Customer loyalty in the time of COVID-19

Exploring customer loyalty programs and their relevance, role and future after the COVID-19 crisis

Reimagining loyalty

Brands thinking about the rebound do, however, need to consider the world they emerge into might be quite different from how it looked in February, with the chances of a deep recession being likely. Parsons says this outcome also needs to be factored into the rebound strategy and the loyalty program that supports it, including concessions such as lowering the price points on rewards and redemptions.

“We also expect to see programs start awarding points for positive engagement, not just sales, posting reviews, blog posts, entering contests with the brand,” Parsons says.

So while many brands are currently in crisis mode, there is potential to start reimaging what their loyalty program might look like. Parsons says it is important when anticipating this new post-pandemic world to consider how the shaping forces will have changed, especially in terms of new customer learnings, attitudes, habits and needs. This might see more emphasis on card linking, partnering, greater personalisation and greater use of subscription programs.

Despite talk of recession, Parsons says there is scope for brands with strong loyalty to rebound from the crisis more positively than competitors. He likens a recession to a curve on a racetrack.

“It is the best place to pass competitors, but it requires the most skill,” he says. “The companies that will prosper are those that will think about innovation and transformation in their loyalty programs during this really challenging period. And that is not going to be possible for everybody.”

Hence those brands that have invested in a robust loyalty program are likely to also be the ones that emerge strongest.

“The general level of emotional loyalty will be lower,” Parsons says. “What that means is you have to work a bit hard to get your customer back in, but you have more of an opportunity to get a customer to switch to you. So as difficult as it is given the uncertainty everyone is facing into today, now is the time to really be putting some time into the reimagination phase.

“Because while it is important to react and rebound, long-term competitive advantage will come out of those bigger and harder changes that ultimately are going to resonate stronger with the customer.”

Hence in the same way that elections are won on election day, Shelper says the same is true for loyalty programs.

“Every eight to 12 yearsm there is a major economic shock that hits, and so that period between is when you should be preparing for that to come,” he says. “And a great way to do that is to have a good quality, well-resourced, well-designed loyalty program that drives deeper engagement with members. So when the economic shock inevitably does come the company has a good relationship with members and they can use that to effectively communicate with them.”

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