Customer Loyalty Gets Rude Digital Awakening

Image credit: iStockphoto/Povozniuk

As if they needed any more growth momentum, loyalty schemes have been supercharged by the COVID-19 disruptions as businesses seek to deepen their engagement with consumers.

Technology is only a part of the new loyalty scheme. Before organizations even think about what technology they will install, there is a whole checklist of things to consider.

The first is brand. In Australia, new Forrester research has found an acceleration in consumer preferences. People are increasingly embracing brands that align with their personal values and beliefs, and the recent disruptions have only added to this trend.

Corporate social responsibility and the stands that organizations take on community and environmental issues are critical for consumer respect and engagement, particularly for younger consumers.

Then there is the whole “shop local” phenomenon, which everyone from small community chambers of commerce through to American Express is seeking to jump aboard.

If that box is ticked, then a loyalty scheme has a chance of success, but it also needs to be sufficiently generous. Customers need to be rewarded for their loyalty.

Beyond gifts

Receiving a cheap sandwich maker in return for several thousand points earned over a year is simply not going to cut it anymore. There has to be a genuine ‘win-win,’ and customers need to be rewarded based on their value.

The expectation among marketers is that these rewards will be more than the traditional cashing in on points for gifting.

Look out for innovative examples of more socially involved rewards or delivering an experience, including virtual experiences. Then there is tokenization, where loyalty is transformed almost into another currency.

Understanding the value of the customer is where technology comes in. With the proper privacy permissions and data collected, a business can now know more about a customer than ever before.

Australian company IXUP, for example, is a start-up that analyzes encrypted data, matching commonalities among databases, and shares insights from this in near real-time with clients. Already, Australian airline Virgin is using this to advance its loyalty program.

These tools deliver a more precise understanding of the value of individual customers, which enables them to provide unprecedented levels of personalization that deepen the relationship and give the return on technology investment, which justifies the business case.

Mobile-driven loyalty

One difference in 2021 is that people are reluctant to spend a lot of time in physical locations.

While they may be more used to scanning a QR code for potential contact tracing on their smartphones, they could be more reluctant to dig into their wallet to find that loyalty card or credit card.

This means that the loyalty schemes need to migrate from cards to phones, even if they are originally bank-based or come from a financial institution. More than half of the loyalty schemes in Australia are currently card-based, so some rapid transformation is in order.

With the increased use of the smartphone as a payments device also comes the potential to deliver geolocation in personalized offers.

Centralizing it all on one device is more frictionless and possibly also safer for the consumer.

It also enables the other technology trend of card linking. A customer simply links a card to a scheme, and the transaction and information exchange just happens in the background. And if the card is linked, the payment can be made on the phone.

Tightly bound to CX

Loyalty will also become integrated more closely into the customer experience as these changes gain momentum.

China has pioneered the idea of combining messaging and payments in ‘conversational commerce’ through WeChat and Alipay.

Look out for WhatsApp and the other western platforms to take that lead, along with social media. Instagram, for example, still has further potential in its business model: you could buy what you see and like on the platform, have it delivered, and pick up loyalty rewards at the same time.

As Forrester says, it’s not a tactic or a discrete program anymore if you’re serious about earning and maintaining customer loyalty.

It’s a core strategy that needs to align with your brand, customer experience journey and be backed up with frictionless delivery, which is seamless to use but can also accommodate an appropriate marketing push.

For brands, this can require fresh thinking and new investment. Success will come to those with value propositions that can capture consumer permissions, integrate that data with data analytics stacks, and elevate customer relationships to new levels.

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and HR&DigitalTrends, and the editor of NextGen Connectivity. His fascination is with how businesses are reinventing themselves through digital technology and collaborate with others to become completely new organizations. You can reach him at [email protected].

Image credit: iStockphoto/Povozniuk