Consumers today are more demanding than ever. They are spoilt for choice and expect superior differentiated experiences from brands. They are also very comfortable with changing their brand preferences with the snap of a finger.
Does that spell the death knell for customer loyalty programs? Certainly not! As per our Consumer Technographics Benchmark Survey 2021, 72% consumers said that loyalty programs make them feel more connected to the brand. About 70% mentioned that loyalty programs influence what they buy; 64% said they spend more money with companies where they have signed up for a loyalty program.
There is increasing interest in loyalty from brands too – whether it is the one-person neighbourhood store or the multibillion-dollar conglomerate – companies are investing millions of dollars in their loyalty programs. In fact, customer retention (26%) and loyalty-related metrics (24%) rank higher than customer acquisition (21%) in marketing decision-makers’ assessment of performance as per Global Marketing Survey, 2021 (B2C).
Yet the loyalty programs of the future will look nothing like the transactional ‘earn and burn’ offers and generic programs that we see today. For loyalty programs to truly ‘stick’, brands need to make a conscious move from ‘tactical’ to ‘experiential’ loyalty and earning customer trust.
Some of the broad trends in loyalty that we’re witnessing in APAC are:
Breaking down siloes
Traditional loyalty programs were often designed to apply to one brand, one country, or one channel. For instance, a customer shopping online might not get the same loyalty benefits that they get when they shop at an offline store, even though it’s the same brand. In regions like South East Asia where consumers travel frequently between countries, there is a tremendous opportunity to expand the scope of loyalty programs to more countries, more markets, and to support multiple currencies and across channels. Brands are moving towards the idea of one loyalty program that puts the customer at the centre rather than being constrained by channel, brand, or geography.
Shift from Transactional to Emotional Loyalty
Loyalty begins with the first engagement – when customers check out the brand on social media, when they send an email query, download the app, check out the online store – way before a transaction happens. These touchpoints can help gather precious data that can in turn help design more customized, personalized offerings to customers.
Cutting through clutter with Personalization
Using personalisation as a way to cut through the noise is very important. Brands are investing in predictive analytics and AI to anticipate consumer behaviour and create personalised, context-specific offers in real-time for their loyal customers. Data to drive decision making is still nascent but picking up.
As brands realise the importance of data ownership and control, even long-running loyalty programs are looking at moving away from transactional to emotional loyalty to even evangelist loyalty.
The loyalty programs of the future will see a distinct shift in focus – moving from ‘share of wallet’ to ‘share of heart’