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Designing for
loyalty in a
digital world
EXECUTIVE SUMMARY
Loyalty is not for sale
Conventional points-based loyalty
programs are failing to build lasting brand
love in the digital age. Rapidly changing
consumer expectations are pushing brands
to re-think how they engage and impress
their audiences to keep them coming back.
Traditional loyalty programs have offered consumers rewards in
exchange for their personal shopping data since the mid-1990s.
Although this model has been widely adopted, with the average
American household enrolled in 29 programs, over time a lack of
differentiation between points-based schemes has resulted in
fading consumer engagement1. In fact, research shows that
traditional loyalty scheme members are actually less loyal than
non-members!2.
With the proliferation of user experience centered businesses
like Uber, Netflix and Amazon, consumers have come to rate
convenience and ease of use as highly, if not higher, than cost-
saving.
Our research explores how brands are driving consumers’
loyalty by saving them time, predicting their needs and tailoring
incentives to their preferences. We outline how the intelligent
use of technology and user-centric design can offer greater
value to consumers in-store and out compared to the traditional
transactional rewards model.
1 Colloquy Census, 2015
2 TABS Group Consumer Value Study, 2015
RESEARCH RESULTS
There’s more to loyalty than points
Through our research, we found that
loyalty programs fall into four distinct
categories, assessed across functional
features and emotional elements.
We analyzed the 40 leading loyalty programs from some of
the most admired brands in the US and the UK. We found
that best-in-class programs were designed to make the
purchase experience easier, quicker, more personalized, and
more enjoyable. Schemes focused solely on points and
discounts failed to add the same amount of value to
consumers and therefore are less affective at driving loyalty.
NO FRILLS REWARDS
Just the points
Offers rewards and discounts only, with no
focus on the consumer experience.
UTILITARIAN
Saving time and effort
Designed to make the consumer’s
purchasing journey easier but fails to
create a personal connection.
CONNECTOR
Meaningful engagement
Appeals to the emotional side of consumers,
personalizing the experience and delighting
them, but doesn’t make the journey any
quicker or easier.
HOLISTIC
Thinking about the whole experience
Uses innovative digital functionality to remove
friction and build personal connections with
consumers throughout the journey.
FUNCTIONAL
EMOTIONAL
LOWHIGH
LOW HIGH
REPORT:
Designing for loyalty in a
digital world
DEFINITION
Brand loyalty
Consistently choosing to purchase from the
same brand rather than competing brands.
Traditional loyalty
programs don’t cut it
In a world of instant gratification, traditional
programs don’t deliver.
Since the mid 1990’s, traditional points-based loyalty
programs have rewarded consumers with points and
discounts in exchange for their purchase data and
loyalty. Consumers are failing to see value in this
exchange anymore.
Research shows that there are an estimated £5.7bn
worth of unclaimed points across the top 10 loyalty
programs in the UK. Points take a long time to earn, are
difficult to redeem and rarely provide a sufficient return
on the effort made to collect them, so consumers aren’t
bothering anymore.
Traditional loyalty program
The Telegraph, 2015
Estimated worth of unclaimed
points from the top 10 loyalty
programs in the UK:
£5.7bn
AWARENESS
Consumer receives
points or rewards
post-purchase
PLANNING PURCHASE USE
We have seen three major
shifts in consumer behavior that
are impacting brand loyalty.
TREND 1
Consumers are
spoiled for choice
Consumers have more choice across online and
offline channels as new brands proliferate and
consumers have access to every store in the world
through their smartphones. Digital marketplaces
and platforms like Amazon, Etsy, Pinterest, and Uber
Eats provide more exposure to choice, resulting in
decreasing consumer loyalty to any one brand3.
Two thirds of consumers say that the number of
companies or brands they consider when making
purchase decisions has increased significantly
compared with 10 years ago4. As a result, research
shows that 90% of the largest brands are declining
in market share5.
3 AdAge, Top 100 CPG Brands Mostly Lost Sales and Share in Past Year, 2015
4 Accenture, Customer 2020
5 Catalina Marketing Report / IRI Worldwide, 2015
TREND 2
Expectations are
higher
Brands need to focus on convenience as much as
price. In fact 86% of consumers are willing to pay
more for a better consumer experience6. Younger
demographics especially are used to getting things
on-demand, with 56% of consumers aged 18-34
expecting a same-day delivery option from retailers7.
If companies don’t move faster, consumers will move
on. Nearly two-thirds say they use online channels
across sales, marketing, and service because of their
speed and convenience, while just over half say they
have become more impatient and want their buying
decision process to be fast with minimal effort8.
6 Oracle CEI Survey, 2011
7 Trustev, 2015
8 Accenture, Customer 2020
TREND 3
Memorable
experiences
matter most
77% of Millennials prefer a cool experience over a
cool product9.
As consumers become more digitally savvy and
increasingly barraged with choices, standing out with
a captivating and memorable consumer experience
can be a compelling advantage. Competitive prices
alone are not enough to entice consumers to keep
coming back. It’s about the whole consumer journey
and making each interaction a moment of delight and
authentic engagement.
9 Deep Focus, 2015
So which programs have adapted
effectively to the new era?
RESEARCH
Our methodology
In our research, we assessed 40 brands who have
loyalty programs active in the UK or US, and who are
ranked on any of the Superbrands, Fortune, Forbes or
Interbrand lists of most valuable or admired brands.
We evaluated these loyalty programs across two
dimensions of consumer value: functional and
emotional. The functional factors focused on how the
loyalty programs were designed to take friction out of
the consumer purchase experience. The emotional
factors focused on how the loyalty programs were
designed to bring the consumer closer to the brand
with features that delight or surprise them.
We scored brand programs on the degree to which
they addressed each factor through a heuristic
scoring system.
FUNCTIONAL FACTORS EMOTIONAL FACTORS
Faster: e.g. shorter waiting time, no
queues, faster delivery
Special: Delighting the consumer with
special moments or surprises
We assessed the loyalty programs across six factors
Purpose: The loyalty program closely
ties to the brand purpose, extends it,
or complements it in a meaningful way
Personal: Based on data, give
consumers personalised experiences
and recommendations
New functionality: Enabling you to
do new things that add value to the
consumer experience
Simpler: e.g. use digital to enable
easier steps in the journey, i.e. use
smartphone functionality to complete
actions
RESULTS
Loyalty
programs are
offering more
than discount
points NO FRILLS REWARDS
Just the points
Offers rewards and discounts only,
with no focus on the consumer
experience.
Through our research, we found
that loyalty programs fall into
four distinct categories.
UTILITARIAN
Saving time and effort
Designed to make the consumer’s
purchasing journey easier but fails
to create a personal connection.
CONNECTOR
Meaningful engagement
Appeals to the emotional side of
consumers, personalizing the
experience and delighting them but
falls short on making the journey any
quicker or easier.
HOLISTIC
Thinking about the whole
experience
Uses innovative ideas to remove
friction and build personal connections
with consumers throughout the
journey.
FUNCTIONAL
EMOTIONAL
LOWHIGH
LOW HIGH
No Frills Rewards
Like the traditional coffee-shop stamp
cards, these programs allow returning
consumers to accrue points and
discounts through repeat purchases.
These programs are easy to sign up to
and always free, but provide limited
differentiation and don’t do much to
improve the overall consumer
experience.
O2
Whole Foods
Nordstrom
M&S
Coca-Cola
Wyndham
Nando’s
Avios
MorrisonsMcDonald’s
Tesco
TRANSACTIONAL
TRADITIONAL
ONE STEP OF THE
JOURNEY
Sainsbury’s
KFC
Southwest Airlines
CostaBoots
Subway
Utilitarians
Utilitarians are the programs that focus on
improving the experience from the
functional side. While many activities are
made easier or faster, the loyalty programs
tend to miss the personal touch of the
brand that could differentiate them from
competitors. These programs focus on
features that are easy to copy. They could
improve by doing more to delight
consumers or focus on building long-term
relationships.
CVSAccorHotels
FASTER
EASIER
GENERIC
Delta Airlines
Connectors
Connectors focus on putting their brand’s
imprint on their loyalty program and on
making the consumer feel special. They
provide additional value to the consumer
through personalized offers and exclusive
rewards (e.g. early access to sales) that can
forge stronger emotional bonds by
delighting the consumer. These programs
could do more to embrace digital channels
and focus on making the purchase
experience quicker and easier.
IKEA
Mothercare
Lego
PERSONAL
PURPOSE
SPECIAL
Waitrose
Pampers
Lancome
Virgin RED
Asos
MEANINGFUL REWARDS
Holistic
Holistic programs score highly both on
functional and emotional factors. These
programs give the consumer something
that makes the overall experience
unique compared to competitors and
aligns closely to what the brand stands
for. They are innovative and foster
loyalty with consumers.
Amazon
Starbucks
Walgreens
Pepsi
Hilton
Marriott
Sephora
Target
American Express
John Lewis Nike
CONNECTED TO BRAND
PURPOSE
PART OF PEOPLE’S HABITS
Most loyalty programs are moving
beyond monetary rewards
AmazonStarbucks
Walgreens
CVS
Pepsi
Hilton
Marriott
British Airways
Sephora
Nike
AccorHotels
Target
American Express
Southwest Airlines
Lancome
O2
Whole Foods
Sainsbury’s
KFC
IKEA
MothercareLego
Nordstrom
M&S
Coca-Cola
Costa
Waitrose
Virgin RED
Wyndham
Boots
Subway
Nando’s
Avios
FUNCTIONAL
EMOTIONAL
John Lewis
Morrisons
Delta Airlines
Pampers
Asos
McDonald’s
Tesco
UTILITARIANS HOLISTIC
NO FRILLS REWARDS CONNECTORS
We believe
Holistic Programs
are the most
effective at driving
loyalty. We have
outlined three
best-in-class case
studies.
CASE STUDY
Starbucks
Starbucks differentiates from other
coffee houses because it considers the
context of buying their product: being on
the go. Its loyalty program is designed
for the urban tech-savvy consumer who
likes the ease of paying through the app
and skipping the queue.
16 million active users
and 20% of revenue
exchanged through
the app.
Receive points
“The Star Rewards are
almost as addictive as
the coffee itself!”
- Robert H. app review
Automated journey
steps / easier
interactions
Check your balance and
add funds to your
Starbucks Card (with
debit/credit card or
Apple Pay).
Save waiting time in the
queue
Starbucks identified a
key pain point in the
experience of getting
coffee on the go: rush
hour queues. With the
Starbucks app, you can
order and pay before
you step into the shop
saving time on queuing.
AWARENESS PLANNING PURCHASE USE
LOYALTY
80m out of 104m
members are active.
CASE STUDY
Walgreens
Pharmacist Walgreens uses its loyalty
program to keep their brand promise
front of mind even after consumers
have left their stores. The loyalty app
integrates with users’ Fitbits and
rewards them based on how much
exercise they do. The app also has a
‘pill reminder’ tool that helps
consumers keep on top of their
medications and prescriptions.
Simplified journey
Through pill reminders, Walgreens
makes it easier for their
consumers to stay on top of their
medication.
Connection to brand purpose
The purpose of Walgreens is to
enhance health. With their loyalty
program, consumers collect points
with healthy behavior, tracked by
their Fitbit. This connects them to
Walgreens in an emotional sense
because they share a purpose -
improving their health.
Save time
Get reminders and refill
prescriptions through
the in-app label scanner,
saving time in-store.
AWARENESS PLANNING PURCHASE USE
LOYALTY
63m Amazon
Prime members.
CASE STUDY
Amazon
Prime
Online retailer Amazon Prime flips
the loyalty program premise on
its head by asking its consumers
to pay for it. In return they provide
a bundle of valuable services
from convenient next day delivery
to instant access to amazing film
and original TV series content.
Image sources
http://www.broadbandtvnews.com/2016/11/08/amazon-increases-amazon-prime-price-germany/
Faster
Free two-day shipping
on millions of products
with no minimum
purchase.
Rewards
Free access to Amazon
Prime video on demand,
borrowing books from
the Kindle Owners’
Lending Library,
unlimited photo storage.
Connection to brand
purpose
The purpose of Amazon
is to build a place where
people find and discover
anything they might
want to buy online. All
these Amazon Prime
perks enable this to
happen.
Special
Members get 30
minutes early access to
Lightning Deals.
AWARENESS PLANNING PURCHASE USE
LOYALTY
Eight things to remember when
designing your loyalty program
Eight lessons for growing loyalty
Last year, 89% of companies claimed that consumer experience will
be their primary basis for competitive advantage (Gartner, 2016).
By focusing on understanding the consumer and designing a loyalty
program that provides an enhanced experience, brands can build
more long-term relationships. When building a loyalty program, it’s
not only about making sure that interactions work smoothly and
consistently from start to finish - it’s about making the whole
experience that much better than the competition, so the consumer
no longer needs to consider where to make their next purchase.
Starbucks’ loyalty program keeps their consumers coming back by
making the whole experience better from ordering your coffee in
advance and skipping the queue, to trying a Butterscotch Brûlée
Latte before anyone else.
1 Focus on the
experience
At the heart of each loyalty program is the collection of consumer
data for the benefit of the brand. But many brands fail to design their
programs in a way that maximizes the benefits for the consumer as
well. If a service gets to know a consumer better after each use, and
adapts the products to their needs in the process, it becomes less
attractive for the consumer to switch to another brand.
Ultimately, data should be used to make the consumer feel special -
Asos A-List surprises you with 10% off on your birthday - and even
more if you are a higher-tier consumer.
Remembering a user’s preferences and past behavior can help not
only to design a great experience, but to anticipate their needs and
respond in the best way possible.
2 Use data to
personalize
3 4
Eight lessons for growing loyalty
Traditional programs often expect consumers to fill in long forms
to order a loyalty card, and understand complicated points
systems to figure out how much money they are saving. The key
is to make the whole experience smooth sailing for the consumer.
Enrol them automatically with their first order. Avoid complicated
points systems. Don’t make them work hard to prove they are a
loyal consumer, so that they feel truly special when you notice
their love for your brand and reward them.
At booking.com, travellers who book through the site six times
are automatically enrolled on their .genius program which not
only gives a 10% discount to hotels that are part of the program,
but also makes the consumer feel special by giving them perks
like a free drink upon arrival and free airport shuttles.
Make it easy
Services that become more valuable the more you use them, such
as storing extensive sets of preferences and data, can be effective
at dissuading consumers from moving to a competitor. Similarly, by
solving recurring pain points in their journey, brands give consumers
a strong reason to stay loyal. Amazon often wins because
consumers never have to re-enter data such as frequently ordered
items, payment details or shipping preferences. But it can be taken
further through anticipatory design - a combination of data analysis
and user-centric design.
Some of the most successful platforms do this really well, such as
Spotify and Pinterest because they hold so much information on
consumer preferences, they are making it extremely difficult for their
loyal users to even consider going somewhere else, where they
would have to build their music or pin libraries from scratch.
Make it hard to
walk away
Eight lessons for growing loyalty
The strongest loyalty programs create network effects when
consumers engage with your product, and enable the most loyal
consumers to become brand ambassadors. This can be achieved by
rewarding consumers for referral, social media promotion or other
types of engagement. Consumers are increasingly used to being an
active part of a product, rather than passive users, through their
regular use of social media.
Some brands have succeeded in emulating TripAdvisor’s community
contributor model. TripAdvisor users are encouraged to review
restaurants and hotels on the site to gain points, reach new levels
and show off their expertise with unique and fun badges. UK telco
TalkTalk incentivizes consumers to provide answers to other
consumers’ questions through points and badges.
5Make consumers
work for you
Loyalty programs should be an extension of the brand
promise, strengthening what the brand stands for. If it doesn’t
feel like a natural fit, it won’t make sense to the consumer.
Walgreens, for example, integrates its brand with people’s
health behavior by rewarding them through their Fitbits, and
relieving key frictions in the consumer journey through pill
reminders and easier prescription refills. By rewarding them
for their healthy choices, Walgreens reminds its consumers
of its brand throughout the day, even when they’re not
directly consuming.
6 Extend your brand
proposition
Eight lessons for growing loyalty
Consumers are becoming increasingly concerned about whom
they share their data with. The value exchange needs to be
transparent and communicated clearly to the user, so they are
fully aware of what they’re entering into. In addition, data
security should be a top priority for any brand launching a
personalized loyalty program. Build functionality that allows
consumers to pick and choose what data they share.
During recent years Facebook has moved power to their users
by allowing them to choose what information to share with
third party apps. This type of functionality addresses privacy
concerns, and should be considered in loyalty programs to
clearly demonstrate to the consumer the value exchange
between shared data and program benefits.
7 Show transparency to
gain trust
Technology continues to re-shape and provide more and more
exciting options for brands and how they can interact, build
experiences and sell to their consumers. However this ever-
changing environment makes it increasingly difficult for brands
to keep up with their rising expectations.
Understanding the changing landscape of new technology and
how they integrate into consumers’ every-day lives (such as
voice-based services like Amazon Echo and Google Home) is
essential for brands that want to provide a consistent
experience, whatever the channel. Brands that recognize this
and keep their finger on the pulse of leading tech trends will
have the advantage of crafting future-proof experiences.
8 Let technology lead
the way
INVISIBLE INTERFACES
Voice driven interactions remove
friction and make it easier for
users to engage with products.
ANTICIPATORY DESIGN
Automating the whole task of buying (e.g.
through subscriptions) or simplifying choice
through personalized search results.
PLATFORMS AS PRODUCTS
The future of loyalty is making
people part of your brand,
allowing for network effects.
NO-FUSS DELIVERY
Driverless transport makes delivery
a no brainer, making anything
accessible to consumers instantly.
CONNECTED SERVICES
Through open APIs, services integrate
with each other through a central AI
(e.g. Google Home) and create one
holistic, frictionless experience.
Image sources:
https://www.amazon.co.uk/echo
https://nest.com
http://venturebeat.com
Stepping into
the future
To determine the future of loyalty,
we need to understand the future
of technology and design.
To inspire you, we identified key
trends for 2020 that can help
design an engaging consumer
experience that will deepen your
brand’s relationship with your
consumers.
Thank you

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Designing for loyalty in a digital world

  • 1. Designing for loyalty in a digital world
  • 2. EXECUTIVE SUMMARY Loyalty is not for sale Conventional points-based loyalty programs are failing to build lasting brand love in the digital age. Rapidly changing consumer expectations are pushing brands to re-think how they engage and impress their audiences to keep them coming back. Traditional loyalty programs have offered consumers rewards in exchange for their personal shopping data since the mid-1990s. Although this model has been widely adopted, with the average American household enrolled in 29 programs, over time a lack of differentiation between points-based schemes has resulted in fading consumer engagement1. In fact, research shows that traditional loyalty scheme members are actually less loyal than non-members!2. With the proliferation of user experience centered businesses like Uber, Netflix and Amazon, consumers have come to rate convenience and ease of use as highly, if not higher, than cost- saving. Our research explores how brands are driving consumers’ loyalty by saving them time, predicting their needs and tailoring incentives to their preferences. We outline how the intelligent use of technology and user-centric design can offer greater value to consumers in-store and out compared to the traditional transactional rewards model. 1 Colloquy Census, 2015 2 TABS Group Consumer Value Study, 2015
  • 3. RESEARCH RESULTS There’s more to loyalty than points Through our research, we found that loyalty programs fall into four distinct categories, assessed across functional features and emotional elements. We analyzed the 40 leading loyalty programs from some of the most admired brands in the US and the UK. We found that best-in-class programs were designed to make the purchase experience easier, quicker, more personalized, and more enjoyable. Schemes focused solely on points and discounts failed to add the same amount of value to consumers and therefore are less affective at driving loyalty. NO FRILLS REWARDS Just the points Offers rewards and discounts only, with no focus on the consumer experience. UTILITARIAN Saving time and effort Designed to make the consumer’s purchasing journey easier but fails to create a personal connection. CONNECTOR Meaningful engagement Appeals to the emotional side of consumers, personalizing the experience and delighting them, but doesn’t make the journey any quicker or easier. HOLISTIC Thinking about the whole experience Uses innovative digital functionality to remove friction and build personal connections with consumers throughout the journey. FUNCTIONAL EMOTIONAL LOWHIGH LOW HIGH
  • 4. REPORT: Designing for loyalty in a digital world
  • 5. DEFINITION Brand loyalty Consistently choosing to purchase from the same brand rather than competing brands.
  • 6. Traditional loyalty programs don’t cut it In a world of instant gratification, traditional programs don’t deliver. Since the mid 1990’s, traditional points-based loyalty programs have rewarded consumers with points and discounts in exchange for their purchase data and loyalty. Consumers are failing to see value in this exchange anymore. Research shows that there are an estimated £5.7bn worth of unclaimed points across the top 10 loyalty programs in the UK. Points take a long time to earn, are difficult to redeem and rarely provide a sufficient return on the effort made to collect them, so consumers aren’t bothering anymore. Traditional loyalty program The Telegraph, 2015 Estimated worth of unclaimed points from the top 10 loyalty programs in the UK: £5.7bn AWARENESS Consumer receives points or rewards post-purchase PLANNING PURCHASE USE
  • 7. We have seen three major shifts in consumer behavior that are impacting brand loyalty.
  • 8. TREND 1 Consumers are spoiled for choice Consumers have more choice across online and offline channels as new brands proliferate and consumers have access to every store in the world through their smartphones. Digital marketplaces and platforms like Amazon, Etsy, Pinterest, and Uber Eats provide more exposure to choice, resulting in decreasing consumer loyalty to any one brand3. Two thirds of consumers say that the number of companies or brands they consider when making purchase decisions has increased significantly compared with 10 years ago4. As a result, research shows that 90% of the largest brands are declining in market share5. 3 AdAge, Top 100 CPG Brands Mostly Lost Sales and Share in Past Year, 2015 4 Accenture, Customer 2020 5 Catalina Marketing Report / IRI Worldwide, 2015
  • 9. TREND 2 Expectations are higher Brands need to focus on convenience as much as price. In fact 86% of consumers are willing to pay more for a better consumer experience6. Younger demographics especially are used to getting things on-demand, with 56% of consumers aged 18-34 expecting a same-day delivery option from retailers7. If companies don’t move faster, consumers will move on. Nearly two-thirds say they use online channels across sales, marketing, and service because of their speed and convenience, while just over half say they have become more impatient and want their buying decision process to be fast with minimal effort8. 6 Oracle CEI Survey, 2011 7 Trustev, 2015 8 Accenture, Customer 2020
  • 10. TREND 3 Memorable experiences matter most 77% of Millennials prefer a cool experience over a cool product9. As consumers become more digitally savvy and increasingly barraged with choices, standing out with a captivating and memorable consumer experience can be a compelling advantage. Competitive prices alone are not enough to entice consumers to keep coming back. It’s about the whole consumer journey and making each interaction a moment of delight and authentic engagement. 9 Deep Focus, 2015
  • 11. So which programs have adapted effectively to the new era?
  • 12. RESEARCH Our methodology In our research, we assessed 40 brands who have loyalty programs active in the UK or US, and who are ranked on any of the Superbrands, Fortune, Forbes or Interbrand lists of most valuable or admired brands. We evaluated these loyalty programs across two dimensions of consumer value: functional and emotional. The functional factors focused on how the loyalty programs were designed to take friction out of the consumer purchase experience. The emotional factors focused on how the loyalty programs were designed to bring the consumer closer to the brand with features that delight or surprise them. We scored brand programs on the degree to which they addressed each factor through a heuristic scoring system.
  • 13. FUNCTIONAL FACTORS EMOTIONAL FACTORS Faster: e.g. shorter waiting time, no queues, faster delivery Special: Delighting the consumer with special moments or surprises We assessed the loyalty programs across six factors Purpose: The loyalty program closely ties to the brand purpose, extends it, or complements it in a meaningful way Personal: Based on data, give consumers personalised experiences and recommendations New functionality: Enabling you to do new things that add value to the consumer experience Simpler: e.g. use digital to enable easier steps in the journey, i.e. use smartphone functionality to complete actions
  • 14. RESULTS Loyalty programs are offering more than discount points NO FRILLS REWARDS Just the points Offers rewards and discounts only, with no focus on the consumer experience. Through our research, we found that loyalty programs fall into four distinct categories. UTILITARIAN Saving time and effort Designed to make the consumer’s purchasing journey easier but fails to create a personal connection. CONNECTOR Meaningful engagement Appeals to the emotional side of consumers, personalizing the experience and delighting them but falls short on making the journey any quicker or easier. HOLISTIC Thinking about the whole experience Uses innovative ideas to remove friction and build personal connections with consumers throughout the journey. FUNCTIONAL EMOTIONAL LOWHIGH LOW HIGH
  • 15. No Frills Rewards Like the traditional coffee-shop stamp cards, these programs allow returning consumers to accrue points and discounts through repeat purchases. These programs are easy to sign up to and always free, but provide limited differentiation and don’t do much to improve the overall consumer experience. O2 Whole Foods Nordstrom M&S Coca-Cola Wyndham Nando’s Avios MorrisonsMcDonald’s Tesco TRANSACTIONAL TRADITIONAL ONE STEP OF THE JOURNEY Sainsbury’s KFC Southwest Airlines CostaBoots Subway
  • 16. Utilitarians Utilitarians are the programs that focus on improving the experience from the functional side. While many activities are made easier or faster, the loyalty programs tend to miss the personal touch of the brand that could differentiate them from competitors. These programs focus on features that are easy to copy. They could improve by doing more to delight consumers or focus on building long-term relationships. CVSAccorHotels FASTER EASIER GENERIC Delta Airlines
  • 17. Connectors Connectors focus on putting their brand’s imprint on their loyalty program and on making the consumer feel special. They provide additional value to the consumer through personalized offers and exclusive rewards (e.g. early access to sales) that can forge stronger emotional bonds by delighting the consumer. These programs could do more to embrace digital channels and focus on making the purchase experience quicker and easier. IKEA Mothercare Lego PERSONAL PURPOSE SPECIAL Waitrose Pampers Lancome Virgin RED Asos
  • 18. MEANINGFUL REWARDS Holistic Holistic programs score highly both on functional and emotional factors. These programs give the consumer something that makes the overall experience unique compared to competitors and aligns closely to what the brand stands for. They are innovative and foster loyalty with consumers. Amazon Starbucks Walgreens Pepsi Hilton Marriott Sephora Target American Express John Lewis Nike CONNECTED TO BRAND PURPOSE PART OF PEOPLE’S HABITS
  • 19. Most loyalty programs are moving beyond monetary rewards AmazonStarbucks Walgreens CVS Pepsi Hilton Marriott British Airways Sephora Nike AccorHotels Target American Express Southwest Airlines Lancome O2 Whole Foods Sainsbury’s KFC IKEA MothercareLego Nordstrom M&S Coca-Cola Costa Waitrose Virgin RED Wyndham Boots Subway Nando’s Avios FUNCTIONAL EMOTIONAL John Lewis Morrisons Delta Airlines Pampers Asos McDonald’s Tesco UTILITARIANS HOLISTIC NO FRILLS REWARDS CONNECTORS
  • 20. We believe Holistic Programs are the most effective at driving loyalty. We have outlined three best-in-class case studies.
  • 21. CASE STUDY Starbucks Starbucks differentiates from other coffee houses because it considers the context of buying their product: being on the go. Its loyalty program is designed for the urban tech-savvy consumer who likes the ease of paying through the app and skipping the queue. 16 million active users and 20% of revenue exchanged through the app. Receive points “The Star Rewards are almost as addictive as the coffee itself!” - Robert H. app review Automated journey steps / easier interactions Check your balance and add funds to your Starbucks Card (with debit/credit card or Apple Pay). Save waiting time in the queue Starbucks identified a key pain point in the experience of getting coffee on the go: rush hour queues. With the Starbucks app, you can order and pay before you step into the shop saving time on queuing. AWARENESS PLANNING PURCHASE USE LOYALTY
  • 22. 80m out of 104m members are active. CASE STUDY Walgreens Pharmacist Walgreens uses its loyalty program to keep their brand promise front of mind even after consumers have left their stores. The loyalty app integrates with users’ Fitbits and rewards them based on how much exercise they do. The app also has a ‘pill reminder’ tool that helps consumers keep on top of their medications and prescriptions. Simplified journey Through pill reminders, Walgreens makes it easier for their consumers to stay on top of their medication. Connection to brand purpose The purpose of Walgreens is to enhance health. With their loyalty program, consumers collect points with healthy behavior, tracked by their Fitbit. This connects them to Walgreens in an emotional sense because they share a purpose - improving their health. Save time Get reminders and refill prescriptions through the in-app label scanner, saving time in-store. AWARENESS PLANNING PURCHASE USE LOYALTY
  • 23. 63m Amazon Prime members. CASE STUDY Amazon Prime Online retailer Amazon Prime flips the loyalty program premise on its head by asking its consumers to pay for it. In return they provide a bundle of valuable services from convenient next day delivery to instant access to amazing film and original TV series content. Image sources http://www.broadbandtvnews.com/2016/11/08/amazon-increases-amazon-prime-price-germany/ Faster Free two-day shipping on millions of products with no minimum purchase. Rewards Free access to Amazon Prime video on demand, borrowing books from the Kindle Owners’ Lending Library, unlimited photo storage. Connection to brand purpose The purpose of Amazon is to build a place where people find and discover anything they might want to buy online. All these Amazon Prime perks enable this to happen. Special Members get 30 minutes early access to Lightning Deals. AWARENESS PLANNING PURCHASE USE LOYALTY
  • 24. Eight things to remember when designing your loyalty program
  • 25. Eight lessons for growing loyalty Last year, 89% of companies claimed that consumer experience will be their primary basis for competitive advantage (Gartner, 2016). By focusing on understanding the consumer and designing a loyalty program that provides an enhanced experience, brands can build more long-term relationships. When building a loyalty program, it’s not only about making sure that interactions work smoothly and consistently from start to finish - it’s about making the whole experience that much better than the competition, so the consumer no longer needs to consider where to make their next purchase. Starbucks’ loyalty program keeps their consumers coming back by making the whole experience better from ordering your coffee in advance and skipping the queue, to trying a Butterscotch Brûlée Latte before anyone else. 1 Focus on the experience At the heart of each loyalty program is the collection of consumer data for the benefit of the brand. But many brands fail to design their programs in a way that maximizes the benefits for the consumer as well. If a service gets to know a consumer better after each use, and adapts the products to their needs in the process, it becomes less attractive for the consumer to switch to another brand. Ultimately, data should be used to make the consumer feel special - Asos A-List surprises you with 10% off on your birthday - and even more if you are a higher-tier consumer. Remembering a user’s preferences and past behavior can help not only to design a great experience, but to anticipate their needs and respond in the best way possible. 2 Use data to personalize
  • 26. 3 4 Eight lessons for growing loyalty Traditional programs often expect consumers to fill in long forms to order a loyalty card, and understand complicated points systems to figure out how much money they are saving. The key is to make the whole experience smooth sailing for the consumer. Enrol them automatically with their first order. Avoid complicated points systems. Don’t make them work hard to prove they are a loyal consumer, so that they feel truly special when you notice their love for your brand and reward them. At booking.com, travellers who book through the site six times are automatically enrolled on their .genius program which not only gives a 10% discount to hotels that are part of the program, but also makes the consumer feel special by giving them perks like a free drink upon arrival and free airport shuttles. Make it easy Services that become more valuable the more you use them, such as storing extensive sets of preferences and data, can be effective at dissuading consumers from moving to a competitor. Similarly, by solving recurring pain points in their journey, brands give consumers a strong reason to stay loyal. Amazon often wins because consumers never have to re-enter data such as frequently ordered items, payment details or shipping preferences. But it can be taken further through anticipatory design - a combination of data analysis and user-centric design. Some of the most successful platforms do this really well, such as Spotify and Pinterest because they hold so much information on consumer preferences, they are making it extremely difficult for their loyal users to even consider going somewhere else, where they would have to build their music or pin libraries from scratch. Make it hard to walk away
  • 27. Eight lessons for growing loyalty The strongest loyalty programs create network effects when consumers engage with your product, and enable the most loyal consumers to become brand ambassadors. This can be achieved by rewarding consumers for referral, social media promotion or other types of engagement. Consumers are increasingly used to being an active part of a product, rather than passive users, through their regular use of social media. Some brands have succeeded in emulating TripAdvisor’s community contributor model. TripAdvisor users are encouraged to review restaurants and hotels on the site to gain points, reach new levels and show off their expertise with unique and fun badges. UK telco TalkTalk incentivizes consumers to provide answers to other consumers’ questions through points and badges. 5Make consumers work for you Loyalty programs should be an extension of the brand promise, strengthening what the brand stands for. If it doesn’t feel like a natural fit, it won’t make sense to the consumer. Walgreens, for example, integrates its brand with people’s health behavior by rewarding them through their Fitbits, and relieving key frictions in the consumer journey through pill reminders and easier prescription refills. By rewarding them for their healthy choices, Walgreens reminds its consumers of its brand throughout the day, even when they’re not directly consuming. 6 Extend your brand proposition
  • 28. Eight lessons for growing loyalty Consumers are becoming increasingly concerned about whom they share their data with. The value exchange needs to be transparent and communicated clearly to the user, so they are fully aware of what they’re entering into. In addition, data security should be a top priority for any brand launching a personalized loyalty program. Build functionality that allows consumers to pick and choose what data they share. During recent years Facebook has moved power to their users by allowing them to choose what information to share with third party apps. This type of functionality addresses privacy concerns, and should be considered in loyalty programs to clearly demonstrate to the consumer the value exchange between shared data and program benefits. 7 Show transparency to gain trust Technology continues to re-shape and provide more and more exciting options for brands and how they can interact, build experiences and sell to their consumers. However this ever- changing environment makes it increasingly difficult for brands to keep up with their rising expectations. Understanding the changing landscape of new technology and how they integrate into consumers’ every-day lives (such as voice-based services like Amazon Echo and Google Home) is essential for brands that want to provide a consistent experience, whatever the channel. Brands that recognize this and keep their finger on the pulse of leading tech trends will have the advantage of crafting future-proof experiences. 8 Let technology lead the way
  • 29. INVISIBLE INTERFACES Voice driven interactions remove friction and make it easier for users to engage with products. ANTICIPATORY DESIGN Automating the whole task of buying (e.g. through subscriptions) or simplifying choice through personalized search results. PLATFORMS AS PRODUCTS The future of loyalty is making people part of your brand, allowing for network effects. NO-FUSS DELIVERY Driverless transport makes delivery a no brainer, making anything accessible to consumers instantly. CONNECTED SERVICES Through open APIs, services integrate with each other through a central AI (e.g. Google Home) and create one holistic, frictionless experience. Image sources: https://www.amazon.co.uk/echo https://nest.com http://venturebeat.com Stepping into the future To determine the future of loyalty, we need to understand the future of technology and design. To inspire you, we identified key trends for 2020 that can help design an engaging consumer experience that will deepen your brand’s relationship with your consumers.