Personalisation, not budget, is the Key to a Successful Loyalty Programme

Wednesday September 14,2016

Mo Firouzabadian Senior Vice President

In the past, telecommunications companies ­­and virtually every vertical, for that matter focused their might and resources on developing highly innovative and highly competitive loyalty programmes. The goal of these programmes was simple: acquire new customers and pull them deeper and deeper into the brand experience with promises of high value, high level rewards, solutions and services. It was, essentially, corporate quid pro quo ­­in exchange for your loyalty and share of your engagement and investment, we’ll provide some meaningful reward or statusmarker that improves your experience.

And the cycle continued.

It continued because, during the loyalty era of telco and marketing as a whole, these programmes moved the needle without any assistance. They engaged customers in a way other methods hadn’t, driving acquisition, advocacy and improving average lifetime value. But as we transition to today’s always­-on, always­-connected landscape, consumers wants and needs shift and, seemingly overnight, conventional loyalty programmes, simply, don’t wield the same potency they once did ­­ at least not as standalone initiatives.

So what is working? At Lumata, we’re seeing over and over that a compelling customer experience within and around the loyalty programme leads the pack when it comes to customer engagement. And, what’s more, it’s these experiences that, in turn, grow loyalty programme participation, fueling that funnel while improving and enhancing every single step along the way. “[O]rganizations able to skillfully manage the entire experience reap enormous rewards,” writes Harvard Business Review, “enhanced customer satisfaction, reduced churn, increased revenue, and greater employee satisfaction.” What’s more, these companies, “discover more-­effective ways to collaborate across functions and levels, a process that delivers gains throughout the company.” Loyalty programmes included.

We recently worked with a tier 1 operator in Western Europe, managing this very scenario. Many years after a highly successful loyalty programme launch ­­ delivering double digit increases for ARPU for engaged users the programme stalled in this Western European country. Redemption rates nose dived and the programme was suddenly delivering a negative ROI.

Instead of abandoning the programme ­­ a loyalty initiative that had produced unparalleled results through the Middle East and Europe ­­ this operator shifted its focus to personalising the customer journey, and delivering relevant, real time experiences at scale. Customers were segmented into behavioural and value groups, with nearly 200 comprehensive profiles constructed. Prizing and specific customer journey elements were then personalised based on these in­depth and individualised assessments.

By shifting focus, this operator drove a massive lift in loyalty programme involvement, as well as the results emerging from that programme. Participation rate tripled to more than 60%, redemption rates broke through to more than 50% and ROI grew to over 60% per month. It was the one­-two punch customers were looking for ­­ a one­two punch that relied on both a customer experience focus and a better, more relevant loyalty programme resulting from this shift. Most importantly this improvement was achieved without increasing the rewards budget for the programme. Most of the prizes remain the same, but were much better distributed.

Not only is this loyalty programme a prime example of consumers’ changing demands ­­ and, with them, our collective shift in focus ­­ but it’s also a mirror for how the telco is pushing the envelope in an effort to meet the ever-­evolving lifestyle needs of its customer. This effort ­­ and others like it ­­ are laser-­focused on delivering greater subscriber relevance. In this case, it’s through a strong loyalty program which, because of its success, has created less churn because users see greater value of staying with their operator.

This is just one of countless examples we’re seeing at Lumata. It’s clear than, in today’s landscape, it’s not enough to provide random prizes and a one size fits all experience. Instead, consumers crave connection and spot­-on experiences­­ with those in place, they’ll naturally develop a greater brand affinity and the likelihood of advocacy grows. Layer this into your loyalty programme with an experience­-first mindset and there’s the real potential for exponential growth and enhancement ­­everyone wins.

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