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5 things your loyalty programme should and shouldn’t be

How loyal can customers actually be?

Your customers today can be reaping benefits of your brand’s gold-tier loyalty membership programmes while simultaneously purchasing your competitor’s latest products. The truth is, exclusive loyalty is long gone as customers today are spoilt for choices. But loyalty programmes are a vital part of generating revenues.

For example, members pull in a whopping 90% of revenues for local IT retailer Challenger Technologies, revealed its head of marketing, Loo Pei Fen.

The challenge for the brand is adding new customers and keeping the old ones coming back. For this, a strong strategy for its loyalty programme is vital.

Here are five tips to making a strong one:

1. Simplicity and intuition

“Loyalty cards have now become obsolete. Customers no longer carry 10 to 15 cards in their bags. Today, apps make the process simpler,” Loo said.

She added that to digitise itself, Challenger Technologies started eliminating paper documentation of customers. This took away manual labour documentation for both the marketing and data teams and saved on time and resources.

To attract people to join its loyalty programme, Challenger decided to make its programme extremely simple keeping its questions to the bare minimum.

However, while it is important to make the sign-up process to your loyalty programme clean and to do away with irrelevant questions, sufficient member data still needs to be collected, explained Loo. Without it, all is lost for the marketing department to build a campaign around it.

2. Speed

Speed, she added, was necessary in any loyalty programme.

“If your customer signs up for a loyalty membership today, they should be part of the programme today itself. If you take two weeks to register them, chances are they would have lost interest in your brand by then.”

3. The right data to collect: the must-haves versus the good-to-haves

Citing an example of her own company, Loo explained the Challenger brand’s loyalty programme had once missed out on getting the birthdates of customers. This led to the company having to scrap its birthday benefits promotions for its members. While it is good to keep the sign-up process simple, it is also crucial to be mindful of the collection of vital information.

“While you can have information about their hobbies and personal interests – these are all ‘good to haves’. It is vital not to miss out on the ‘must haves’ such as birthdays to cater more personalised promotions.”

4. Micro-segment your audience

Kittisak Eh Chuei, director of loyalty marketing at Pan Pacific Hotels Group – Pan Pacific and PARKROYAL brands, talked about how vital it was to target audiences as precisely as possible. He called it creating micro-segments within existing data.

“As a hotel brand, we might have a rough idea of who our customers are from their names and passport details, but we still don’t really know our customers’ likes or dislikes or personalities. Only when the customer joins our loyalty programme can we monitor their preferences and find out more about their intimate moments,” he said, adding that within that data, he could then tier customers and target them accordingly.

“When you understand your consumers, you can exploit their wants and desires. At the end of the day loyalty programmes are intended to be profitable and increase revenue to your business.”

5. Don’t make it a pricing war

With the competition in the market increasing, many brands today are entering the price war through their loyalty programmes. While this tactic might work for brands whose communications strategy is built around competitive pricing, for others it might simply result in a transactional relationship rather than long-term engagement.

Chuei explained the true essence of loyalty should not be about selling the product at a discounted value.

“Brand marketers need to rally together and make a stand to push for the fact that loyalty is not about discounts and devaluing your brand.

“At the end of the day you need to secure your business’ future. How can you do so if you are selling your brand at the 60% discount rather than a 120% profit?”

Create instead, experiences. This is particularly prevalent given the rise of the “experience economy”. Consumers today demand for travel experiences that resonate on a deeper emotional level. Brands, hence, need to develop products that are more adventurous, more personalised, and more attuned to the culture, said Chuei.

“Service and goods have become a norm and commoditised. Loyalty programmes should ultimately provide organisations with the best platform to deliver outstanding and memorable experiences as a competitive advantage,” Chuei said.

Philipp Kristian Diekhöner, senior manager of innovation at MetLife and founder of futureLab, MetLife, added that at the end of the day brand experience is what drives and inspires loyalty.

He added that customers essentially interacted with brands only if they had a purpose or a reason to do so.

“Brands are simply a vehicle to getting their task at hand done. What brands should then aim to do is be disruptive and find out easier ways to help the customers before they actually ask for it. Customers may be loyal to a brand, but they are open to seduction.”

Loo, Eh Chuei and Diekhöner were speaking at the Customer Experience Conference 2015, a two-day conference held on 11-12 March at the InterContinental Hotel Singapore.

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