Fair Exchange: Loyalty Smoyalty

26 Aug 2013|Erna George

Brands partner consumers in many ways and finding ways to keep what should be a two-way partnership exciting is a challenge given all the many distractions around. One device employed seemingly at the drop of a hat in South Africa is the loyalty programme. So, while Voyager’s rewards are highly sought after, it takes too long to earn them. No-one wants to wait ages to claim a reward, so shorten the cycle and reward more often.

Hearing about the forthcoming launch of Standard Bank’s new initiative in this area, my husband (an ex-Standard client) grumbled “You know, I wish all these programmes supposedly rewarding loyalty would offer some of the cream at the top instead of the ‘stupid*” (replaced*) residue in the cup”. This prompted me to conduct an informal poll (not a serious study), and examine the qualitative research Added Value has done into loyalty programmes, to discover why so many brands are failing at the loyalty programme hurdle and raising the ire of people like my husband. The few principles this exercise uncovered are truly not rocket science, but seeing as so many new programmes appear to have not learnt from the lessons of the failed past, or tried to mimic successful programmes, they beg publication.

Principle 1: Offer real value – so, my significant other was right about cream and residue. Consumers want tangible benefits such as rewards or VIP treatment. And these rewards must match their passions. Woolworths has gotten this right as it offers immediate savings on purchases, thereby addressing the “what’s in it for me” question, and links it to assisting others less fortunate, allowing us to polish our halos while we shop. Furthermore, the reward should match the brand proposition, or it won’t be remembered as belonging to that brand. For example, a hotel could offer a free cooler bag for each 3-day booking, or tiered bonuses from preferred check-in to a free night’s stay. Those friends who responded to my poll question about which loyalty programme offers great rewards put up Voyager because the rewards are linked to the brand, and they are desirable. However, the respondents did highlight a problem with Voyager; see principle 2 below.

Principle 2: Reward often So, while Voyager’s rewards are highly sought after, it takes too long to earn them. No-one wants to wait ages to claim a reward, so shorten the cycle and reward more often. Respondents thought eBucks Online was a winner here because they could earn automatically (no card) and there were multiple reward options giving them the choice of redeeming for smaller rewards more often or bigger rewards less often. Unfortunately, they also remembered the fiasco with air lounges from a few years back.

Principle 3: Loyalty programmes are not pacifiers Brand owners must remember that loyalty programmes don’t replace the basics of great quality, service excellence and so on. If the product isn’t right, no amount of rewards will keep the customer coming back.

Principle 4: Avoid abusing the customer By signing up consumers to loyalty programmes, brands gain lots of client information that helps with effective targeting, insight into actual behaviour and hopefully a hook that keeps people coming back for more. However, the brand owner must avoid building a database that gets plundered for research as well as say ‘no’ to marketing tactics that annoy these customers. These are two behaviours that will quickly dissolve the partnership between the brand and the customer.

Principle 5: Be circumspect There is no point in recruiting someone who seldom buys the product or uses the service – they won’t earn a reward and will simply be frustrated by that extra card in their wallet. The brand, too, will lose because it will not gain the insights it needs to properly tailor its marketing campaigns.

Principle 6: Simplicity and flexibility The programme should easily slot into the consumer’s life – it should be simple and easy to understand from the go when they sign up, to calculating how points are earned, to redeeming. And it should be flexible enough to be used at any brand or outlet, not have many limitations and manage expiration dates sympathetically. More complex and inflexible equals no use. Respondents pointed out that the Vitality programme is a great idea and sells an aspirational lifestyle, but it is also so complex and hard to maximise value unless you are a gym fanatic. With these six principles in mind, let’s compare two other programmes that the respondents often quoted: Pick n Pay Smart Shopper and the Clicks Club Card.

First Pick n Pay: Another card for the bulging wallet. Enter the store; queue at the machine to swipe in order to determine what’s on special to maximise points; print special offer slips; shop; at the till remember to handover the special offer slips for scanning because the two systems don’t talk to each other; hope I haven’t spent R750 because, while spending that would earn me 1000 points, I forgot to print out that slip. At least I can redeem my points at my own pace but this is not exactly a walk in the park, right? Yet, on each trip, PnP gets my data and my money. I get R5.62 and feel fatigued. A quote from my little poll: “PnP Smart Shopper, huh. You have to accumulate millions of points to earn miniature discounts, there’s no instant gratification. Feels like a waste of time.”

Now Clicks: Another card (but with a family card option to maximise spend). At the shelf, there’s always like 3 for 2 offers; simply swipe card at the till and I automatically earn points; progress reports are mailed regularly. Plus, there are also discounts at the movies. Now this is a park many seem to enjoy walking through. A respondent’s quote: “Money for jam.”

The conclusion? These are similar programmes but even the right programme poorly executed can have the opposite effect to what was intended. In summary, ask yourself: – Who you’re targeting? You won’t win with everyone so design for your core target market to ensure focus. – Are you offering real value to consumers? Is it simple to use with great rewards and flexibility and minimal limitations? – Is it linked to your brand, does it serve to enhance the product or service experience? – Does it feel balanced between what you get and what consumers receive? – Loyalty programmes can be win-win scenarios for all involved with brands playing a more meaningful role in consumers’ lives. And, who knows, someday soon maybe technology will move beyond cards for lighter wallets!

Fair Exchange is a column on business relationships, written by Erna George, Business Director at Added Value for MarkLives. To read Erna’s previous post click here.

prev next