Sandra RadlovackiSandra RadlovackiMarch 3, 2020
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4min1324

Brands are failing to engage younger generations with their loyalty programmes, according to a new whitepaper.

A report by Mando-Connect and YouGov reveals that while 76 percent of British people are currently members of loyalty programmes, some 44 percent of men aged 18-24 don’t use them at all, and 33 percent of women aged 18-24 don’t either.

The research shows that 18-24s do like the idea of loyalty programmes (79 percent think they are a great way for brands and businesses to reward their customers) but problems such as not tailoring to their needs, not addressing social purpose and sustainability well, not enabling recommendation, not offering good enough value, and not being in the right digital or social channels hold loyalty programmes back.

Turned off: Loyalty programmes are failing to attract younger customers

Although rewards are still the number one thing that people consider most important in loyalty schemes (65 percent of 18-24s think rewards are important), marketers aren’t getting rewards right for 18-24s. 

Relevance, value, appeal, variety, and excitement are listed as the main drivers that will build loyalty. People want to feel savvy and that they have received a better deal than their peers.

They also want to feel they have been treated, and they want to help others. Twenty-eight percent of Brits want loyalty rewards to be something that helps others, such as giving to charity or helping an environmental cause.

Charlie Hills, Managing Director and Head of Strategy at Mando-Connect said: “The report shows that, whilst the Brits are major fans of loyalty programmes, the industry is failing to engage the 18-24 year old audience.

“Rewards are the most important factor for Brits in loyalty programmes. Loyalty marketers need to sit up, take notice and understand what people really want. What people really want from loyalty programme is great rewards.”

Sam Tatam of Ogilvy UK’s Behavioural Science team believes the best way for brands to engage younger audiences is to think differently about motivation and reward.

“While the research shows discounts play an important role in driving loyalty, we shouldn’t neglect the range of psychological levers available to us,” he said.

“Relying too much on finite or rational incentives doesn’t just force tough economic decisions for brands, they also limit our creative freedom. By better understanding the additional ways of creating ‘psychological value’, arguably an infinite resource, we can work to complement these initiatives.”

 


Edd WellerEdd WellerAugust 12, 2019
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9min2007

The age-old argument tells us that retaining existing customers is cheaper, and more strategically sound, than acquiring new ones.

Retention strategies, however, are often a huge challenge for marketers, who find it easier to throw money at quick wins upon failing to crack the retention code.

Loyalty programmes show a brand’s investment in their customers through forming, sustaining, and rewarding brand loyalists. The power to influence preferred behaviours, gain deeper insight into consumers’ daily lives and remain front of mind during purchasing decisions is a major asset to brands.

Recent research revealed that 66 percent of consumers are more interested in experiences than price. So, in an increasingly fragmented market, the question is how can brands go about building their loyalty programmes?

Think of the times colleagues have sent an email around the office asking for an O2 priority code; it isn’t just the discount they’re after, but early or exclusive access to a particular event. Similarly, how many times has someone you know boasted about the number of air miles they’ve accumulated by spending on Amex? Loyalty programmes must now provide a wide range of access, benefits and privileges to keep customers engaged.

A great loyalty programme pulls data, audience insights, relevant partners, brand objectives, and creativity into an easy mechanic to use and understand. If you’ve hit this magic mix right, then signing new partner benefits and fuelling customer growth will be straightforward and crucially the programme will be both interesting and engaging.

Audience and relevance

Nowadays, a common bugbear is with banks and the relevance of their partner programme merchants that consumers are encouraged to use. Often these merchants are situated nowhere near where the banks know their customers live or shop, so taking advantage of these benefits immediately becomes impossible – and more importantly they tend to be somewhere the consumers in question don’t spend. Considering they have all the relevant data, what’s their excuse for not using it to construct an offering that is actually rewarding?

Knowing your audience to this degree may be reserved for the telcos and banks (if they look at the data) but there are some very basic demographic metrics any partnership manager should be comparing in the initial meeting point. This will help to establish what the target behaviour (and therefore offer) should be.

The smaller your audience, the more difficult it becomes to secure partners. As an initial step, really understanding your demographic and what triggers them to redeem, purchase or attend will help sign the right partner.

Quantity vs quality

The quality of the offers should be your first priority.

Even great partners with non-exclusive or generic offers divert audience because they’re better or more easily available elsewhere.

Try and keep to the right partner in the sector, if you’re a youth-oriented brand, Boohoo rather than John Lewis. DriveNow for a London audience vs Enterprise for the traveller; think about context or why they’ll want to use these partners when shaping the offer.

It’s also important to keep in mind that getting a quality offer from a partner brand takes negotiation, the best in the business will establish hard metrics for you to meet before unlocking the best bits. British Airways, for example, will need a spend metric hit from your audience before offering lounge access etc.

Without adhering to this, your programme becomes more Wowcher than Wow.

Mechanics

Over the last few years we’ve seen two big travel brands go opposite ways in loyalty. BA increased its premium offering, with a programme weighted to really reward the top spenders and crucially make it harder to reach that status. Hilton, on the other hand, has gone after the lesser value customer with as little as one stay before people can receive offers.

Making choices like these depends largely on where you want to position your brand. For Hilton this is repeat customer acquisition at large, but for BA its recognition and reward. Either way it is key that the mechanic matches your objectives.

When it comes to promotions has your brand asked the tough questions? Do you need points, or is that handing out liability unnecessarily? A prize draw isn’t actually rewarding anyone other than those that win – is that loyalty? If you’re driving spend to another brand, is that hurting your share of wallet?

Boosting loyalty programs through brand partnerships

At Ingenuity, we believe partnerships are one of the key ways to make a loyalty programme work. Consumers are more likely to care about your brand if it’s offering them something they want right now; easy if you sell vodka, not so much if you’re British Gas. If consumers use direct debit for your brand, they’re unlikely to think about it as often. So how can brands keep them engaged with a loyalty programme? By introducing them to things they would otherwise have no access to or helping them save money on things they’d be likely to interact with in the first place.

Clever mechanics, such as Netflix being paid by customers’ Amex points may add up to little ‘engagement’, but they do show up on bank statements every month, showcasing great loyalty benefit. Even better when consumers can use the rest to pay their Amazon purchase of laundry powder.

These integrations take much more work and this more broadly is the point. You have to invest in the programme and the partnership. You have to manage it, communicate it internally, and externally engage your customer service team as well as your partners’, and crucially deliver the media behind it that it deserves to ensure people actually know what they can get, with you!




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