The truth is...Loyalty is about engagement not points

The title of this piece is a “catch-phrase” beckoning throughout the global loyalty industry and is seen as one of the top loyalty trends of 2012. I say “globally”, because coming from the South African loyalty market place, I can confidently state that South Africa is quickly catching up with the global landscape.

A few years ago, we couldn’t have said that.  Having recently spoken at a loyalty and CRM conference in Chicago (CRMC, May 2012) and at the Intercontinental Group of Department Stores conference in Milan (November 2012), I realised that what we have in South Africa is on the same level playing field as our global peers.  That is, in terms of the loyalty programme design and points structures.

So for example, let’s discuss two players in the South African loyalty space. 1) Food retailer, Pick n Pay with its smart shopper programme and 2) Nedbank, one of the big four banks with their card loyalty programme called Greenbacks. Swipe your smart shopper card and receive 1 smart point for every R1 you spend. Over 5.5 million Pick n Pay customers are doing this in the space of 18 months…wow! Swipe your Nedbank card and receive 1 Greenback for every R5 you spend on your credit card.  By the way, 1 smart point is not equal to 1 Greenback before you try to do the maths!  We also have tiered loyalty programmes in South Africa, like the Woolworths W rewards programme and Discovery’s Vitality programme.  These also exist globally and our schemes aren’t half bad in comparison.  In fact, in the past 12 months, Vitality has been heralded by the New York Times and the Harvard Business Review as being a loyalty initiative, which truly changes customer behaviour.

However, whilst points may equal prizes (& discounts, etc), points do not equal long-term customer loyalty to your brand.  We all know that a loyal customer is up to twenty times more valuable to a business than an uncommitted customer.  A points collecting customer may still be uncommitted to your brand. There is one overriding and majorly significant point of differentiation, which leaves our South African industry with the opportunity to play catch up.  True loyalty isn’t achieved through a few loyalty points and prizes.  True loyalty is achieved through the long-term customer focus on all aspects of your product and service offering and communications engagement strategies.

In English, what does that mean?

If you have a magnificent loyalty programme, but can’t deliver outstanding products or services, then you have nothing.  Some of my colleagues call this “putting lipstick on a pig!”  i.e. no matter how wow the loyalty programme is, I, the customer, must truly want to buy your brand anyway before the loyalty initiative swings my decisions firmly into your court.  Bronwen Rohland, Director Marketing: Pick n Pay, refers to this as the loyalty programme being the invitation to the party.  If the party’s bad, you will leave early!

In fact, reflect on some of the best brands in the world:  Apple, Nike, Coca Cola.  They don’t have loyalty programmes, apart from Coca Cola who run a Coke Rewards initiative, mainly out of the USA market.  Way before Coke Rewards existed, we saw Coca Cola as the world’s leading global brand year after year.

What I am really referring to is the power of combining the loyalty programme with brilliant engagement strategies. Loyalty programmes enable brands to gather immense insights about what, when, how, how often customers buy, bank, travel, etc.  Shame on any brand who has this data and doesn’t use it to its full effectiveness.  This is an entirely different subject matter covered in previous Truth articles (namely the Iceberg Effect).  Suffice to say that brands which employ a customer insight-led approach to their business, can vastly improve all different aspects of their product and servicing strategy. 

 The most compelling loyalty and rewards initiatives I am seeing globally are the brands which combine their loyalty thinking with social media engagement strategies.  Truly encouraging your customers to engage with you (via good and bad stories), allows you to convert customers into true brand ambassadors.  You can only do this, however, if you engage your customers and do not simply push product and price messages via facebook and twitter.  Engage with your customers where they are most comfortable (in the social space, amongst their friends….not amongst your marketing messages).  Some of my favourite US retail brands who do this most effectively are gilt.com and Cabellas.  Last month, the 10^th annual Colloquy  loyalty awards announced Caesars Entertainment to be the “Master of Enterprise Loyalty 2012”.  They proudly integrate rewarding their customers’ social behaviours in social media as well as their traditional transactional behaviour at Caesars’ Entertainment properties.

 Bottom line is that South Africa has successfully played catch up to get onto the loyalty playing board.  We now need to roll a few double sixes to accelerate our positioning via truly customer-led engagement strategies for all aspects of our businesses not just marketing and loyalty points.
                                                                                                     Amanda Cromhout, Founder & CEO, Truth

Best Buy share their lessons learnt on loyalty

Last week I attended the “What’s hot in Rewards” webinar hosted by Loyalty 360 & Best Buy¹.   

Best Buy shared their thoughts on how to leverage loyalty points for the merchandise that’s in high demand by their customers.  

One of the key topics discussed in this webinar was Best Buy’s view on their lessons learnt while creating a successful loyalty programme.²

A common message coming out of any loyalty discussion these days is that loyalty is no longer just about points but it’s about that mutually beneficial dialogue between a brand & the consumer.

This dialogue needs to withdraw information from the consumer about their wants & needs and in turn brands need to provide insight to the consumer on how they will deliver these wants & needs.

Companies are realising the important role of loyalty and list it as one of their number one facets when determining their marketing strategy & budget. In the US, the average consumer has over 18 loyalty cards and it’s therefore no surprise that loyalty is becoming (or forced to become) the forefront of all marketing decisions.

Best Buy’s lesson one says, that when developing a loyalty programme or revising your current one, brands should always offer a broad assortment of services, such as various redemption options and reward options. A survey by Best Buy and Affinion Loyalty Group in a webinar earlier this year showed that the attendees felt that loyalty programmes that are not unique and are too restrictive & unattainable are the main reason they are no longer attractive to the consumer. Others say that the lack of options available when redeeming points also plays a major role. It seems marketers are falling short by providing a seamless loyalty programme that has all the right elements to it (simplistic, transparent & engaging) but when it comes to wanting to redeem your points you are faced with minimal or simply unappealing. 

This leads to lesson two & three: focusing on convenience and flexibility & therefore increasing the need to shift to mobile as one of your loyalty platforms. Shoppers want everything in real time. The digital & mobile worlds have customers expecting to be able to shop when they want, how they want and where they want. What once was seen as a benefit, like free shipping & tailored offers is now the norm. Mobile enables the customer to easily & more quickly redeem points, check points balances & special offers on the go. Brands failing to meet these expectations will soon lose relevancy. 

Lesson four: customers are becoming street wise about the value of points they earn and what this value means to them. It is vital that brands are informative & transparent about the value of their points’ currency and show their customers the extent of the value and how it can positively impact their day to day lives. 

Always innovate is lesson five. Innovation goes beyond what is expected. Understand what your customers expect from you and blow them away with something remarkable.

With your customers being bombarded by everyone else’s loyalty programmes you need to ensure you create an unique experience from start to finish (lessons 1 – 5) noting that a positive redemption experience, that offers your customers choice on how to redeem points, is key to meeting the current needs of your customers.  

                                                                      Ros Siddle, Marketing & Loyalty Research Manager, Truth

 ¹Best Buy is the no.4 US retail brand & the world’s largest consumer electronic brand with annual revenue of $50 Billion (2010).   

² The loyalty programme Reward Zone launched in 2003, now has over 30 million members making them one of the largest loyalty programmes out there.

6 Trends to consider in the loyalty environment

  1. Loyalty is no longer just about points

Points alone do not create loyalty. Loyalty goes beyond discounts, air miles, coupons, exclusive tickets & rewards. It is all about the way we engage with our customers.

     2. Understand your customer data

It’s the age of the customer and acknowledging  their needs! A shift from “we know best” to “we hear you”. One needs to meet the expectation of the customer by listening to them. They need to consider you as a brand that is valuable and a brand they will remain loyal to because of the value & worth you make them feel for engaging with your brand.

     3. Feedback across all departments

Feedback from customers needs to be translated across all departments and understood by all. The value of the customers’ feedback needs to reside throughout your company. The customer is the judge of everything you do so unify the feedback and do something about it!

     4. Mobile

Mobile refines the way our customers access & receive information. Customers are constantly on the go and on the hunt for new, innovative ways to access this information and make their day-day activities as painless as possible. Payments via a mobile device are growing and mobile numbers are becoming increasingly more important than an email or physical address.

     5. Gamification

Loyalty goes beyond a “like” or “follow” or earning a virtual badge for visiting your favourite stores several times a week. Gamification is merging fast into loyalty thinking because of its  way of using game thinking and game mechanics to drive engagement.

“Make the journey (accumulating) as fun as the destination (redemption)”  

                                                                            ~ Shawn Bloom, GM, Scene LP

6. Right time, right offer, right location

Meet your customer where they are! Not where you want them to be.                                                                                                                                                                                                                            Ros Siddle, Marketing & Loyalty Research Manager, Truth

So whose side are you on?

Marketers are now faced with the decision of which direct marketing medium to use in a world that is predominantly digital.

Some suggest Traditional Direct Marketing is dead and Digital is the only option going forward. On the other end of the scale, customers are believed to still enjoy the experience of seeing their favourite ad on a billboard as they drive to work every day and receiving something in the mail, having that excited sensation of walking to the post box and physically opening the envelope and revealing its contents. Customers are said to be more “loyal” to a brand that they can “see, touch & own a piece of.”

Let’s have a look at a few points that may justify each and why this may be the case as established by Keith Lindsay & Paul Geary at PrimaPlus recently presented at the Loyalty Exhibition & Conference in Cape Town hosted by TCI (Trade Conferences International).

10 points rooting for digital!
1. Cheaper to use (less hardcopy)
2. More personal (rich profile online, which you give access to 3 rd parties)
3. Highly targetable – when I am online, appropriate advertising finds me e.g Facebook.
4. Able to deliver qualified leads (relevant offer at the right time e.g Google)
5. Accountable (analytics & results)
6. Dynamic (live content, relevant real time offers)
7. Flexible – easy to adapt as the game develops.
8. Participatory – audience can lean forward and engage and you can engage with your audience.
9. Social – people like to share their experiences (brands, products & services). They like to endorse products they love online.
10. Elicit a direct response by using the same mediums (inbound)

Team TDM!
1. Everyone has their own loudspeaker! Digital gives everyone a voice and therefore the power to create content online which in essence clutters the web. One needs a filter to sift through what content is of real value
2. I don’t want advertising on my wall – the web belongs to its users. Marketers could come across as invasive and therefore irritate users by "bombarding" their online experience with marketing overkill. 3. Privacy concerns - lost out there such as spam that may deter your customers!
4. People still love paper!
5. People are more likely to and can more easily "opt out" of your campaign in the online space because they are irritated by being bombarded by marketing messages.
6. "I want the free version" - A culture has formed within the online world, where users have become so accustomed to be able to access valuable information for free, that if you, as a brand, do not offer any service or information for free then you are not seen as very valuable.
7. Not all digital platforms and content is created equal. The digital arena is open to everyone, & there are no real standards in place that separate the good from the bad (and the spam!).
8. App generation! A huge trend at the moment is turning everything a brand can offer into an app. Each country is at a different stage when it comes to owning a mobile/digital device. Does everyone have the mobile device that allows for an app?? The answer is..no.

Which are you in support of and why?

Ros Siddle, Marketing & Loyalty Research Manager, Truth