Why loyalty goes beyond a brand's rewards programme, according to Guzman y Gomez, The Point of Loyalty, Craveable Brands and MobileDen

Industry experts reiterate that building customer loyalty is not just about giving points and discounts.

Huge potential remains in what rewards programs can do but their success or failure depends on how brands understand and define what loyalty is to them, a panel of executives during the 2018 QSR Media Detpak Conference and Awards explained.

“Our customers come first but that's in [the] crew level as well. Loyalty doesn't just come in the form of a programme. For us, it's about loyalty to the brand and our loyalty program comes hand-in-hand with that and talking to our customers, reminding them that we're there,” Guzman y Gomez chief marketing officer Lara Thom said.

Craveable Brands head of digital Ken Russell stressed the need for digitalisation as a key component in loyalty programmes in the current landscape.

“You’ve got to have amazing digital products that you can put in the hands of your consumers and for your crew as well because I think if your crew [are] facing constant challenges [and are] not able to answer those challenges, it could really hinder your loyalty programme,” he said.

MobileDen general manager Gavin Gorazdowski emphasised the importance of brands being able to establish the metrics of success of their loyalty programmes.

“If you look at some of the brands in the world that have the biggest level of engagement and customer loyalty, brands like Apple, these brands usually don’t have a points based reward program, they focus on building long lasting relationships with their customers through quality product, service, differentiation and intimately knowing their customer base – there’s a huge opportunity for Australian retailers to leverage technology to build similar engagement and ultimately sustainable loyalty.”

Proper use of customer data
The Point of Loyalty chief executive officer Adam Posner offered four factors that lead loyalty programs to success and not "FAIL": Focus, Alignment, Implementation, and Leveraging of data.

“Focus is about businesses knowing why they need a program what their objectives are. Alignment is about the team[s] believing in the program ,” he said.

“Clearly, Implementation and execution is where programs can fall down. And finally leverage the data they collect; looking at who's buying what, where and when [whilst] being sensitive with the use of that data.”

Asked specifically about proper leveraging of data, the panelists offered unique perspectives.

“First, you get permission – privacy now is becoming a big issue,” Posner said, citing his group’s research – For Love or Money 2018 on using data to enhance the customer experience versus invading their privacy.

Russell said Craveable Brands is utilising technology that allows them to understand customers’ interests to ensure that future information from their group of brands would be “most relevant.”

“Data is essential to our loyalty programs and the evolution of it,” he said.

Gorazdowski adds to this line of thought, saying that data should be better utilized to determine which of your consumers are most valuable to your brand.

“As brands attempt to achieve profitable growth, there’s a huge opportunity to use historical data to nurture and retain your most valuable customers and slow down the leaky bucket feeling when heavily focusing on acquiring new customers.”

Guzman y Gomez, whilst in the midst of their “big data transformation” process, stressed that there is a peril of overusing data.

“We use data for good, not evil. It's really important not to use data incorrectly; [it] can be skewed any way you want to. You can't take away the magic of gut instinct so we use data as a guide but it's not a definitive rule,” Thom said.

Asked about how brands are finding a balance between giving away products and rewarding loyalty, Thom said it is an enormous expense but says “it’s worth it.”

“It needs to look amazing, but it needs to taste better. We believe in our food and once you taste it, you'll come back and eat more. That's our strategy; it's very simple.”

Russell, meanwhile, says their group is eyeing to integrate gamification and exploring means “to drive sales through digital gifting” that's not related to their products.

Millennials and loyalty
Some members of the panel also illustrated how loyalty programmes are still relevant to the millennial age group.

“Millennials absolutely want something in return for their loyalty; they rank very highly in emotional loyalty and they also want something for what they spend,” Posner said.

Thom said the highest users of their GYG app are in universities, mentioning data that suggested that millennials are keen on using their app and earning points.

“They are actually significantly more loyal than other age demographics,” she said.

The importance of defining loyalty
But ultimately, the panelists agreed that driving loyalty goes beyond earning rewards and getting free products.

“Loyalty cannot drive brand love. A brand can drive brand love and never mistake the two. You didn't fly Qantas for the points,” Thom said. “Whether you respond to every customer, whether you treat every guest as if they matter - that's what drives loyalty.”

“The issue of loyalty and loyalty programs is that we really need to separate the two. Loyalty is at outcome; a loyalty program is a tool that drives whatever loyalty means to your business. When you define what loyalty actually means, then you'll know what kind of program you can implement to drive those outcomes,” Posner concluded.