Reward programmes in a digital age

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1 Reward programmes in a digital age Think SoLoMo

2 It s a digital world It s no surprise to see that businesses who have remodelled to embrace the digital revolution have flourished in the past 5-10 years. High-streets and malls all over the world have changed forever, as established retailers collapse or simply move to a more responsive and digital based proposition to cope with an ever more demanding consumer. The financial industry has been no exception to this change, with the McKinsey Global Private Banking Survey 2013 reporting that, globally, branch visits to retail banks are down percent, while the use of remote channels has jumped up five-fold. Client segmentation is also increasingly structured around channel usage (consumption), rather than by the level of wealth. In addition, the 2011 McKinsey & Company report Retail banking in Asia highlighted the huge increase in digital-channel usage, with developed markets usage up by 36% (where people now use digital channels more than branch and telephone banking put together), and 39% in emerging Asia. Rewards programs are no different; we have found through our research that 88% of program members now specify a preference to redeem their loyalty points online. Whilst the digital revolution undoubtedly offers a huge opportunity for banking loyalty and reward program managers, the immediate challenge is to identify this new wave of consumer, as undoubtedly, their requirements will be shaping your program for many years to come. 88 % of members choose to redeem online BANKING LOYALTY CONTENTS It s a digital world 2 Are you thinking social, local and mobile? 3 A modern day approach 4 Decisions with data 5 Five tips to help you look long term 6 REWARD PROGRAMMES IN A DIGITAL AGE 2

3 Are you thinking social, local and mobile? SoLoMo (social, local and mobile) is a term becoming more and more familiar for marketers. The term has evolved against a backdrop of increased technological advancement and customer demand for a more tailored and personalized offering. So who is the social, local and mobile consumer? They are the consumers who are expecting companies to meet them wherever they re at offline or online - and make themselves available through any and all channels. Crucially, with the always-on nature of social media and mobile technologies, these consumers are expecting more personalized experiences, tailored to their individual needs and wants. The speed with which services and products need to be delivered has also increased. E-tailers such as Amazon and Wal-Mart have created an expectation of rapid fulfilment, often instantly, as in the case of an e-book or music download. Failure to deliver, therefore, can trigger the abrupt end of your relationship with a customer, catapulting them into the arms of a competitor. Times during a customer s day that were once commercially inactive are no longer so. The proliferation of mobile communication and computing devices such as smartphones mean that occasions such as waiting in an airport lounge or travelling in a taxi have become opportunities for online shopping and browsing. Be available through any and all channels REWARD PROGRAMMES IN A DIGITAL AGE 3

4 A modern day approach For banks, the question is how to best meet the evolving expectations of reward program members, while ensuring the program itself remains profitable and attractive. Quite often the answer already lies in the way that your bank has (or is) remodelled in general, by segmenting your customer base by channel of consumption, as opposed to by wealth. Frequently it s the case of the loyalty reward program catching up with the rest of the business and operating in a more modern and contemporary fashion. From the platform that the program sits on to the channels of consumption, to the rewards that are available to redeem - your program needs to compete with the best of class e-commerce and cashback propositions from a whole host of industries that the SoLoMo consumer has become accustomed to. BANKING LOYALTY Channels of consumption Platform Rewards available REWARD PROGRAMMES IN A DIGITAL AGE 4

5 Decisions with data Investing in delivering a unique and differentiated reward program requires more time than a quick-fix. The key to success is getting the combination of rewards and brand right, and ultimately, it s the insight from your customer data that enables you to do this. With e-commerce, mobile and social media all holding more influence on consumers browsing and buying behaviours, loyalty marketers should be looking to re-engineer their programs to address a more social, local and mobile audience. Data has, of course, always been an important part of any loyalty or reward program strategy, however it has recently become more prominent because of the continued narrative around big data. But the size of your data should not change the importance of getting your strategy right from the outset. Your data needs to offer a single view of the customer that provides practical and actionable insights but it should also help make loyalty initiatives much more valuable as they can further personalise the relationship between you and your members. Age/ Gender Likes/ Dislikes Buying habits REWARD PROGRAMMES IN A DIGITAL AGE 5

6 Five tips to help you look long term To help you come to terms with an increasingly complex banking loyalty program environment, we have suggested five points to help you look to the longer term, embrace change and help you to provide a more effective loyalty reward program: 1 2 Put data at the heart of your loyalty strategy to understand EVERY customer s individual requirements Plan a rewards strategy that focuses on matching the portfolio of rewards and the mechanisms for delivery to your members 3 4 Deliver rewards using a platform built on technology that creates an interface experience that matches or surpasses the experience of other leading e-commerce suppliers Work with partners to identify and source content that resonates with the bank s brand 5 Implement a robust ongoing communications strategy that is properly managed REWARD PROGRAMMES IN A DIGITAL AGE 6

7 We are part of The Collinson Group. The Collinson Group help brands across the world manage their customers more effectively. We started out over 20 years ago offering travel enhancements and insurance. We re now a leading provider of customer management, focussed on delivering acquisition, optimisation and retention through people, products and services. The aim of every business within The Collinson Group is to support, delight and reward our customers. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any manner, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright Collinson Latitude Ltd