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Marketing Insights: Empowering your loyalty programme

This post is brought to you by AIMIA.

Consumers have access to copious amounts of information at their fingertips in today’s digital age. Technology has enabled them to find the best deals and bargains effortlessly, thus causing them to jump from one brand to another, whenever it fits their budget.

As a result, companies continuously struggle to not only capture consumers’ attention through the various ads they release, but to also retain their loyalty. Some may wonder if loyalty has become fleeting, since consumers today are good at finding the best bargains.

During the “Inspiring Loyalty and Brand Advocacy” insights conference organised by Aimia, in partnership with Marketing, Victor Kaw, chief commercial officer at AirAsia BIG Loyalty, said consumer loyalty has taken on a different approach today.

In return for their loyalty, consumers are seeking benefits that come in various tiers. He said the most basic tier is the benefits that are relevant to individual consumers. The next tier is to create experiences that will incentivise them to become a “priority” member. Explaining this further, he said: “Consumers want to know if they will be treated differently if they fall within the high-tier of a loyalty programme.” He cited the example of how airlines will offer a priority member privileges such as a special check-in lane, which will then make the passenger feel proud to be a member.

For AirAsia, one challenge has been to turn customers into advocates, given consumers today are extremely demanding and the budget airline sector is immensely competitive. During the fourth quarter of its 2017 financial year, AirAsia BIG Loyalty saw the number of new members grow by 25% to 3.5 million. And while the general perception is that travellers buying at budget prices aren’t always the most loyal, Kevin Kan, managing director for Asia, Aimia, said this isn’t always the case.

“Despite the fact there are certain industries that may encounter price competition, loyalty is not fleeting. This is because consumers tend to go back to brands that they are either familiar with or had a good experience with,” he said.

“We humans are creatures of habit. Once we buy something that is comfortable and suits our needs, we tend to stick to it,” he said, adding that such behaviour is prevalent in the cosmetic and beauty industry.

The role of digital and apps

Besides offering a good customer experience, brands have also gone digital by launching mobile applications to improve convenience and accommodate the needs of consumers. However, these are not always sufficient to convert a consumer into a brand advocate.

According to Kan, while mobile apps allow consumers easy access to offers and points, companies should think about the various touchpoints where consumers don’t interact on a daily basis and figure out how to make them the top of consumers’ minds.

“For me, I personally find the Apple Wallet great because all your cards can be loaded onto that wallet. Nobody wants to carry 15 cards or download 15 apps, and that is the next challenge that we are going to be facing,” he said.

However, he said that since companies are increasingly launching apps, marketers need to find a way to differentiate themselves and enhance customer experience.

“Everyone wants to create an app that is on a consumer’s phone. So, think about how you can collaborate with Google or Apple, for example, so you don’t have to open up your own app in order to access the loyalty information.”

Creating a successful app for loyalty

Agreeing with him is AirAsia’s Kaw, who added that to cut through the clutter in the loyalty space, companies should consider if their loyalty programme is useful and if consumers’ lives revolve around it.

Consumers need to think they are unable to function without the loyalty programme or app. For example, consumers in China are so accustomed to using Alipay and WeChat that they may not be able to imagine life without them.

Meanwhile, Abad Ali Ashraf, research director for loyalty at Ipsos Malaysia, said that having a mobile app for loyalty is not enough, as companies have to make it easier for consumers to redeem their points as well. He also said a loyalty programme is not the main driver of loyalty. In his view, customer loyalty is dependent on several aspects, including service and brand positioning.

“A loyalty programme does not work in isolation. It has to be in line with the company’s overall marketing campaigns and customer journey and experiences,” he said.

He added that companies also needed to see how their loyalty programmes were contributing to the whole customer experience because without that visibility, marketers might end up spending unnecessary dollars on their loyalty programmes. “As such, companies might end up with more cost than benefits. Loyalty programmes are not the end itself, it is part of the bigger picture so you need to see that picture.”

Avoiding the trap of transaction based loyalty

Often enough, marketers might fall into the trap of transaction-based loyalty, since it is one of the easiest ways to entice customers to join loyalty programmes and gather data. One way for marketers to avoid that trap would be to implement the “tokenisation” of points.

“If you get points from making a purchase, it becomes coins that can be redeemed within the ecosystem, for example, or companies are able to exchange those coins with rewards,” Ashraf said.

Meanwhile, Aimia’s Kan said that many of his clients are looking at building a long-term relationship with their target audience, and designing programmes that are more experiential rather than just point-based.

“As such, marketers will have to go through the customer journey and interact with people so that it’s not so transactional.”

In the telecommunications industry, for example, consumers are rewarded based on the frequency they interact with the company, usage of their phones or broadband, Kan said.

There needs to be continuous innovation for loyalty programmes.

“Me too” programmes, which are indistinguishable from competitors, tend to “fall off the view” of consumers’ wallets, which is contrary to what each company wants – that is to be on top of every consumers’ minds.

Coalition or independent loyalty programmes? 

One of consumers’ pain points today is the difficulty of earning points in a loyalty programme. Either that or the programme doesn’t provide enough rewards or offers that interest them. As such, coalition programmes are a way to strengthen loyalty programmes because they can help improve customer lifetime value and offer coalition points at a lower cost.

Coalition loyalty is gaining popularity across industries such as airlines and retail. Recently, AirAsia tied up exclusively with mobile loyalty app developer Fave to launch BIG Deals by Fave. Under this partnership, more than 3.6 million BIG members in Malaysia can earn BIG Points, while enjoying savings of up to 95% off on travel and lifestyle deals by Fave.

“Coalition loyalty programmes can also offer a broader and richer data pool for customer segmentation and targeting,” Kaw said.

Meanwhile, earlier this year, group CEO of AirAsia, Tony Fernandes, described passengers’ data to be a “very valuable asset” and expects the number to increase exponentially as it grows its passenger numbers.

To this, Kaw said that data helps companies identify consumers’ needs, understand their travel patterns and behaviour. Using this information, the company is able to carry out destination marketing more effectively and have a higher conversion rate, since it is pushing relevant content and offers to consumers.

“Today, a lot of companies are just giving offers up to a large group of customers. What we want to achieve through data is a personalized offer for each customer. We want to be able to achieve that level of accuracy, as it will increase our customer lifetime value,” he said.

He said that in the future, the loyalty space will likely see the fusion of AI with data to help companies understand the customer better.

He added that agnostic platforms such as foodpanda, on the other hand, which rewards consumers with points regardless of which restaurants they order from, have less constraint and enable consumers to earn points easily.

With all that is out there, it comes as no surprise that many marketers sometimes get overwhelmed.

To this, Parijat Priyadarshini, director of loyalty business consulting at AIMIA, in a separate conversation, said a loyalty programme is “a promise between the customer and the brand”.

Data analytics and insights are what quantify the relationship and articulates the promise. However, the challenge is creativity versus return on investment.

“If you can quantify where your opportunity lies through a very data-driven process, and you know exactly how much ROI that particular segment is going to give you through a certain channel, you can be as creative as you want,” she said.

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