COVER STORY: The best loyalty programs remove friction across the whole life cycle

Don't judge me. During the endless pandemic winters and summers of 2020 and 2021, our household commitment to enriching the shareholders of alcohol delivery service Jimmy Brings saw us wrack up over $400 in loyalty bonuses. The only problem was that we had no idea about our delicious windfall.

The innovative delivery company had removed so much friction from the process of engagement that it took us over a year and a half to recognise how much they valued our custom.*

A decade's worth of investment by brands in customer journey mapping, data analytics and, increasingly digital wallets, has transformed the experience of loyalty programs for consumers.

Critically, it has also made many programs much easier to use.

However, while the consumer may marvel at how simple it is to redeem cash on the Jimmy Brings app (much too easy as it turns out) it would be a mistake to assume improvements can be attributed simply to technology. 

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Instead, loyalty managers and customer experience leaders have learned the hard lesson that success comes from understanding the lifecycle of engagement — then knocking heads together to breakdown organisational silos.

Adam Posner, a loyalty specialist and researcher, who produces the popular and influential For Love or Money research study says there are a dozen key moments brands need to consider so they can answer all the right questions.

“Do I understand the proposition, is it simple to understand? Is it easy to join? How much data do you want from me when I join? And how easy is it to use [the program] in whatever channel you choose?”

“Also, is it easy to actually identify myself each time I engage with the program, whether I’m in-store or online — I've got to identify myself as a member, otherwise, I won't get the rewards or benefits against my membership.”

“Then when I need to pay for the purchase, how easy is it to pay at the same time, and then get the reward, and how easy is it to earn the reward and then redeem?”

The answer to each of these questions feeds into the accessibility of the program. Where it is poorly executed, friction in increased for the customer, says Posner.

“If you don't make it accessible, your members go missing in action. Strategically, the question is how do you make it accessible at every single moment?”

Posner told Digital Nation Australia, identifying the cause of the friction is the first step to removing it. Is it internal processes, is a data silo, a combination of all those things?"

Too many organisations fail to adequately map the customer experience which makes identifying the points of friction difficult.

“You have to understand the customer's experience in every single moment. So you've got to live, breathe, and watch it.”

But this is also the kind of problem that a loyalty manager or a CMO cannot solve by themselves, he says. Instead, it is necessary to identify which part of the business is involved in each moment.

Data, marketing, technology, strategy, compliance all have a role to play in executing accessibility, he says.

That’s certainly been the experience of Matt Jones, head of digital for iconic Australian retail brand, Country Road.

“The key factor of our loyalty program is we are fully integrated across all of our channels. The experience is completely frictionless."

The rewards and the pricing are exactly the same whether you are shopping on the company's app or in its flagship Chadstone store, says Jones.

"So we have to stitch that together really well," he says since the omnichannel focus has to deliver a consistent experience for the customer regardless of where they are shopping.

The stakes are high. Loyalty delivers as much as  70 to 80 per cent of sales, says Jones.

“It's the cornerstone of our business. It’s about rewarding and recognising those customers that are the most important customers that support us with high levels of engagement, high levels of interaction.”

It's that level of interaction that is important to cementing the relationship.

“We give them exclusive access to the product, we give them exclusive access to events within our shops. We give them exclusive access and in most cases sole access to a lot of our promotions. Our Spend and Save is our signature promotion which we know our customers love. That is a promotion that is exclusive to our members. We do not take that to the public.”

Organisational culture

Loyalty programs work best when all aspects of the relationship are considered, so it’s important to recognise any impediments, and that these blockers are as likely to be cultural as technological.

For instance, a misunderstanding of the role of loyalty doesn’t help. Too often it is relegated to a division of marketing says Phil Hawkins, until recently the COO of the huge Coles Flybuys program and now happily cashing in in a career worth of loyalty points in semi-retirement.

"Sadly, I see too much where loyalty is relegated to the backroom of the marketing department.”

However, he says, increasingly in the larger and better-resourced programs, loyalty has multiple touchpoints across the business.

Leadership buy-in is important to ensure this happens smoothly, and it’s also important to maintain the integrity of programs based on customer data, around which there is increased sensitivity.

“Having the buy-in and support from the highest levels of management in an organisation is absolutely key in that regard. If you have the CEO in your corner, then that makes things easier.”

Ease of use

Hawkins says that as loyalty programs have become easier to use, this improvement in customer experience has increased program satisfaction.

“I think the progressive moves towards ease of use, that's certainly been in the spotlight, I'd say in the last four or five years. The investment in digital assets, such as a fully functioning app. I think that's a critical requirement for programs.”

Hawkins says the wider adoption of digital cards whether through aggregator products like Stocard or via a brand's own app has helped solve the problem of wallet bulge, where consumers have to hunt individual cards at the point of purchase.

Analytics has also helped improve customer experiences.

“If you are intelligently and creatively using data to create that opportunity for personalisation that makes the program easier, more enjoyable, more worthwhile for the customer.”

The caveat, however, is that brands need to make it simple and easy to understand in the first place. 

“You need to be able to explain it to a child, how it works. You need to be able to explain it in one sentence in a lift. It's got to have that core of simplicity. If you start to be too cute with the mechanics of the program, people are so time poor they haven't got the interest to learn how a complicated mechanism works.”

“It’s a race out there. You can see that the better functioning apps, they're winning and it's a key driver of program satisfaction.”

Know your customer

For Purebaby, the purchase decision is especially personal.

“The customer is with us for a period of three to five years depending on how many children you're having. So our product range only covers up to five years,” says Sanjay Gill, CEO of the popular babywear brand.

During that period the typical Australian couple will have two children. “There is a time period that we try to serve our customers the best [although] they do become secondary customers as gift-givers.”

“Our program is bespoke,” he says. The period between finding out you are having a baby and then those first few years represents a very accelerated period of purchasing. 

“We try to reward them during that period. It's a bespoke loyalty program, acknowledging the journey that parents are taking with us with quarterly rewards.”

Loyalty programs are not always exclusively about increasing the share of wallet from existing customers, they can also help introduce the brand to new buyers.

We want to extend it further with a referral system, Gill says.

“You will find that groups of people go through the same journey, so [when] one couple is having a baby, the chances are their friends will be having babies down the track. We want to incorporate a referral and that people get rewarded for that."

Fragmentation

According to Radinck van Vollenhoven, the Australian managing director of digital wallet Stocard, "Retail loyalty programmes need to be stitched together to create a frictionless buying experience which is personalised and timely.

He said that with so many fragmented touchpoints to consider,  retailers look to partner with companies like Stocard to collect first-party data of their most loyal customers in real-time, with a 360-view and along their entire shopping journey, including online shopping as well as instore shopping.

"This unique insight into their customers allows retailers to offer very personalised promotions to their loyalty members based on previous purchase history and online and in-store shopping behaviour."

For example, he said, most consumers take their mobile with them shopping which provides brands utilisating digital wallets the opportunity to utilise its GPS technology. "Once an individual enters a store, an analysis can be made on where that person walks around in-store, the stopping points and logging purchases – all in real-time and anonymously. This is comparable to analysing website traffic of a person who does not have an account with a retailer."

Furthermore, according to van VollenHoven if the customer opts-in to share their contact details, retailers can send personalised promotions based on their in-store activity.

"In 2022, I expect to continue to see retailers connect their bricks-and-mortar channel and online pure-play to provide a truly omnichannel loyalty program experience for customers."

*(In my defence there were three adults under one roof, including a teenager, and nobody got murdered, except maybe the lyrics to Life is a Highway on the weekend we discovered the Jimmy Brings Voucher Vault.)