Stay ahead in 2011

2010 was the tale of two halves - the struggle of more mature markets to finally climb out of the recession, and the incessant explosion of emerging markets, such as China and Brazil. For brands in mature markets that have emerged battle-worn, it is vital that they now use this opportunity to focus on creating engaged customers who will remain loyal in times to come.  For emerging markets, although they are still heavily focused on acquiring new customers, soon there will come a point when they need to turn their attention to their relationships with existing customers. 

With many exciting opportunities and technological developments emerging to positively influence loyalty, our experts take a look at the key trends for 2011.

1)     Focus on the strategic impact of loyalty

While points programmes have been around for a while, loyalty initiatives will shift to focus on generating deeper engagement and building relationships for the long-term. This strategic approach will help build true loyalty based on a total customer experience; something to date that has not been achieved by the vast majority of brands.  

Marketers now realise that although spend and number of transactions are an important measure, in 2011 we will see brands move away from transactional, tactical activity such as price promotions or discounting, to activities that focus on customer interactivity and engagement. These are becoming increasingly important measures of loyalty, and an indicator of customer potential commercial value. 

2)     Information before interactivity

During 2010 brands started to better appreciate the quality and potential value of their customer data to enable them to conduct more integrated and targeted campaigns to drive particular consumer behaviours and loyalty. This focus highlighted that brands need to go back to basics, review the existing data they are collecting and reconsider what the bigger strategic picture for building customer relationships.  They need to get this right before they dive into how to generate more interactivity.

3)     Relevancy a key driver to build relationships and advocacy

A comprehensive strategy based on real-insights drawn out from existing customer data is critical to driving a personalised and relevant customer relationship strategy.  Personal, relevant deals are the second most frequently chosen reason for spending more with a company, mentioned by 48% of people in research[1]. Success stories like Amazon highlight the power of a highly personalised and relevant approach to improving business performance and engendering customer loyalty.

4)     Greater localisation of programmes

One key trend that will continue is the transformation of global loyalty programmes to be more locally relevant - and in a way that is profitable.  With billions of loyalty programme members around the world, the 'one-size-fits-all' approach is becoming a thing of the past.  Brands need to provide consumers with reward that are relevant and of value to them to maintain their engagement and engender loyalty.

Several brands are now focusing on delivering relevancy in this way, whilst creating a competitive advantage. For example, Wyndham Hotels run a global loyalty programme - Wyndham Rewards.  As the world's largest hotel loyalty programme based (7,200 hotels), Wyndham Rewards has 8m members worldwide and continues to enhance the localization of their programme in China. Wyndham sources local partners to help tailor rewards to local needs and cultural interests.  In addition they offer local in-language telephone support and last year launched tailored local promotions.

5)     Loyalty needs to get more emotional

Loyalty or reward programmes are highly rational mechanisms.  With a points-based programme, for example, the reward behaviour is very transparent, and customers know exactly what they will get for showing a specific purchasing behaviour.

The next generation of reward programmes must focus on generating more consumer emotion so they are more involving and exciting.  This might include interactive games which stretch a programme into other lifestyle areas.  Brands such as United Airlines have successfully tapped into a more emotional behaviour as part of their programme marketing initiatives.  In 2010 they released their 'Optathlon' members-only interactive game which enticed members to engage and play the fun game online and win a variety of prizes.  Members were offered instant daily rewards which included things like fast track security line passes, seat upgrades and free business lounge access for a day.  Five iterations of the game were released, with the latter being available via mobile apps, further encouraging members to engage with the programme.

Of course channels of engagement need to be appropriate to the region. For example in the Middle East, social media is hardly used by companies as a means to interact and engage with their consumers - rather it is predominantly used by individuals for personal use.

6)     Extracting value earlier

Programme engagement also means offering unique, desirable and, importantly, attainable reward options. In order to increase the number of active members and participation rate of loyalty programmes, they must offer lower level redemption offers, to encourage earlier engagement in the loyalty programme.

For example, how to better involve lower level or tier members who traditionally have low points balances.  Of course this benefits both the programme operator and the customer - as the operator's points liability can be reduced whilst at the same time engaging and rewarding the customer.

7)     Making people feel good

Recognition will become more important to build advocacy and loyalty, plus taking this one stage further there will be a move to self-actualisation - making people feel good about themselves. This is supported by the increase in cause related marketing activities being integrated into existing loyalty programmes, motivating the customer to give something back.  For example donations to charity or even recycling loyalty programmes such as RecycleBank.  

8)     It's all about location

Have loyalty cards reached saturation point? For example, a recent study highlighted that over 70% of people reported they had 2 or more loyalty cards[2]. With people's wallets or purses quickly filling up with plastic loyalty cards, this will only instigate a move to virtual cards. Mobile applications like CardStar have already tapped into this growing need.

The most exciting trend continues to be the growing intersection between mobile, social and local - enabled by smartphone technology and clever software services.  This will result in location being used to effectively target customers across all media and technology platforms, at every stage of the customer journey.

Check-in services such as foursquare and Gowalla experienced explosive growth in 2010, with the total user base nearly tripling year over year[3].  The loyalty focus will evolve to be about much more than the check-in and switch to the offer which will be part of a more integrated CRM or loyalty initiative oriented around customer location.