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Rewards Redefined: Innovating Customer Interaction For Lasting Loyalty

12/20/2023
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Economic headwinds are impacting consumer spending habits as discretionary spending weakens. Brands are ramping up loyalty strategies for efficient client acquisition and retention in the face of shifting consumer preferences by introducing innovative loyalty rewards and incentives.

Almost one in three respondents note that rewards not offering value is the main barrier to loyalty programme participation

Source: Euromonitor International’s Voice of Consumer: Loyalty Survey in 2023

Amid intense competition, engaging in an authentic manner by providing a hyper-personalised offer is key to differentiate and encourage brand advocacy with meaningful and purposeful interactions.

Sharing is caring - democratising rewards for client acquisition

Over 50% of respondents, with higher tendency among millennials and Generation Z consumers, agree that they only buy from companies and brands they trust completely

Source: Euromonitor International’s Voice of the Consumer: Lifestyles Survey in 2023

To gain trust effectively for client acquisition and retention, it is important to communicate through trustworthy sources. Friends and family recommendation is the top information source considered extremely and very trustworthy, according to the same survey.Chart showing Top Five Trustworthy Information Sources 2023

Client acquisition through leveraging an existing loyal customer base can be cost-effective, considering the power of word-of-mouth as a trustworthy information source. For example, Hyatt’s “World of Hyatt” loyalty programme allows its highest-tier members to extend benefits to non-members through a “Guest of Honor” scheme. The hotelier will ease requirements and allow more members to share perks such as club access, suite upgrade and extra room night rewards with non-members as a gift in January 2024, following positive feedback and high usage of the scheme.

This effectively helps brands to acquire new customers as their loyal members share their experience and rewards with their friends. It also lowers switching costs for customers. New customers and non-members are able to enjoy one-off VIP treatment and special offers and services at little to no cost, significantly improving their first touchpoint with a new brand. After a positive premium experience, it provides instant motivation for the new customer to stay with the brand and earn their status to experience the same offers and services again.

Create meaningful engagements - personalised and experiential rewards

Consumers are looking for more meaningful and genuine ways to connect with brands. One in five respondents, with higher tendency among younger generations, believe that holding exclusive events for loyalty members and offering fun in-person experiences are influential loyalty features, according to Euromonitor International’s Voice of the Consumer: Loyalty Survey in 2023. Brands are shifting away from pure earn-and-burn loyalty programme models to provide rewards that offer greater exclusivity and interaction with the brand.

Slapfish, an American chained seafood restaurant, launched its new loyalty programme in November 2023 to enable a more personalised and exclusive dining experience for loyal customers. Instead of focusing on transactional rewards such as discounts or coupons, Slapfish’s loyalty programme grants exclusive limited-time members-only menu options as well as personalised marketing. Slapfish’s member sign-ups increased by 17% within several weeks of the launch, highlighting how customers search for interesting rewards other than typical transactional rewards.

Enable purposeful loyalty - giving back to the community

Many brands donate to charity through their loyalty programmes. For example, the Shell Fuel Rewards scheme announced its latest collaboration with Meals on Wheels America in November 2023 to help tackle food insecurity among older consumers during the Thanksgiving season. Brands offer ways for members to give back to their community through spending at their brand.

However, consumers are ready to be active and more practical to give back to their community. Almost one in two respondents agree that being active in the community is important to them, according to Euromonitor International’s Voice of the Consumer: Sustainability Survey in 2023. Additionally, more than 50% of respondents agreed that they feel they can make a difference to the world through their choices and actions and that they give back to those in need according to the same survey.Chart showing Agreement on Sustainability Awareness 2023

CCG Hearts, a loyalty programme launched by Hong Kong’s Chinachem Group in October 2023, aims to encourage community engagement and have a positive impact in the city. Other than earning points through spending at Chinachem Group shopping centres, hotels, and cinemas, members can also earn by participating in quests, which involve activities with their partners such as spending time with older communities and appreciating art and culture.

Enabling purposeful loyalty facilitates genuine connection between the customer and the brand to work towards one goal – for the betterment of the community and society – and in return build emotional loyalty.

Learn more about what next-generation loyalty programmes will look like and the loyalty landscape in Asia Pacific in our reports, Next-Generation Customer Loyalty and Elevating Engagement: The Loyalty Landscape in Asia Pacific to understand how to better position your loyalty programme in the face of evolving customer demands.

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