BY LEE LI LIAN
Last year, full time blogger Ben Schlappig earned instant fame after revealing how he manipulated frequent-flier miles and card points to rack up air tickets to fly for free. Not once, not twice, but enough to circumnavigate the globe 16 times, chalking more than 400,000 miles a year.
So how was this possible? Simple. The 25-year-old took advantage of the age old adage of customer loyalty and reward programmes that almost any brand worth their salt has utilised as a marketing tool to retain customers and keep them happy .
Customer acquisition is a shiny toy that everybody wants but ultimately retention through loyalty programmes drive greater incremental value. While the specifics of each scheme may differ, the premise remains the same: build long-term relationships, reward purchasing behaviour, show customer appreciation and promote the cyclical nature that is word-of-mouth.
It is also an excellent tool to drive sales and track customer metrics. To achieve the desired effect however, a business has to skilfully ensure it is getting the most out of the investing in designing and maintaining the system.
The challenges start by clarifying goals, to engineering the economics of the reward structure so that the incentive given to the consumer encourages repeat business but yet not too generous to starts eroding margins.
Generally loyalty programmes converge into a blend of:
We are all too familiar with loyalty offerings from major retail players such as AEON, Tesco, Isetan, MPH, Sephora and Ikea, each having successfully garnered a steady following of customers and card members.
Then there are standalones like BCard and BonusLink. Launched in 1998, BonusLink is the largest and most established multi-partner consumer rewards programme in Malaysia backed by the corporations of Shell, MBF and Parkson. There are to date over 8 million BonusLink members who get to swipe their cards at 27 affiliated partners, resulting in billions of sales. BCard, the newer kid on the block, has been running since 2010 and is available for point collection at over 3,000 channels nationwide.
While it is arguably easier to weave the loyalty wand for a single brand or store, it is definitely more complicated for shopping malls to develop a cohesive all-inclusive, mall-wide experience that covers multiple tenants under one roof on top of building brand loyalty from the average shopper.
The process is long and bumpy, and not exactly a joyride. In short, it takes a lot of courage to develop a mall loyalty programme. First, the programme needs to suit different types of businesses, yet have a common platform that F&B restaurants to apparel retailers can adopt. It also needs to be flexible enough to cater to large anchors and small businesses.
Active participation from mall merchants requires patience and dedication. Starting a programme with less than 60% of the mall’s tenants signed on is less than desirable. A successful loyalty project has over 90% tenant involvement.
To keep tenants interested, share as much research and market data as possible so that they understand the programme’s benefits. Allow tenants to manage their promotions easily, ensure consistent training for shop sales staff and provide round-the-clock technical support for smoother sales and redemption processes. On a grander scale of things, once mechanics are put into motion, the programme can help strengthen relationship between tenant and landlord, so tenants become more loyal too. Strategic co-branded partnerships with tenants like events and promotions are mutually beneficial.
Local malls that have developed their own loyalty programme are far and few in between. These include 1 Utama (ONECARD Privileges+), Sunway Pyramid (Sunway Pals), The Gardens (Club Card), KL Sogo (S Card) and Evolve (Evolve+). Understandably, most malls prefer to lean towards offering the simpler Tourist Card instead.
1 Utama, the world’s 5th largest mall, boasts the first mall-side loyalty programme – the ONECARD Privileges+, it is also the first in the Klang Valley to support both shopping and parking facilities. Its standout features are :
When the programme is up and running, it is important to always keep a watchful eye. Use relevant statistical analysis to review its success and if need be, make appropriate modifications.
Understanding the economics surrounding a loyalty programme is critical as maintaining these babies can easily cost millions. When companies fail, the delicate act of balancing expenditure vs profit, the culling should start so that the programme does not continue to limp along.
Too many companies are stuck with a programme that is no longer effective but are too afraid to shelve or change it for fear of upsetting existing customers. In April, Starbucks ran into a huge PR backlash when it chose to revamp its loyalty terms. While once customers could spend USD$24 and get a free drink after 12 trips to Starbucks, they now have to spend $62.50 as the new scheme shifted towards monetary spend rather than transactions. Coffee aficionados around the world were quick to revolt.
Now more than ever, consumers are looking for engagement and experiences that move beyond shopping. E-commerce and digital technologies are reshaping expectations so shoppers expect to be consistently entertained. Hence it is critical that retailers and malls go the extra mile to build social sharing into their loyalty programme’s design.
Try to incorporate experiential rewards and play for shoppers to have fun. Delight campaigns and on-ground events such as personalized messages, virtual cards, e-wallets, mobile app, gamification, augmented reality screens, motion capture games and interactive photo booths can easily be merged into membership programmes. The ability for members to share content across social channels makes it easy for them to act as megaphones for the mall and brand. So be playful and give members more reasons to stay faithful.
Lee Li Lian is PR Manager of 1 Utama Shopping Centre, a corporate member of The Malaysian Shopping Malls Association