an increasing focus on more experienced-based benefits, a simple, tangible and immediately realizable benefit that stands out against the backdrop of changing reward points earn and redemption rates.

This will be a space where we see continued change and competition as established players look to grow and tailor experience-based rewards, and move to digital execution to drive engagement and cost. While other new entrants innovate and address the new regulatory environment, capitalizing on the remaining customer demand for points based rewards.

What does Mastercard hope to do from a customer loyalty perspective to deliver a more personalized experience?

Keenan: Our focus is on working with our customers to unlock the potential consumer data affords to highly personalize loyalty programs. Whether it be through the channels that are used to communicate with loyalty program customers, or refining the offers that are presented to fit with the individual’s personal interests, using data to deliver superior customer experiences is key.

To do this, we work with customers across three key elements: Personalized offers, digital platforms, and loyalty program communication. By interpreting consumer data and drawing insights around customer engagement and preference, we help our customers create programs that speak to the individual. This both meets the growing consumer demand for personalization as well as optimizing the level of engagement and performance of the program.

What has caused the negative NPS in Australia, as it relates to customer loyalty?

Keenan: Australia is a loyalty market that is more mature than most in the APAC region. This means that, naturally, consumers here have grown to expect more from programs. The immediate, tangible rewards that once resonated powerfully are increasingly replaced by an appetite for experiences over things.

Coupled with macro events, such as the recent cap on interchange rates, we’re seeing the combination shift the perception some consumers, particularly those in the 40+ age group, have of loyalty programs.  Part of this is a perception change is that rewards have become more distant. This changes the level of immediate influence a program has on behavior compared to what it might of in the past, making it less likely for a consumer to strongly advocate its benefits, the core measure of NPS.

This contrasts to what we see in India (NPS+37) and China (NPS+14). In these emerging loyalty markets, the customer expectation and experience is different. Consumers are still seeing increasing program value and have a strong appetite for loyalty generally.

Our focus on personalization and customer experience is a core part of our strategy for addressing this in Australia. Speaking to what is important to consumers on an individual level and connecting in ways that are meaningful to them holds the key to reinvigorating the sense of value, and advocacy, they associate with loyalty programs.

What do you foresee as far as customer loyalty trends in Australia now and in the future?

Keenan: The traditional approach to loyalty program rewards and the use of monetary levers like point incentives and bonuses is no longer a strong enough value point on its own within the Australian market.
Through our research, we know that personalization, digitization, and communication have a material impact on a program’s influence. Having the presence of all three holds the potential to influence a consumer’s behavior by up to 70 percent. This indicates a real opportunity for the loyalty space and it is evidence to the fact that experience-based rewards will increasingly become an important alternative. 

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