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Loyalty in banking

By
Peter Shackleton
,
VP of Commercial

I'll start with a question. Is the data correct?

At the end of 2016, Forrester Consulting polled a cross industry group of Directors and Senior Managers to better understand how those overseeing loyalty programs craft their strategy for optimum results. The study found that those in Banking have high aspirations for their programs but only 13% stated they were satisfied with the performance of their program. (Also within that report, the biggest objective for financial institutions offering loyalty programs was not actually loyalty. 66% of banking executives said acquiring new customers was their top strategic objective for their loyalty program. Customer retention comes in at number two).

Fast forward 12 months or so and the dynamics have not changed. Knowing what banking executives want to achieve, we wanted to take a look at what the other side of the research looks like. What are consumers saying they want from their banks and credit card providers when it comes to loyalty schemes?

Firstly, do consumers value Rewards and Loyalty products / services from their banks and credit card providers? The answer is most definitely yes, consumers value Rewards and Loyalty services. Rewards rank year-on-year as one of the most attractive features of their account or card. That response actually increases further up the 'premiumness' chain. 80% of customers with incomes in excess of $100k rate rewards as one of the most attractive features of their preferred credit card (TSYS 2017).

So what are consumers saying they want from a loyalty scheme? We continually sift through data and research to better understand consumer demands, but feedback seems to fall into three categories.

Exclusivity

Top of the feedback list are aspects relating to exclusivity and having access offers that others can’t. In truth this feedback is as much to do with social competitiveness as it is exclusivity, and points to the fact that so many ‘loyalty’ offerings are so widely available that they lack both:

Photo by Tim Evans on Unsplash
  • 94% of Americans would take advantage of an exclusive offer provided by a brand that the brand would not typically offer the general public (Kelton)
  • 58% of consumers who would use an exclusive offer say it would increase their likelihood to purchase while 48% say the offer would speed up a purchasing decision and 40% said it would increase how much they originally planned to spend (Kelton)

A number of pieces of feedback focused on the impact of a lack of exclusivity and not being made to feel 'special'

  • Just 19% of loyalty program members say that brand representatives make them feel special and recognised (Bond)

Simplicity

The next key piece of feedback was ease of use, both in terms of access and as well as the mechanics of a loyalty scheme. Here the feedback starts to vary across the demographic groups

  • 75% of consumers would engage more with loyalty programs that make rewards information mobile-friendly (CodeBroker)
  • 97% of millennials say they would actively engage with loyalty programs if they could access their rewards information from their smartphones (CodeBroker)
  • 45% of millennials don’t join a loyalty program because it requires too many purchases to earn rewards (Kobie Marketing)
  • About two-thirds of Generation Z are reluctant to join loyalty programs, with 40% of saying the programs require too many purchases to earn rewards or to redeem points (Kobie)

The topic of ‘simplicity’ also extends to ease of access and in particular the use of mobile apps. Consumers across all demographics are looking for immediate and simple access to their rewards and are quite happy downloading and managing that access via a mobile app:

  • 64% of consumers download an app for promotions and exclusive deals or products (WillowTree)
  • 61% of consumers download a bank related app for loyalty programs (WillowTree)

Personalisation

The final recurring piece of feedback from consumers is around personalisation and that ‘one size does not fit all’. Desires change across demographics with the Baby Boomer generation spiking higher with quality and value for money whilst millennials are looking for traits in their Banking incentives such as; personalisation (42%), ambition (35%), and uniqueness (35%) as well as excitement (31%). (NDDATA)

With such a large proportion of proposition-focused executives across Banking looking to upgrade and improve their loyalty schemes, the consumer feedback suggests that focusing on loyalty mechanics that address these areas would have the biggest potential impact on acquiring, retaining and rewarding customers.

How does that feedback relate to Upgrade Pack?

At Upgrade Pack we’re worked hard to create a platform that truly enhances a loyalty scheme and provides a differentiated means of addressing what consumers are truely looking for in a loyalty mechanic.

Exclusivity

  • Upgrade Pack is a closed marketplace not open to the general public
  • We only work with a limited number of clients per territory to ensure the proposition remains exclusive for end users and differentiated for clients
  • The discounts we can offer cannot be obtained anywhere else

Simplicity

  • A user enters a booking reference and gets presented with a discounted option to upgrade their flight or their hotel
  • Discounts are not based on customer ‘status’ so there are no complex mechanics
  • We can work alongside existing travel loyalty programs

Personalisation

  • Upgrade Pack is an independent platform that works across all airlines and hotels
  • Our platform does not restrict users to specific brands, putting them in control
  • The platform provides users with a means of upgrading to the next grade of airline seat or hotel room, so in our case 'one size does fit all'

December 7, 2018
Tags:
Commercial
,

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