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Are Customer Loyalty Programmes Worth the Investment?



For leading brands, combining a digital-first experience with an effective loyalty programme is critical to its customer-centric digital transformation. Yet why are so many brands getting it wrong? Amperity's Billy Loizou discusses

Are Customer Loyalty Programmes Worth the Investment?

In the APAC region, there’s a strong appetite for loyalty programmes among consumers. According to Mordor Intelligence, 92% of customers are more enticed to shop where a loyalty programme is part of the offering. And for brands, the economic benefits of loyalty can’t be ignored:

- Customers in leading loyalty programmes are worth up to 10x more than unenrolled customers

- The top 5% of a brand’s customers account for up to 50% of its revenue

- The most successful loyalty programmes drive as much as 7x the business impact compared to average ones

- Keeping an existing customer can be 5x more cost effective than acquiring a new customer

Beyond economics, however, the best loyalty programmes give people a sense of connection and belonging, making it more likely that they will repeatedly engage with a brand. Loyalty programmes create a positive feedback loop of growth and retention for the business. But not all loyalty programmes are created equal, leaving some brands completely missing the mark.

Not all loyalty programmes are created equal

Everyone knows how important customer loyalty is. But it’s not always clear how to take your loyalty programme to the next level. Running a top-of-the-line programme starts with building great incentives and rewards, but that’s not enough — there must be a continued focus on expanding membership while also nurturing existing members and enticing back lapsed members.

Whether a programme runs on points, perks, rewards, subscriptions or referrals, it needs to provide members with both value and a seamless experience. And the best way to do that is to use what you know about customers — your first-party customer data — to identify likely new members and tailor the experience to them. Even more, the loyalty programme must be consistent across geographic regions, treating all members with the same level of personalisation and perks.

Take Uber, for instance. The popular ride-sharing app recently made waves for axing its loyalty programme Uber Rewards. With four different tiers from Blue to Diamond, customers could work their way up to exclusive rewards like double points on Uber Eats or access to more highly rated drivers. Customers loved it, but not every customer had access to it – those outside the US, Australia, France, Brazil, Mexico and New Zealand didn’t have access to any of the available perks. And that was strike one.

Strike two was when Uber eliminated its rider-referral programme slowly and without warning. At its inception, Uber issued a $20 reward to both the person referring and the one being referred to its programme. After a while, that perk went down to roughly 10% of its original amount, with referees getting just $2 or so off their first three rides and then, nothing. For a brand that was built on referrals, customers were, unsurprisingly, confused and disappointed when the perk suddenly vanished. 

Getting loyalty right

Investing in a strong data foundation powered by analytics and insights allows brands to build valuable digital relationships and better deliver personalised experiences at scale. And the leading loyalty programmes stand out amongst competitors by doing things differently. They: 

- Orchestrate personalised journeys to activate and measure impact across the customer lifecycle

- Identify the moments that matter, which are all the interactions that solidify a customer’s feelings about their brand

- Market across channels – bringing the best of the loyalty programme to your customers’ preferred channels will drive the best results

Even more, they keep evolving. Loyalty customers make great cohorts for testing and experimentation. So work within your loyalty customer base to drive growth for new products and services and remember to always include a hold-out group to measure incremental revenue. Or perhaps evolve your programme from points to experience, whereby exclusive product drops, premium services and support and next-level incentives that go beyond points and cash back captivate customers and redefine how they interact with your brand. 

These evolutions don’t happen overnight, but when you break out loyalty programmes from an initiative to growth strategy, it’s evident that customers will use the loyalty programme to get what they want from your brand.

Taking loyalty programmes to new heights

This leading airline has long pioneered the travel industry, moving quickly to embrace technologies that enrich and enhance customer experiences. For example, it was the first airline to offer online booking. And recently, it acquired another renowned customer experience trailblazer, building on a robust tradition of experiential excellence. These choices helped make the airline a leader in an industry that increasingly competes on customer experience over pricing.

To complement and monetise these strengths, the airline embarked on an initiative to build long-term loyalty through increased engagement with its loyalty programme and mobile app. Success hinged on the ability to reach the right customers with personalised, targeted and well-timed promotions for each programme. In order to accomplish this, the airline first needed complete and current customer data, unified from its many disconnected sources.

The necessary customer data existed across six systems, each with distinct teams, permissions and data formats. Rather than engaging in a lengthy and expensive data integration project, the brand worked with Amperity, the leading Customer Data Platform (CDP) provider that helps companies use data to improve marketing performance, build long-term customer loyalty and drive growth.

The brand sent raw data from each of the six systems to Amperity, without any prior transformations. Using machine learning and massive computing power, the CDP probabilistically stitched together terabytes of data, rapidly forming rich customer profiles. According to the airliner’s Director of Communications, “Doing our data integration for Responsys took us eight months. With Amperity, we were up and running in a matter of weeks.”

Once profiles were formed, the brand used the powerful CDP to create recurring micro-segments, refreshed daily, for non-loyalty members and non-mobile app users. This data was then combined with contextual information about when and where customers were traveling. Afterward, the brand built an omnichannel marketing programme to promote loyalty and app downloads.

The mobile app was offered prior to travel because it provides flight notifications, online check-in and mobile boarding passes. The airline found that customers who used the mobile app reported greater satisfaction than those without it. It also offered its award-winning loyalty membership before an upcoming flight, allowing customers to acquire points that could immediately be used towards upgrades or future travel.

Using the Amperity dashboard, which displays current metrics about loyalty members, mobile app users and reservations, the airline was able to track the efficacy of the programme and course correct as needed. By sending personalised, contextual, and targeted communications the brand increased its conversion rate by 198%, a primary indicator of long-term loyalty.

Discover more ways to supercharge your loyalty here.

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AZK Media, Mon, 21 Nov 2022 08:41:00 GMT