The paradigm of Loyalty Programs is witnessing certitude (a feeling of certainty) for a drastic makeover, as the interactions with the growing consumer base of Millennials and Gen Z surge. A generational shift in the principals and practices of traditional Loyalty Programs is highly warranted to entice and engage the prospective customer base comprising largely of this pool which exercises tremendous influencing capability as well on their 360-degree environment. Millennials are the “Go-To” people today for influencing and buying decisions at most domestic fronts.
The new Loyalty Attitude paints a picture of the young consumer preferring and allocating more weight to Experiences than any other form of redemptions unless of course redemption provides a memorable experience. It is almost a cliché to state that the Novo consumers “Prioritize Experiences over other Transactional Shenanigans”.
Some companies today do offer Customer-Centric Experiences as a part of their Points/Miles or other Redemption plans and rely mostly on Novo loyalty tech platforms to understand what form of reward or experience works for each individual, at what time and with what message.
A McKinsey report on German Retail Banking tells us “that when banks invest in delighting their customers, the returns are significant and measurable.”
This resonates with our conviction that Customer Loyalty is directly proportional to Customer Experience (each time, every time)
The Whys? (Corroborated by Data)
The data analysis of a study by Eventbrite yielded that 78 percent of Millennials preferred to spend money on experiences in lieu of physical goods. Another example is their willingness to share personal information (a core objective of any loyalty program) in exchange for more customized and seamless interactions with brands.
Further, the recently published Bond Brand report leaves no ground for doubt when it reveals that 81 percent of Millennials and Generation Z consumers are open to having data about their behavior collected in exchange for more personalized rewards and brand engagements.
There is a steady rise in what’s been dubbed the “Experience Economy” and this can certainly be attributed to enhancement in Information Dissemination Technology leading to Higher Customer Awareness (for traditional customer segments) and the Buying Power of the Millennials known for doing things a little differently and how they shop is certainly no exception.
The main drawback of most loyalty programs of today is that they aren’t aligned with those attitudes, leading to growing dissatisfaction with and reduced participation in loyalty programs among consumer segments.
Loyalty research firm Colloquy stated that 54 percent of loyalty program memberships are currently inactive. In order to redesign loyalty programs for an evolving consumer mindset, companies should stop thinking about loyalty strictly in terms of the prevalent practice of points and miles. Instead, they should focus on dynamic, targeted and custom-made loyalty solutions that enhance the brand experience while delivering today’s consumer the loyalty experiences they crave and fancy. This will help reduce the cost of customer acquisition tremendously while simultaneously ensuring that particular brands are top-of-mind when a purchase is made or a service is booked.
Some programs are myopically designed in such a way that they try to reduce the cost of the program by encouraging “breakage” (Points that are never redeemed). This in a way potrays the unethical mindset of the Business owning the program. It will be naive to assume that the customer is unaware of this deceit and con of sorts, and is one of the primary reasons apart from unawareness for the customer’s disinterest in the specific program. This also dilutes the personal objectives of the customer and the business simultaneously.
The ideal program running on an ideal platform would constantly update the customer about their Accrual and Redemption status and at the same time suggest redemption options based on behavior, preferences, and patterns.
Subscribers of such a program are also able to set their Experience Goals with the program and work toward achieving them all within the platform.
Taking care of points 1 through 3 guarantees an optimum level of customer loyalty and tremendous brand recall @ moment of truth
“Loyalty programs were never just about rewards accrual and redemption,” Daniel Farrar CEO – Switchfly
Simply by optimizing and fortifying their loyalty strategies by the use of Novo-technology to generate customer insights and create meaningful experiences, brands today can increase stickiness, brand recall and tap on new earning potential.
Reciproci, a Customizable, Robustly agile Experiences & Loyalty Platform underlined with Hyper Proximity Assets helps brands maximize the value of their loyalty programs.
Reciproci believes in these strategies Brand Executives should use to ensure they’re reaping the rewards of today’s changing attitudes toward loyalty.
Food For Thought
77 percent of Millennials stated that their best memories came from events and live experiences. In the sphere of loyalty programs, this means that organizations need to look for opportunities that will generate excitement and anticipation of future experiences. Doing so will help forge longer-term emotional connections with customers.
Standalone and uni-focus Loyalty Programs are a thing of the past and passé. The Loyalty Program of this age is built on and nurtured by a strong foundation of Customer Experience principles and practices. Organizations that understand this and are raring to become front runners, in this pursuit of the elusive Customer Success that will catapult them towards top seed.
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