Giving your customers what they want begins at home – sometimes literally, in the case of points redemption
Global research carried out earlier this year by Collinson Latitude (entitled ‘Rewards That Count’) found that, in general, banking loyalty programs generate high levels of customer satisfaction (75%) – higher than hotel frequent guest programs (70%) and airline frequent flyer programs (60%) – and the majority of those who have redeemed their points once are highly likely to do so again (80%, according to our research).
But there are areas for improvement – and these improvements are becoming ever more important given the ease and speed with which customers can switch brands. It’s no secret that customer loyalty can be the key to financial success. But creating a loyal customer base means giving your customers the brand experience they want.
Giving your customers what they want begins at home – sometimes literally, in the case of points redemption. The research found that 88% of respondents preferred to redeem their loyalty points online – compared to only 10% by phone and 2% in store. This may sound like an obvious development, but does your loyalty proposition currently match the digital requirements of your member base? We’d suggest that many have not yet made this progression, and certainly many more are way behind the pioneers of loyalty programs in industries such as retail, as we discuss in more depth in our paper ‘Driving Reward Program Change’.
But – it goes without saying – having an impressive redemption capability has no value if your customers aren’t motivated to make that key first redemption.
Factors such as availability, attainability and desirability can all be key inhibitors to redemption – 59% of program members told us that there was a ‘lack of availability’ of rewards in their specific program, whilst 54% said the rewards seemed unattainable through their points program.
Banks also have to make sure they have the right rewards on offer – whether these are part of their core brand offering or not.
Our research found that travel rewards – such as hotel room upgrades, free flights and flight upgrades – were the most popular rewards globally. This was somewhat expected given that these are ‘traditional’ rewards that are part of the loyalty legacy.
But when we asked these same members what rewards they would like to redeem their points against, all sorts of different products and services were mentioned. For example, 34% of respondents in Asia wanted to be able to redeem points on event tickets.
And these aren’t just a wishlist – over half of the program members we spoke to said they felt that a greater choice of rewards would increase the value of the reward program and enhance their relationship with the brand. More than a quarter said they would be encouraged to collect more points.
Having a range of rewards available also generates insight from interactions so you can make the right rewards available to the right customers. And it makes sense to utilise this data as much as possible – 76% of program members would rather redeem their points on carefully selected rewards than on a cash alternative, presenting a huge opportunity for actionable loyalty insights. Give your customers the rewards that count to them, and your reward program can offer a profitable solution to the challenges of customer loyalty.
For more insight and content about loyalty and redemption in banking, visit our Road to Reward microsite here: http://www.collinsonlatitude.com/the-road-to-reward.aspx