Loyalty revolution: It’s time for companies to rethink how they reward customers

It’s time for companies to rethink the way they reward customers

Businesses are also taking a playful, game-based approach to loyalty rewards.

By Shaziya Khan

Many customers are offered rewards from loyalty points. Yet, the feeling, at times, is somewhere, someone is missing the larger overall point of joyful choices while transacting and experiencing the rewards of loyalty.

Points to remember

The points parade matters, but in a different way. According to IRI Worldwide, 74% consumers globally choose a store based on its effective loyalty programme. And this holds true across generations, especially millennials — 79% of whom want ‘a strong loyalty and discount programme’. However, the points parade has become complicated by two factors: the desire for less breach of data as well as for more personalised and experiential rewards.

Privacy concerns rain on the points parade to the extent that, according to research by Baringa, companies that suffer a data breach risk losing 55% of their customers. The General Data Protection Regulation came into force in Europe in 2018 to protect privacy rights. A Data Privacy Master Class organised by WPP’s Date with Data in 2018, in Mumbai, spoke of important aspects of privacy in India, such as the concept of ‘consent fatigue’, where details of and by customers are in effect given only for a time bound period (for example, 90 days) and then can be withdrawn. Such measures will effectively stop organisations and brands from collecting irrelevant data.

Emotional loyalty

The heart of new-age loyalty is the concept of emotional loyalty. Research shows that three out of four millennials value experiences over things; and that one in two customers would like personalised rewards based on their purchase history.

But are personalised and experiential rewards actually possible? Let us look at a few examples that demonstrate letting go of complex and routine rewards, and refreshing loyalty to enable joyful and meaningful customer experiences, such as streaming music, pooling to pay, playful gaming-based rewards, personal monograms, ‘once in a lifetime’ events, and rewards for engaging, not buying.

The Starbucks app offers loyal customers lifestyle rewards — they can stream music and use points, conveniently pre-order and pay for coffee before reaching the store, all via the smartphone. Hotel chains like Hilton have revised their loyalty programmes to put flexibility ahead of rules. Customers can flexibly pay by points or cash, and be allowed as groups of family and friends to pool their collective resources.

Businesses are also taking a playful, game-based approach to loyalty rewards. Ikea, for instance, discovered that only 35% of its members swiped their family loyalty cards, so it offered instant prizes for swiping a card and experiencing a bit of Sweden. These prizes ranged from a Swedish dinner party organised at home to a trip to Sweden for four.

Apparel retailer Hackett offers a personal touch to its members with complimentary embroidery and monogramming services. To appeal to its millennial customers, Marriott creates fun and relevant experiences open only to members, such as the opportunity to bid to sleep in luxury safari tents at a festival ground, using their points.

Tarte Cosmetics rewards consumers not for buying, but mainly engaging with the brand by visiting the website or posting on social media. Depending on the engagement alone, they win access to exclusive products, gifts, better shipping rates, etc.

The focus, in these examples, has been to infuse fun and relevance in personal and experiential ways. Can somebody gently explain to the stranger on a dropping call announcing what one is “eligible for” that customers of such esteemed brands are eligible for something less transactional, more joyful and meaningful?

(The author is national planning director, Wunderman Thompson)

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