A long-term relationship is built on trust and belief, but it can also be enhanced with those magical reward points you get each time you purchase.
“I can’t remember, last time I thanked you,” are the first two lines of Dave Dobbyn’s New Zealand classic song, Loyal. How many customers of how many brands, products and services feel that way, unrewarded for their loyalty?
As a brand custodian, whether you choose a loyalty programme using a point system or reward customers based on how much money is spent, the ability to entice customers to keep shopping for a product or service will ultimately be decided by how loyal you are to them.
This article was written prior to the latest research release from Loyalty NZ, which by the time you read this will have been exposed to marketers at NZ Marketing’s Future of Retail Marketing Conference 2023.
Loyalty NZ provides consulting services on a variety of topics, including loyalty marketing, customer relationship management, and data analytics. It helps businesses design and implement a loyalty programme that meets their specific needs, while collecting and analysing data about their customers. This data can be used to improve customer loyalty, marketing campaigns, and product development.
In the Ranking of New Zealand Loyalty Programmes 2021, a study by The Point of Loyalty that ranked the top 20 loyalty programmes in New Zealand, the study surveyed 1,000 New Zealanders and asked them about their attitudes towards loyalty programmes. According to that study, the top 10 loyalty programmes in New Zealand, were, in order, AA Smartfuel, Countdown Onecard, Fly Buys, Air New Zealand Airpoints, New World Clubcard, Westpac Hotpoints, Mobil Smiles Driver Rewards, The Warehouse Clubcard, Farmers Clubcard, and Z Energy Smiles.
The study found that the top-ranked programmes were those that offered a wide range of rewards, easy ways to earn points, and convenient ways to redeem rewards. The study also found that consumers were increasingly interested in loyalty programmes that offered social benefits, such as the ability to earn points for referring friends or family to the programme.
The top-ranked loyalty programmes were those that offered a wide range of rewards, but consumers were most interested in rewards that could be redeemed for everyday items, such as groceries, fuel, and travel. They wanted easy ways to earn points, and the most popular ways to earn points were by shopping at participating stores, using a credit or debit card, and completing surveys.
Convenience was paramount with consumers wanting convenient ways to redeem rewards, including redeeming rewards by shopping at participating stores, and transferring points to other loyalty programmes.
Consumers were also increasingly interested in loyalty programmes that offered social benefits, and most interested in loyalty programmes that offered the ability to earn points for referring friends or family to the programme, and for supporting charitable causes.
A 2021 study by Ipsos found that New Zealand consumers are increasingly concerned about the environment and are looking for ways to shop more sustainably. The study also found that consumers are willing to pay more for products that are made sustainably.
Purchasing the brand over and over again is only the first half of perfect brand loyalty. It is when customers not only continue to engage and purchase the same brand, but also hold the brand in such high esteem, because of the positive feelings they feel towards the brand, that they go out of their way to recommend it to friends and even strangers.
Having said all that, customer loyalty programmes can be very effective. Most such programmes fall into one of four categories: points, tiers, social media, and paid programmes. Companies offer points or benefits to customers who can redeem points for discounts, free products, rewards, or insider advantage. The aim is to motivate repeat purchases and build trust between the customer, the brand, and the business.
Artificial intelligence (AI) is rapidly changing the way businesses operate, and loyalty programmes are no exception. AI can now be used to improve loyalty programmes in a number of ways, including personalising rewards, predicting customer behaviour, identifying fraud, and of course, automating tasks.
Personalising rewards for each individual customer, based on their purchase history, preferences, and other factors, helps to keep customers engaged and motivated to continue participating in the programme, while predicting their behaviour can be used to target customers with personalised offers and promotions, which can help to increase sales and improve customer loyalty.
The digital age has brought with it the dangers of scams and here AI can be used to identify fraudulent activity in loyalty programmes, such as people who are trying to game the system or who are using stolen credit cards to earn points. This can help to protect businesses from financial losses and ensure that the loyalty programme is fair for all participants.
The automating of tasks associated with loyalty programmes, such as processing transactions, sending rewards, and managing customer accounts is already widely used and is freeing up staff time and associated costs.
Overall, AI has the potential to revolutionise loyalty programmes. As an example, Starbucks is using AI to correlate data from its loyalty programme to track customer preferences and purchase history. This information is then used to create personalised offers and promotions that are more likely to appeal to each individual customer.
Likewise, Amazon is using AI to predict customer behaviour, tracking customer purchases, browsing history, and other factors. This information is then used to target customers with personalized recommendations and offers.
Also, in the U.S. Walmart is using AI to identify fraud in its loyalty programme. The company uses data from its loyalty programme to track transactions and identify patterns that are indicative of fraudulent activity. This information is then used to prevent fraudulent transactions from occurring.
Some of the recent successful innovations in loyalty programmes from around the world have included the use of gamification to make loyalty programmes more fun and engaging: Gamification is the use of game-like elements in non-game contexts. This can be a very effective way to make loyalty programmes more fun and engaging for customers.
Air New Zealand’s Airpoints programme uses gamification elements to make it more fun for customers to earn and redeem points. The programme has a number of different levels that customers can progress through, and each level offers different rewards. This helps to keep customers motivated and engaged in the programme.
Social media is becoming the effective way to connect with customers and promote loyalty programmes. A 2020 study by Nielsen found that New Zealand consumers are increasingly using social media to research products and services before making a purchase. The study also found that consumers are more likely to trust recommendations from friends and family than from advertising.
Nike uses social media to connect with customers and promote its NikePlus loyalty programme. The company has a number of different social media channels that it uses to share news about the programme, offer exclusive rewards, and connect with customers. This helps to keep customers engaged in the programme and aware of the benefits that it offers.
Likewise, mobile technology is being used to make loyalty programmes more convenient for customers. Many loyalty programmes now offer mobile apps that allow customers to earn and redeem points, check their balance, and view their rewards history. This makes it easy for customers to participate in the programme, even when they are on the go.
Antavo is an enterprise-grade SaaS loyalty technology provider that builds comprehensive loyalty programmmes. Founded in London in 2012 it has quickly reached the point of serving enterprise-level companies from all over the world, including BMW, KFC and Kathmandu and Mercury Energy here in New Zealand. Included in their offerings are Hybrid programmes that bypass the limitations of each type of loyalty programmme, mixing things up by adding exciting new elements along the way. These tend to make a lasting impact by introducing features that support a brand’s message, for example, by rewarding sustainability or an active lifestyle to connect with customers who share those brand’s values.
The introduction of tiered programmes allows top customers to be recognised and rewarded differently, delivering a higher value for every engagement.
Locally, Rapport Group, has teams experienced in developing and optimising loyalty programs that drive customer engagement and growth. As one of their latest blogs says, “Modern loyalty programmes are being crafted to hit multiple business and marketing objectives, with a move away from purely transactional models – where a brand recognises and rewards based only on customer purchases – to more holistic programmes, which incentivises broader behaviours that are deemed valuable to a company, beyond just getting the next short-term sale.”
Rapport works with With U which partners with businesses to allow them to reward their customers or employees for living healthier lifestyles. One of the partnerships they have here in New Zealand is to provide AA Smartfuel members with discounts on their fuel the more they work out.
On One NZ Rewards, customers are rewarded for simply being a customer. This is a programme Rapport runs in conjunction with One NZ. This isn’t tied to a particular transaction, but connects customers with their passions, focusing on travel, movies, music and sport. Being a customer gives you access to exclusive events, competitions and offers through their partners, without having to do anything extra. There are often special rewards for those that engage on social.
One NZ also launched One Good Kiwi that distributes $100k a month to charities. One Good Kiwi users use their votes to distribute the available funds between the nominated charities. This is a great example of the move to including social good in a Loyalty programme.
Mando-Connect in the UK created the Inside Edge, which gives premium lifestyle rewards and also thought-leadership content and business insight to BMW Corporate customers. While you have to buy to take part, this is a great example of how companies are thinking about ongoing engagement between those big-ticket purchase moments.
Mando-Connect is a smart, loyalty specialist, brand partnerships and rewards agency, devoted to producing brilliant data-fuelled partnerships that drive results across the UK, Europe, and the globe. Some of their interesting research shows that the majority of adults who live in the 24 European markets are members of loyalty programmes and 61.3 percent are members of at least one loyalty programme.
In Europe, 56 percent think loyalty programmes are a great way to reward customers, 42 percent think every brand should offer a loyalty programme, and 35 percent join loyalty programmes each time they are given the opportunity.
Loyalty programme impact is very positive. On average across our 24 European markets, 43 percent say membership makes them more loyal, 36 percent say they are more likely to recommend the brand, 33 percent feel more emotionally connected, and 29 percent will spend more with a brand when a member of its loyalty programme.
Great Britain has long been known as one of the most innovative and diverse loyalty markets. In the past few years there has been the launch of Asda Rewards, MyMcDonald’s Rewards, Lidl Plus, Pizza Express Club and Pret Perks to name just a few. There is a huge variety of mechanics at play too; Points, Milestones, Rewards Always On and Subscription are the primary ones.
There has also been consistent innovation across the whole loyalty lifecycle with the launch of “members only pricing” as seen with Tesco Clubcard Prices, and Boots Price Advantage; a significant increase in focus on sustainability, as with the Costa Club relaunch; a rise in charitable giving & engagement as from Pets at Home Lifelines, which has given over £19m to charity and now even helps members find lost pets.
There have also been new and ever more inventive rewards, such as Sky VIP’s Money Can’t Buy experiences, VeryMe Rewards from Vodafone’s Feel Good Fridays and My John Lewis’ crafting tutorials and cooking workshops.
These are just a few of the most recent successful innovations in loyalty programmes from around the world. As the world becomes increasingly digital, we can expect to see even more innovative and effective ways to use technology to improve loyalty programmes in the future.
This article was originally published in the June/July 2023 issue of NZ Marketing. Click here to subscribe.