Rewarding loyalty? Most schemes are running on empty

Richard CalvertHardly a week seems to go by these days without a new loyalty scheme launching or an established one having a revamp. But it never ceases to amaze me how truly awful some programmes continue to be.
Take the classic airline reward programme. Like those of us lucky enough to fly frequently I check my status regularly so that I can manage my flights and my tier status. I’m forever either trying to squeeze one more flight into a year so that I retain my lounge access or to check how many flights I need to quality for the next, elusive tier of benefits – and a new luggage tag – that frequent traveller badge of distinction.
I’m having a busy year with a number of long-haul business trips planned and, good news, only 12 more long haul flights to go until I qualify for my new luggage tag and the promise of a wider smile at check-in.
I mentally tot up my trips… and bingo… the next level perks will be mine. Hoorah!
But the 12 flights all have to take place by September 30th, and we’re already over half way through July. For heaven’s sake what percentage of travellers take one long haul flight a week? A very, very, very small proportion. Then again, maybe that’s the point – great for some, eternally frustrating for the rest of us. So I now I’m faced with a choice to take two long haul flights a week or lose my tier points at year end and slide back down the loyalty ladder.
The point is that the goals set by loyalty schemes are simply unachievable for mere mortals and, therefore (excuse the pun), ultimately pointless.
Consider BP’s latest loyalty offering, BPme Rewards. Apparently drivers need to spend the equivalent of a month’s salary on fuel in order to claim the cheapest reward gift, a Thermos mug, which probably costs less than a pound to manufacture. Where is the equity in that?
It beggars belief that in an era where trust and relationship building are critical that an organisation could have got the value exchange so wrong. While it hasn’t been explicitly announced why the petrol giant has left the Nectar fold in favour of launching its own programme, it stands to reason it will have something to do with the rising importance of first party data in today’s GDPR governed times.
Nikki Grady-Smith, BP’s head of UK retail, was quoted as saying: “We’ve listened to what our customers have been telling us. So for the last 12 months, we’ve been working on how we can bring a compelling and rewarding offer that is personalised and reflects BP’s unique combination of convenience retail and high-quality fuels and lubricants.” Nothing screams compelling and rewarding like a cheap coffee cup.
The problem with cooperative loyalty platforms like Nectar has always been data ownership.
Member brands have never had full control over the information and this makes it hard to leverage the data as a foundation for meaningful customer relationships; now even more so with the increased constraints dictated by GDPR.
As a result, the value of first-party data is now at a premium and fostering real permission-based relationships is fast becoming the new normal for marketers. Consequently, brands are increasingly looking at ways to encourage customers to entrust them with their personal information.
A loyalty programme is one obvious solution. But, and it’s a big but, only if the organisation demonstrates and communicates to its customers just how valuable they believe that data is and provide something of value in exchange.
This doesn’t just boil down to points win prizes, it refers to the whole data ethos of the company.
People must be convinced that organisations will both protect their information and use it responsibly to enhance their experience of the brand.
BP talks about personalised offers, but will this actually materialise? Sadly I expect this will probably translate into a lacklustre customer journey that will result in a few offers being sent out to key segments at various intervals in a thinly veiled attempt to cross or upsell.
In fact, BPme Rewards could become a responsive scheme that reacts to how individual members interact with the programme and the brand. For modern, GDPR enlightened marketing practitioners, a well thought-out loyalty programme delivers the opportunity to create a truly one-to-one relationship that both recognises loyalty and provides a rewarding experience for both customer and brand.
For everyone else, it’s a transactional relationship that will ultimately fail if the value balance is tipped in favour of the brand.

Richard Calvert is co-founder of The Thread Team

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