Loyalty programs: 2019 look back & learn vs 2020 look ahead & be brave

2019 look back and learn

The loyalty and rewards program landscape in 2019 was vibrant with a few moments worth remarking on. Here are 11 with some key learnings (my point of view):   

1. ACCC report on loyalty programs (‘scheme’s)

The ACCC released a ‘Customer loyalty schemes draft report’ with findings and recommendations on consumer and competition issues that are associated with consumer-facing customer loyalty schemes in Australia.

My point of view

Here’s a summary of my point of view from the article I wrote - The ACCC review of loyalty programs ('schemes'​ ...ouch!)

  • Improve the clarity and transparency of how you communicate your program's terms and conditions of membership.
  • Check your programs legals comply with ACL (Australian Consumer Law) and any changes that are being recommended from the Digital Platforms Inquiry Final Report
  • Take care when you change a program's structure eg earn rates and redemption values.
  • Watch out for tricky expiry rules
  • Data practices. 32 pages of the ACCC Customer Loyalty schemes draft report are dedicated to data practices of programs. Read them.

2. Qantas Frequent Flyer review 

In June, Qantas revealed changes to their Frequent Flyer program - which Alan Joyce said was the "single biggest overhaul of the Qantas frequent flyer program in its 32-year-history".

There were many opinions on the ‘give and take’ of the program review, however according to Qantas since the launch of the review (as at 13 August), there was a:

  • 29% increase in international premium cabin seats booked by members
  • 31% increase of all International premium seats booked since the announcement has gone to members that have never redeemed a Classic Reward Flight or have not redeemed in over 18 months

My point of view

  • When reviewing a program, there are bound to be winners and others.
  • The learning for any program considering a review, is how to maximise the winners and mitigate the risk from the negative voice of the others. I know this is obvious, however working through a ‘pre-mortem’ ie what can we expect to not work the way we plan before we relaunch and minimise the risk is far more prudent and powerful than a ‘post-mortem’ ie reflecting on what went wrong after the fact.

(If you are interested in the pre-mortem process, have a look at this article).

3. BP and QFF

With QFF top-of-mind, another win for them and for BP, was the new partnership they forged with BP customers earning QFF points as of next year. Good for QFF members and BP customers. Not so good for Virgin Velocity’s members.

My point of view

  • Choose partners with care.

4. Woolworths Rewards increases the earn value on QFF points

Woolworths Rewards members gained a 15% increase in value of spend at Woolworths for QFF points. $2000 spent at Woolworths provides members who choose to have QFF points with 1000 points up from 870 (15% increase in points).

They also made the experience more immediate and seamless into the member’s QFF account.

My point of view

  • Ticks the boxes on two of my three SPV ingredients = Simple and Valuable. Simplifies the experience and adds more value.

5. flybuys turns 25

A milestone was celebrated with flybuys celebrating their 25th birthday on 29 August 2019.  

My point of view

  • A program that has lasted 25 years and still going strong proves to me that it is possible to sustain the life of a loyalty program for the long term.
  • How? Phil Hawkins (Head of Loyalty Operations – flybuys) gave some insights when I interviewed him earlier this year and has also added a few extra’s here:
  • flybuys has remained relevant and rewarding – the flybuys card (including today's digital alternatives) has remained “sticky” and continues to earn its place in the purses and wallets of Australian households.  That’s only been possible because members see an ongoing benefit from “choosing to swipe”.
  • The original essence of flybuys remains in place – the opportunity to earn benefits and rewards from everyday life; someone once coined it as “points for living” – from your everyday shopping, filling your car, using your credit card, organising home and car insurance to paying your power bills and so on.
  • Over 25 years, flybuys has earned the trust of Australian households – taking seriously the security and privacy of members’ information that we hold in trust, and honouring the offers and promises we make to members. In an environment where regulators bring into focus methods of operation in our industry, flybuys is driven to keep providing genuine benefit and reward to its members; we will never operate a “scheme”.

6. Velocity buyback 

Mark-Ross Smith provides a great insight to the planned Velocity buyback in his article – 5 predictions for Airline Loyalty in 2020

My point of view

  • It proves the power of a loyalty program asset. Own and control it 100% to realise its profit potential.

7. David Jones Rewards

David Jones launched their highly anticipated (by me and many others) bespoke rewards program with a focus on the digital integration.

My point of view

  • While there was a one-off sign-up offer, there was no ongoing financial reward within the program structure.
  • Digital interaction is not unique nor revolutionary, however it is still pleasing that the focus is on simplicity and seamless member interaction.
  • I have no view on the success of the program although I am sure gaining members will not be the issue. How active they are…only the David Jones team know.

8. ‘The loyalty program doing a great job’: welcome to Mecca Cosmetica’s Beauty Loop

Whenever I run loyalty workshops or present on loyalty I am consistently asked…”so which program do you think is the best?”.

My answer... “from whose point of view – the business or the members?”.

While I do not know how Mecca’s Beauty Loop program is performing for the business (I have not worked with them), it seems to me that it’s doing a brilliant job for the members.

It ranked in the top 10 for the first time in our For Love or MoneyTM 2019 Australian research as a program (unprompted) ‘doing a really good job’.

It is also clear that the business believes in it as per the ’20 years and 100 stores’ article.

My point of view

  • The program is in sync with the brand and the ‘beauty boxes’ are a perfect example of ‘surprise and delight’, even though they are overtly promised (so not much of a surprise), the delight for members is abundant.

9. Recycling loyalty

I wrote a post on Linked In about IKEA’s Buy Back program and the circular economy.

My point of view

  • It’s a loyalty program without the program.
  • The proposition of ‘buy-back’ sets in motion the ‘give back to get back’ of loyalty. Customers ‘give back’ their pre-loved furniture. IKEA gives them a voucher. They come back and spend again. They feel they are making a difference to a greater purpose.
  • There-in lies the perfect blend of transactional and emotional loyalty.

10. Subscription based loyalty programs – flavour of the month, year and future

I’ve written an article on the wave of subscription programs being implemented and it’s worth refreshing yourself on an insight relating to subscription ‘guilt’. Here is the article.

Another great article is the one here from McKinsey & Company. Although from early 2018, it still has some great insights on three types of subscription programs.

My point of view

  • Ensure your business is ‘subscription’ ready. Sounds simple, however the excitement of the upfront and recurring revenue earning potential that subscription programs offer can overshadow the commitment needed to ensure longevity.

11. For Love or MoneyTM 2019 – Australia (7th edition) and New Zealand (1st edition)

The For Love or MoneyTM research continues to reveal trends and insights to help loyalty program marketers optimise their programs.  

My point of view

  • There were many learnings and insights in 2019 although a stand-out for me were the factors that members consider as important when providing their data to loyalty programs (1) security: knowing how secure my data is 2) use of data: knowing how my data is used 3) company reputation: the reputation of the company asking for my data 4) data value exchange: knowing what I get in return for providing my data 5) control: knowing what control I have over my data 6) privacy policy: evidence of the programs privacy policy and 7) knowing why: knowing why they are asking for various data
  • There will be more learnings and insights in the For Love or MoneyTM study in 2020!

2020 look ahead and be brave

Here are five ‘be brave’ considerations for your loyalty and rewards program strategies in 2020

1. Solve a problem 

Shift your focus for designing and deploying a program from… rewarding customers to change behaviour, to… solving a customer’s pain point or problem and then rewarding customers to change behaviour to solve the problem

Here are two examples:

SuperSuper – How GuildSuper is using a cash-back rewards program to crack the Superannuation engagement code.
AIA Vitality – It’s not a loyalty program. It’s a science-backed wellness program with incentives and rewards

2. What’s simpler than simple? Simple

Complex program structures and tiers, program experiences full of friction and mental gymnastics to do the maths on programs all destroy programs.

  • They reduce member onboarding and interaction
  • They make it difficult for the team to share the love of programs with customers
  • For the internal loyalty team they make the joy of managing a program joyless.

Go for subtraction not addition.

3. Get the measures of success right

This year I experienced too many clients who only measured the cost of programs. We need to get the measures right in 2020. I am not going to cover all the measures, however these three need more visibility in 2020. Measure and report on:

  • Return on loyalty investment. Make revenue visible. Make cost visible. Make return visible. (go to the next level on profitability)
  • Member lifetime value to date and potential value in the future (compare to non-members)
  • Active retention. Focus on how active members are and not how many members there are.

4. Recycle loyalty

  • Be bold, be brave and be visible with cause/social/sustainable connections to your program. Make it the hero and not the after-thought.

5. A few other hot (ish) 2020 considerations

  • Subscription propositions will become part of a number of new programs or an addition to existing programs.
  • Loyalty Cards as a connection to programs will decrease even more. For Love or MoneyTM 2019 identified 58% of Australian loyalty program members indicating the card as their method of interaction with programs, down from 81% in 2017.
  • Payment integration with loyalty (card linking) will become more prevalent.
  • The loyalty program industry will continue to be watched based on the ACCC draft report.

What are your ‘be brave’ recommendations for loyalty programs in 2020?

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