Our Analysts' Insights

Loyalty will rise to the fore after the COVID-19 pandemic runs its course. People will remember the brands that reached out in meaningful ways during the crisis. Start planning now to take advantage of loyalty to retain premium customers through the crisis and beyond as you strive to support them during the ensuing ramp-up or recession.

Give Loyalty the Strategy It Deserves

How many firms view loyalty programs as a strategic investment? Not many. But they should. Participants already have a connection to your brand, want to buy from you, and hope that you stay in business. The cost of retaining customers is almost always less than winning new supporters. Every organization should strive to keep its premium audience as satisfied and engaged as possible while seeking to advance more customers to this category. Hence, the need for a real strategy – not just an add-on program that’s low on some marketer’s list of priorities.

• Identify your goals. What are you trying to accomplish with your package to attract premium customers and eventual brand ambassadors across foreign markets? Do the objectives differ in significant ways from those for the domestic audience? Should they? If so, how? For example, you may find that business would benefit more from converting one-time buyers in market A versus convincing current customers to buy more services in market B. These are the questions that your firm must answer as it settles on the plan for localized loyalty programs.
   
• Look out for competitors – and partners – everywhere. If no other team is asking these questions, raise your voice. Who do you compete against in terms of loyalty in the markets most important to you? Who’s up and coming that will threaten your position? Are there already digital disruptors reinventing the overall loyalty experience in your vertical while you’re simply tweaking yours? At the same time, seek out local or regional partners that can substitute for third-party participants in your domestic program.

Adopt Customer Journey Management

Don’t just plot, trace, follow, or map customer profiles and journeys; rather, guide and manage them. Superior customer experiences offered through well-executed loyalty programs lead to higher retention and advocacy rates – but only if they resonate with individual audiences around the world.

• Enable your organization to adapt to customer journeys – not the other way around. Done right, overhauling a loyalty program should push your organization to remake itself in the image of the customer journey. This approach eliminates silos and leads to alignment of the teams and resources tasked with supporting loyalty journeys – whether for the home market with its multicultural audiences or for local markets. If you don’t adapt to this higher level of customer-centricity, you risk making your program too complex or riddling it with restrictions.
   
• Incorporate your loyalty program into the global customer experience. Analyze how this program adds value – or not – to each interaction with your customers in local markets to ensure that you’re not just bolting something on that will be under-used. Adding to the complexity is that there’s really no one journey for a particular customer profile or local market. Rather, there are usually several, depending on 1) the particular point in the journey; 2) the local culture, business, and legal context at the time; and 3) the customer’s socioeconomic background. For example, some audiences will depend more on recommendations from friends and family, while others will flock to celebrity or influencer endorsements.

Implement World-Ready Design from Day One

Achieving a versatile design for use worldwide isn’t only about software UI, but it’s also about other program components; for example, third party partners, delivery logistics, and how to handle unredeemed points and unclaimed rewards. At many firms, customer-centricity only extends as far as the national borders of the home market. This focus may not even reach that far if the business ignores multicultural audiences that have money to spend. 

• Plan from the start to offer loyalty options outside your home audience. How accessible is your program to participants outside of the major language speakers in your domestic market? Can the loyalty app be easily localized for all of the places you plan to take it? Do all points, tiers, and rewards appeal to customers in the locations where you offer them? What about delivery mechanisms? These are just some of the questions to ask as you build or revamp a loyalty program. Engage local partners, such as marketing agencies or LSPs, to put the entire program through its paces to help you identify gaps and misaligned areas.
   
• Identify the right data to underpin international design requirements. Make sure that you have the data required from local markets to support program designers. This includes information on sign-in, online browsing behavior, purchasing activity, and any relevant offline activity. In larger organizations, this information will often be stored in different databases throughout the enterprise in sales, operations, marketing, and customer support. Again, look into building a common dataset to be collected and analyzed across all markets rather than customizing by country. If you don’t know where to begin, ask your colleagues in finance, operations, or digital marketing.
   
• Weigh points versus money. Europe tends to favor points, rather than money, because the former are easier for participants to earn and redeem as they cross borders. However, for markets such as the U.S. and Canada, where currency fluctuations tend to be negligible, monetary rewards are not an issue because most companies will simply write them off. In markets that experience frequent currency volatility, stick with non-monetary rewards. Why? Because an amount originally equaling US$80 may be down to US$20 or US$30 by the time your customer gets around to redeeming it – or vice versa.

Loyalty is a relationship, not a program. Initial enrollment doesn’t mean much these days. You must still prove the program’s worth for customers to commit beyond the first few discounts or rewards. Going forward, winning long-term commitment to your loyalty program will require appealing to your customer’s hearts through experiences, as well as to their wallets through discounts and other financial rewards. This means adapting the program for local markets and relevant content – whether localized or created from scratch. Localization teams should be prepared. These times call for more proactivity based on a strategy that offers robust, meaningful loyalty programs that are localized, measured, and enhanced over time to lead to better relationships, and ultimately, higher profits.