Balancing the value equation in a changing loyalty landscape

More than ever, consumers need to be rewarded and recognised. Loyalty programmes are still successful, especially in financial services but as Mandy Gallie, VP Mastercard Loyalty Solutions tells Douglas Blakey, how we fund and deliver them has changed

Customer satisfaction in many mature markets has fallen, affecting the profitability of loyalty and reward programmes, according to Mastercard’s Engagement index

Mandy Gallie, VP Mastercard Loyalty Solution, tells RBI that customer satisfaction rates for loyalty programmes is falling for three reasons.

  1. There is a marked fall in the customer value proposition, driven primarily due to central government regulation;
  2. Broader market expectations: for example, the need to utilise technology to deliver instant connectivity and satisfaction, and
  3. The rise of the millennials: a segment of the market with greater expectations around personalisation.

Says Gallie, the key is to introduce a greater level of personalisation, digitisation and communication.

Get that right and satisfaction rates grow significantly.

Rewards programme members are willing to share their personal data based on Mastercard’s loyalty survey of 7,000 card loyalty members across seven key Asia Pacific markets.

Averaged across the seven markets, 71% of loyalty programme members will share personal information with loyalty/rewards programmes, ranging from a high of 87% in China to a low of 46% in Japan (see table).

One size no longer fits all

To achieve relevancy, Gallie has six key recommendations.

“Segment your loyalty base – you don’t have to treat all customers the same, when it comes to pricing and rewards offers.

“Offer good rewards and benefits and enable cardholders to choose their own adventure. Thirdly: consumers increasingly want rewards with instant gratification.

“Next, ensure that you have one interface for UX built into the payment experience.

“It is also important to build in automatic marketing triggers to keep your customers on course and lastly, invest in a good loyalty platform that is highly parameter driven and can scale.”

For loyalty programme owners, Gallie argues that to create sustainability they need to look beyond funding of schemes the traditional way from interchange.

“Programme owners also need to revisit their existing partnerships with merchants and aim for a convergence of hard and soft benefits.

Personalised card linked offers promote sustainable programmes for debit and credit by partnering with merchants.

Gallie says that card issuers need to identify target segments and design campaigns based on the merchant’s objectives.

It is not enough though for a rich retail offer to be received by the target cardholder; the cardholder has to be able to transact with the retailer normally with their rewards statement credited with points automatically.

The ultimate goal says Gallie is to balance the value equation between what consumers want versus what programme owners can afford.

Pay with Rewards

Mastercard Pay with Rewards is an innovative solution that gives cardholders the freedom to redeem rewards points for purchases at millions of eligible locations worldwide, in store or online. 

With the option to reimburse either part or all of the purchase, card issuers enable real-time engagement with cardholders, increasing satisfaction and the likelihood of them using the card again.

For issuers, Mastercard’s Pay With Rewards means that they can meet customer demand by providing a differentiated rewards programme that is convenient, flexible and offers instant gratification.

It also takes advantage of a more cost-effective rewards programme by lowering catalogue and call centre expenses. 

Cardholders spend increases as consumers are more likely to use their card when they are offered the ability to Pay with Rewards. Says Gallie, redeemers spend almost three times more than non-redeemers. 

In Canada, Mastercard helped Rogers Bank enhance the consumer redemption experience and deliver incremental top-of-wallet usage in everyday categories.

The results so far at Rogers highlight how Pay With Rewards is driving top-of-wallet behaviour in everyday spend categories.

Says Gallie: “There has been an increase in engagement with a 10% gain in active cardholders and a 26% rise in transactions.
“There has also been an increase in overall cardholder spend since Rogers introduced Pay With Rewards with a 61% rise in spend by rewards redeemers.”

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