PURCHASE, N.Y.—Loyalty programs now need to be more than just points and miles, suggests a new report that also offers strategies for making loyalty rewards more competitive.
Mastercard “Beyond Rewards: Raising the Bar on Customer Loyalty" report that shows how exceptional customer service, digital access and ease of use have displaced economic traditional points and rewards as the most important components for building loyalty.
Developed by Harvard Business Review Analytic Services, the report highlights survey research that covers 400 executives in more than a dozen major industries around the globe including North America, Europe, Asia and South America. The Mastercard-sponsored study finds that fewer than half of survey respondents (42%) believe their organization’s customer loyalty strategy is effective—and that companies are increasingly moving to seamless, digital experiences and creating personal connections that last far longer than a points bank. In fact, more than half (55%) of respondents say they’ve updated or refreshed their loyalty strategy within the past two years, including 30% who did so in the past year.
“Today’s consumer has a bank branch, a retailer and all of her friends within her reach,” says Francis Hondal, president, loyalty and engagement at Mastercard. “We need to meet consumers where they are, when and how they want to engage. This means connecting them across channels in a meaningful way and bringing them high-value services. These are the building blocks for robust, loyalty programs today and into the future.”
Four Core Areas
So what can executives and businesses do to stay ahead of the curve? There are four core areas companies can focus on, according to the study:
- Create seamless, unique experiences: “Our research shows that brands are increasingly focused on personalization and cross-industry partnerships that open more channels for consumers to earn and use rewards,” the company said.
- Deliver contextual loyalty: In addition to offering dollars and points, brands also need to build personal relationships with consumers and meet them precisely where they are. In fact, 57% of respondents say that forging emotional connections is a primary reason for investing in customer loyalty initiatives.
- Become digital-first: Of respondents whose companies recently made changes to their loyalty strategy or are planning changes within the year, the top reason was to create a more digital experience (44%).
- Leverage predictive analytics: Just 41% of respondents say their organization can successfully track the ROI of customer loyalty investments, and only 31% claim best-in-class loyalty measurement capabilities.
Of the other changes companies made to their loyalty programs, 40% added personalized offers, 30% added new perks and 25% looked for the personal touch by hosting events.