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The Master Report: The new world of loyalty

This was a sponsored post by Aimia under the Master Report series.

With consumers demanding more integration and a seamless path when it comes to the customer journey, loyalty programmes are getting more competitive than ever to appeal to customers. As such, more and more brands are creating unique partnerships to bolster the value they bring.

Recently, AirAsia BIG Loyalty teamed up exclusively with mobile loyalty app developer Fave to unveil a new feature on its BIG Loyalty app known as BIG Deals by Fave. This is part of AirAsia’s commitment to giving members more freedom to enjoy “bigger experiences” with better value.

This will see over 3.6 million BIG members in Malaysia earning BIG Points, while enjoying savings of up to 95% off on travel and lifestyle deals by Fave. BIG Deals by Fave also allows members to utilise their BIG Points to redeem BIG Deals vouchers for brands such as A&W, Forever 21, Le Meridien Kuala Lumpur and Kenny Rogers Roasters. The partnership also included BIG member privileges to Fave Malaysia users, allowing them to earn one BIG Point for every RM1 spent on Fave, which can be used to redeem AirAsia flights.

In Singapore, OCBC Bank and StarHub also struck a deal to jointly develop a coalition loyalty programme, as part of the next step of the “We Economy” initiative both brands announced previously. Through the new programme, both brands aim to bring on board key players from 10

industries: financial services, telecommunications, travel, insurance, retail, hospitality, food and beverage, grocery, petrol and transport.

A total of seven partners across seven industries have been roped in as part of the partnership. These brands include AirAsia BIG Loyalty, Frasers Property Singapore, Great Eastern, Millennium Hotels and Resorts, and Robinsons Group.

Apart from OCBC Bank and StarHub, five other partners will also be integrated into the loyalty platform later this year, and the brands are in talks with other market leaders to bring them onboard the programme.

This will allow consumers to utilise the cross-industry loyalty platform to accumulate and convert their rewards points and air miles across different partners and merchants via an online tracking dashboard.

According to OCBC Bank’s estimate, the average redemption rate of a typical standalone loyalty programme is 50% to 70%, which it said is a relatively low usage rate. This can be attributed to multiple reasons such as consumers not having sufficient points to make a meaningful redemption, not being aware of the points expiry date or having forgotten to redeem the points. The new alliance, hence, aims to tackle this with the consolidation of points, while also highlighting the issue on rewards wastage, and their objective of reducing it to benefit consumers.

A win for the customers

Oliver Spalding, head of CRM for APAC at Digitas, said that coalition loyalty programmes have been increasingly popular for brands to elevate their existing programme. This also reduces many of the operational and logistical burdens of running a programme independently.

A successful coalition programme is great for consumers who have more opportunities to earn and redeem the points they have accumulated.

It also means they need fewer cards and memberships numbers to access a wider variety of rewards and benefits.

“This increases the likelihood they will use your programme, given the gamut of competing offerings from every category,” he said.

He added the best coalition programmes tend to have a thematic link. For example, NTUC Plus! is all about convenience and its partners are primarily in everyday retail. Singapore Airlines and Grab working together makes the overall travel experience more rewarding.

For Kelvin Koo, managing director at FALCON Agency Singapore, a successful coalition influences the consumer’s choice of brands the same way frequent flyers choose their airlines based on the airline’s loyalty coalition. From a user’s perspective, it is a good thing as it offers greater flexibility and accessibility in how they can earn and redeem rewards.

“I believe the most successful coalition loyalty programmes are those where there are natural synergies between the different brands in the coalition. The greater the synergy, the more enticing the loyalty programme becomes for both the brand and the consumer,” he said.

For example, hotels and dining could be one such synergy as someone who would not stay in a hotel each week could potentially dine in one weekly. This allows the consumer to earn points more frequently which in turn may result in them staying in the hotel more frequently than they might.

However, utilisation of completely different verticals, for instance, a partnership between a supermarket chain and a shoe brand, could also work. While someone may buy shoes twice a year, which makes a loyalty programme less enticing, coupling the programme with a supermarket chain which allows the user to earn points weekly might result in a more frequent repurchase cycle for the shoe brand. This allows both the user and the brands to win at the end of the day.

More doesn’t always mean merrier

That being said, more choice doesn’t necessarily equal better choice, Spalding said.

“Brands need to be very careful in considering their customer’s needs and journey, and consider how partners address them. Also, there is a big question about which partners customers are actually more loyal to,” he said.

Increased choice also often comes with increased complexity, particularly when there are aspects such as membership tiers which may result in unused points due to the hassle. Sometimes members are more grateful for simplicity, ease and relevance, he added.

For more insights on evolving loyalty programmes, check out below:

Data & Experience: Data-driven onboarding to generate loyal and engaged members

Acquiring a new member to your loyalty programme is a great sign of growth; it’s a sign your member base is getting larger and therefore your revenue and margins are growing. That’s the usual perception and the reason why many marketeers spend a disproportionate amount of their budgets on various forms of above-the-line communication to attract new members.

Yet in most cases, this is the wrong approach. Read more for the approach that works.