How brands are ramping up customer loyalty program spending in 2017

In a mid-year survey of US marketers last year, CrowdTwist and Brand Innovators found the majority intended to allocate more budget to customer loyalty in 2017.

According to the research, at least half of respondents planned to invest more dollars specifically into their loyalty programs. Forty-four per cent, for example, said they expected these budget to ‘increase somewhat’, while 13 per cent expected ‘significant increases’ in dollars this year.

There’s plenty of evidence supporting the case for customer loyalty programs remaining a vital part of a brand’s customer engagement make-up. The latest Nielsen report, Global Loyalty Sentiment Survey, showed 57 per cent of Australian consumers are more likely to return to a retailer if they have a loyalty program in place, and 48 per cent will spend more if they know they’re going to be rewarded.

Globally, Nielsen’s research also showed 72 per cent of all consumers buying from a retailer with a loyalty program over one without.

And if there was ever a need for proof just how important programs can be in building customer satisfaction, the consumer backlash Woolworths received for revising its loyalty scheme in 2016 provides it. After announcing that shoppers would stop earning points on every dollar spent in favour of a dollar-based scheme for select ticketed items, the supermarket giant reversed its decision a few months later, much to the relief of its member base.

Kobie Marketing senior consultant, Howard Schneider, suggests the renewed emphasis on investing in customer loyalty programs has been driven by the rise of pure-play retailers and digital shopping.

“E-commerce has made it easier than ever before for consumers to compare products and deals, and today’s consumer is much less likely to stick to a handful of ‘tried and true’ brands than they have in the past,” he says.

“This is more pronounced when consumers feel they’re not getting anything special out of the relationship with the brand. This means brands have to look beyond their products and offerings to keep customers coming back and to stand out among all of the brands they’re now competing with both online and off.”

What most brands are also realising is that repeat customers make up a sizable share of business’ earnings, providing a steady stream of revenue and opportunities for incremental growth.

“They’re also more likely to stick around during economic downturns,” Schneider claims. “A marketing program that focuses solely on lead generation or demand generation is great for driving those initial purchases, but what’s to keep the customer coming back? A loyalty program that solves customer pain points can differentiate a brand and convert customers into brand evangelists.”

Putting loyalty and advocacy first

Ladbrokes is one organisation ramping up investment to improve customer loyalty and advocacy this year. General manager of customer experience and innovation, Christian Bowman, cites some hygiene “1 percenters” to tidy up at different customer touch points, as well as a big focus towards retention and building strong relationships with the brand.

One of his current tasks is fleshing out the betting company’s voice of customer program.

“This extends way beyond just surveying our customers but closing feedback loops and bringing the great ideas our customers have, into the product and service innovation process,” Bowman explains. “In the industry Ladbrokes plays in, we place high value on understanding our new customers and ensuring we can minimise attrition and churn before it happens.

“One of the two big agenda items for me is introducing dedicated client agents at critical touch points who will proactively engage in conversations with our customers to fill in any gaps of our understanding of their intent and action.”

The other big ticket item is personalisation, with a strong dependency on accurate data and segmentation frameworks, Bowman says. As an example, he notes the use of individually personalised video to reactive dormant customers during the Melbourne Cup. To do this, Ladbrokes utilised the smartvideo platform, which he claims was a first for the industry. Personalisation including video will now be rolled to several other customer touch points throughout 2017.

When it comes to building out a customer loyalty program, Bowman says there’s lots to do and he’s working to get several teams across Ladbrokes to collaborate and make it happen.

“The key focus is building meaningful relationships, which will allow us to start the co-creation process which will fuel most of our work in customer loyalty,” he says.

“The key focus should be on growth for any organisation looking to be sustainable in the future. This means there are lots of opportunities to build and accumulate ‘1 percenters’ from different aspects of a relationship with a customer, which can all add up to significant growth.”

Making customer loyalty more relevant

Expedia launched its first A/NZ customer loyalty program in 2015, entitled Expedia+. The program sees consumers earning two points per dollar spent on booking flights, hotels, hire cars and other travel-related services on the Expedia website across three tiers of membership. In return, members can get access to VIP benefits such as bonus points, priority customer care and exclusive hotel amenities. Points can also be used for booking award travel for others.

“We continue to invest and evolve Expedia+ to ensure it's the best travel loyalty program for the way real people want to travel,” says Expedia local managing director, Michael Pearson.

“Since we launched the program, we’ve incorporated real traveller feedback and data to measure and improve the relationship we have with our customers to make it easier for them to earn points faster on nearly all parts of their trip, ensuring that they receive a positive customer experience.”

Pearson positions the Expedia+ loyalty program as the key mechanism in the travel site’s overall customer engagement strategy and says it’s using data and technology to continue to adapt the program to better suit customer needs.

“We do this by taking the information our customers provide us, turn it into insights and in return provide them with value, choice and savings. This is why our loyalty program is more than just being rewarded with points for dollars spent - customers receive member-only deals, points from how they engage with the site, for bookings made via Expedia’s mobile app or with our multi-buy purchase incentive,” he continues.

“We spend a lot of time focusing on acquiring customers but even more on our existing customers and how we can drive engagement with them and turn them into our most loyal customers.”

Another brand that sees the value in a robust customer loyalty program is Crown Resorts. The casino and hotel operator is working on a program that it says will be the foundation for its ongoing customer engagement efforts.

During an interview with CMO, the group’s marketing chief, Christopher Coyne, said loyalty efforts are going to be the “lifeblood of Crown” as it moves forward and drives growth. To get there, the marketing team has worked to build a comprehensive customer segmentation strategy through insights, including qualitative and quantitative research across more than 10,000 loyalty cardholders and non-cardholder customers, plus a review of best-in-class loyalty programs globally.

Coyne says the digitally led scheme will be driven by customer value and “genuinely world class”. Further details are expected in coming months.

David Jones is also reportedly working on a new customer loyalty program, based on extensive customer and market research undertaken across its core department store brand, along with the four brands sitting under the Country Road group: Country Road, Witchery, Trenery and Mimco.

The aim is to foster a one-to-one relationship, using data and insight to get there.

At rival department store, Myer, more than five million customer loyalty program participants bring in upwards of 70 per cent of sales. During a recent interview with CMO, general manager of brand and marketing, Mike Scott, described the program as the “sleeping giant”, providing terrific insight into the customer that can be leveraged to improve the omni-channel experience and communications.

He suggested plans are afoot to refresh the program in order to keep pace with consumers, alongside wider brand rejuvenation plans.

Up next: How brands can ensure their loyalty offering remains fresh

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Keeping loyalty fresh

When it comes to how to reward existing customers, Schneider believes the focus for brands should be on providing opportunities for engagement beyond the pure purchase.

“For example, instead of merely rewarding points for purchases, brands can reward customers points for activities like filling out profiles and preferences, submitting reviews, registering on their website, sharing or checking in on social media and downloading their app,” he says.

“Brands can also provide personalised rewards for milestones, such as customer birthdays or membership anniversaries, or even offer impromptu rewards throughout the year. This helps to keep the program fresh and adds an element of variety to surprise and delight customers, keeping them engaged with the brand and creating an emotional connection.”

Schneider highlights mobile as the game-changing technology making it easier for marketers to not only focus on customer loyalty, but also justify these activities and spend.

“The rise of mobile has certainly made it easier for brands to engage with customers beyond the point of purchase,” he says. “Smartphones allow consumers unfettered access to email, apps, social media and websites. With so many possible touch points on one device, it’s easier for marketers to reach customers when and where the message is most likely to connect.

“Brands should be looking to integrate their mobile app into the broader customer experience. They can create a mobile wallet, add in order and pickup reminders and streamline access to coupons and rewards. Since mobile is now a necessity for brands anyway, it certainly should be easier for marketers to justify the spend on these functions.”

Whatever approach brands take to their customer loyalty program and activity, it’s clear there needs to be a priority from both the board and executive committee on the customer, Bowman says.

“Failing to do so will ensure any business to become irrelevant as they will be moving in a different direction to the market, and opportunities will dry up quicker than ever before,” he says.

“One of the simplest ways for marketers to help guide their organisation towards customer loyalty is to put it into simple numerical terms on a single page that can demonstrate growth. This may be in the form of a chart of goals and KPIs, or a roadmap of what the future could look like if you increase the performance of different touch points.”

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