Customer loyalty is not a novel concept. A convergence of trends, the accelerated move to digital channels, and the ‘locked down’ customer created a greater need for value and better experience which increased the emphasis for customer loyalty.
By Priyanka Lakhani
An estimated 72 percent of businesses say optimising customer loyalty is a top-five priority for them over the coming years.
The changing priorities is one of the factors why the global loyalty management market size is projected by industry experts to reach $10 billion by 2027, exhibiting a CAGR of 19.9 percent.
In recent years, majority of consumers have changed their buying habits and are increasingly demanding for more digital experiences as part of their programmes.
Notably, several analysts suggest that about one-third to one-half of the GCC’s population is under the age of 25 and, by 2050, 54 percent of the population is expected to be below 36 years of age.
These customers are extremely ‘connected’ to technology, heavy users of digital services and consumers of digital content.
According to Juniper, membership of loyalty programmes with a digital element will increase from 37 billion in 2020 to 48 billion in 2023 globally.
In today’s ‘new normal’, we have seen many companies implement digital – rather than physical – experiences and value to enhance customer engagement.
They’re therefore gravitating towards ‘virtual value’ in terms of content, games, or social interaction.
Examples of these range from Amazon Prime to brands engaging consumers with new experiences in the Roblox virtual world platform.
Nonetheless, there are many market examples in the past that have shown that not all loyalty programmes are cost effective.
Having a huge hit with loyalty is sometimes a bit of luck as well as judgement, however in avoiding the known problems and pitfalls we can also learn from others’ mistakes.
As is the case with any programme, there needs to be a structured and well thought out strategy that tackles issues and opportunities with science and art, to have the best chance of a positive outcome.
With a legacy of managing over 500 million loyalty transactions every day, both through its own programmes and that of our partners and clients, at Collinson we believe a loyalty programme needs to have six design dimensions at its heart, if it is to be a success.
The six dimensions of a successful loyalty programme are:
- Commercial, and
Strategically effective loyalty is about striking a balance between the different dimensions of loyalty.
Be it a customer value proposition versus company affordability, or a simple and easy customer experience versus the complexity of mobilising an entire organisation’s capability.
It is one thing to design a unique loyalty programme, and another thing entirely to forge an emotional bond with the consumer.
There is always the need for a big idea, in most cases clients ask for something extraordinary, without truly defining what that means.
To bridge this gap, there is a vital step from all the insight, knowledge, research, and business understanding to make the ‘creative leap’ into a programme brand and design that encompasses everything you need to achieve.
Whether it is a rewards programme, free membership, paid for subscription, with or without points and redemptions, or tiers and benefits, the programme brand is the promise to the customer.
The creative aspect of the loyalty journey is only brought to life, and tangibly delivered, to your customers if the value proposition, the customer experience, the delivery process and, critically, the economics all work in harmony.
It is essential to deliver company strategy whilst meeting what customers need from their relationship with their favourite brands.
Brands must look hard at understanding customers’ needs and expectations. They should grasp the opportunity to build and calibrate that effective value exchange mechanic that delivers motivating benefits to customers at high perceived value with lower costs, or in other words, loyalty magic.
This article originally appeared in Arabian Business. Priyanka Lakhani is Senior Vice President Commercial for EMEA at Collinson.