Customer loyalty/rewards programmes: Why CX and personalisation are the key to winning

Michael Levinsohn. Image supplied

Some programmes are directly linked to a particular company (such as an insurer, bank or supermarket chain), while others are stand-alone rewards programmes.

From a business point of view, a loyalty programme is a strategic marketing tool.

2024 loyalty research report by Bond Global revealed that 73% of surveyed consumers opt to adapt the amount they spend to maximise reward benefits and 79% of consumers are more likely to recommend a brand if it has a good loyalty programme.

A whopping 85% of respondents said that loyalty programmes encourage them to continue doing business with a particular brand.

Considering that repeat business comprises a significant portion of organisation sales, this is a massive factor to take into account. The data indicates that in a highly competitive business landscape, having a rewards programme that is superior to those of competitors is likely to give a brand a notable business edge in terms of attracting and retaining customers.

On the South African front, 76% of consumers have indicated that they make regular use of loyalty programmes (Brandmapp South African Loyalty Landscape Report 2023 – 2024). This figure has been on a steady upswing.

There has been a marked increase in usage from top-end consumers (over R40,000 per month household income), which is extremely valuable to brands as this economically active segment of the population take home more than half of all formal income earned in South Africa every year.

Customer Experience (CX) and Personalisation (PX)

Simply offering a loyalty programme, will not guarantee success. A programme needs to offer real value to the end user (i.e., the consumer).

To succeed, brands need to have a “big picture” understanding of Customer Experience (CX), and develop strategies based on these fundamental elements. CX refers to the entire customer journey, encompassing the various touchpoints and opportunities for interaction, including marketing content, direct interactions with customers, post-sales customer service, social impact and overall perceptions of a brand.

CX entails both tangible benefits (such as direct sales), as well as comparatively intangible benefits, such as promoting trust and emotional connection.

An excellent loyalty programme is one that takes these numerous “mini experiences” into consideration and entrenches them into market strategies, but also makes the CX journey highly personalised, starting with simple items such as using the customer’s name when addressing them. This goes far beyond “feel good” factors as it stimulates customer-centric value which in turn promotes brand bottom-line objectives.

Some tactics to improve the Customer Journey (CX) and Personalisation (PX) aspects of loyalty programmes include:

• Memberships and benefits: Customers don’t just want to pay a fee for a reward package, they want a membership. They want a sense of belonging.

  In other words, they want to be formally acknowledged as a member of a programme, including access to member-only / VIP benefits. There is a level of esteem and exclusivity that consumers assign to such a structure.

• Easy Point Accumulation & Redemption Process: Complicated point values that are difficult to convert into actual monetary value. negatively affect customer experience.

  As most consumers belong to multiple rewards programmes, it is very difficult for them to keep track of the number of cumulative points that equate to a single rand when redeeming. Ideally, rewards should be in direct financial terms or a 1:1 ratio of points to rands.

• Broad Partnerships: While many programmes are structured for redemption solely with the brand that issued them, there is value in incorporating additional partners, or , a network of partners / coalition partnerships for the earning and redemption of rewards. This allows the member a heightened level of freedom, flexibility and increases the value of the programmes’ currency to the customer.

• Emotional Connection: While informative content is important for members to understand the programme structure, benefits, tier options and so forth of a programme’s, communication needs to be more than just top-down information. Emotional connection is paramount. Brands that succeed in going beyond to connect with members will reap the rewards of their efforts.

  This includes giving customers a voice and incorporating their input when developing brand strategies. Research by Predictive Emotional Intelligence solutions firm Motista has found that customers who feel emotionally connected to a brand have a 306% higher lifetime value than customers who are merely satisfied.

• Digital Integration: Having an online portal or mobile app allows customers to check balances with ease, access membership information, find out about promotions and easily update their details. From a business point of view, it allows the brand to serve personalised content and offers loyalty programme members, which in turn improves the customer journey. Innovation is also key to keeping the programme competitive and keeping member’s engaged.

• Recognition and Reputation: Reputation is key to elevating a loyalty programme. Industry awards is a great way to increase brand awareness, credibility, and to showcase excellence. From a strategic growth point of view, entering such competitions and awards also aids brands in benchmarking services against industry standards, identifying areas for improvement and highlighting unique brand characteristics.

With 89% of companies stating that they compete primarily based on CX factors (Zippia), elevating customer experience should form a central component of organisational strategies. More so as excellent experiences lead to increased referrals and word-of-mouth marketing, further driving brand objectives. Loyalty brands can set themselves apart by developing innovative ways to impress customers and exceed expectations. And, as the data shows, it is unquestionably worth the effort.