The face of loyalty is changing
The face of loyalty is changing. Companies are beginning to veer away from points and even cashback as the key indicators of a loyalty programme’s value. The observed shift is towards personalisation, not as a by-product of loyalty programme data, but as the core value offering at the heart of loyalty.
It has long been known that the customer data obtained from running a successful loyalty programme could be used to target consumers on a more individual level thus insuring increased brand relevance and minimising the risk of generalised campaigns based on limited data and guess work. However, in this day and age personalisation is not a “nice to have” but rather a necessity. According to Bond Brand Loyalty 78% of consumers who are satisfied with the level of personalisation offered by the programme are very satisfied with the programme as a whole.
At Truth, we advise clients to place the majority of their focus on the covert elements of their programme. Covert elements refer to the behind-the-scenes, data-fuelled marketing efforts which offer cat lovers discounts on cat food and offer the cash-strapped student money off two minute noodles. Covert elements of loyalty programme marketing are contrasted to overt elements such as the 5% back everyone gets in points or the R50 birthday voucher we all receive. We, at Truth, refer to this concept as the Iceberg effect. The difference between overt and covert is best understood in this iceberg. All the overt elements are above the waterline for all to see; however, your real value lies below the waterline where customer specific data should be used to change customer behaviours and drive increased long term loyalty.
Red Lion Hotels is a good example of a brand which has all but done away with the overt elements of loyalty marketing. Their “Hello Rewards” programme has done away with points and tiering and instead positioned itself as a guest recognition programme, seeking to treat every guest in a personalised and appreciated way. Instead of earning points, guests earn recognition and staff are encouraged to treat every guest personally. Hello Rewards is based on a surprise and delight strategy, offering guests recommendations and discounts based on their individual interests. Certain overt benefits also apply to Hello Rewards members, such as a free night for every seven nights stayed, express check-in and checkout, room upgrades when available and late checkout.
One does not need to do away with points entirely to have a customer-data led loyalty strategy. While the Red Lion example illustrates an international brand getting it right, it’s worth noting that the overt benefits (i.e. free night stay) would have served to attract consumers to the programme initially.
In conclusion, points, cashback and other overt benefits still serve a place in attracting consumers to your loyalty programme and brand. However, covert leveraging of customer data for personalised offers and experiences should form a core part of your value proposition. The face of loyalty has changed; is your programme keeping up?