Loyalty programmes refer to strategies that are used by companies and businesses to motivate clients to continue using their services and products. These programmes are designed by merchants with the aim of marketing the business and its services by use of rewards schemes and other features to encourage the customers. The loyalty programmes are seen as a type of unified visual currency with unidirectional flow of funds.
Loyalty programmes started as a solution for companies to get loyal customers and to be at an advantage among other companies making similar products. The competitive advantage that the companies held no longer served as an advantage to the specific company as a result of the proliferation of similar goods from competitors.
The Singapore Marketplace
In Singapore, the digital marketing scape is growing at a tremendous pace. Thus it has become a necessity to do social media and digital media marketing in Singapore. This is because, like most people in the world, Singaporeans tend to spend considerable time on the internet before making purchases. They would look at ratings and reviews on the products on social media channels while doing this. So, you could not possibly be making a sale if you are not on these social media channels in Singapore.
The digital marketplace is expanding so because of several reasons. Some of the statistics that have been collected have proved this. For instance, 3.3 million of the 5.8 million people living in Singapore are social media users. These people spend more than 45 hours of their time during the week on the internet, and about 40% of them prefer to make purchases on the web. The country population on Facebook is about 80%. Of this number, more than half of them communicate using Facebook messenger.
Moreover, half of the country’s population is on instagram. Most of these users comprising of 15-24-year-olds who make up 87% of the total on the platform. Singapore also has the best broadband speed and internet access in the world. This has contributed to a lot of time spent on the internet as the people statistically watch about two hours of online videos per day.
Also, most of the jobs are suited to fit digital marketers with over four thousand of them on Linked In. Hence, these skills are crucial for you to manage and earn a comfortable living income in this highly technological city of Singapore.
Personal Data Protection Act 2012 (PDPA)
The PDPA is a law passed and envisioned to govern the gathering, use, and distribution of personal data. Companies must seek the consent of customers before they can collect information about them. The customers have a right to know how their data is to be used or if it will be shared with a third party. They can also decide on changes to be made, or removal of the data and also can deny the consent at any time. This feature was also introduced to Google Analytics to ensure the implementation of the GDPR. The data expires after twenty-six months, and the time limit can also be adjusted. It also enables you to delete the user profile when you want.
Why Is It Important To Conduct Loyalty programmes?
It is imperative for a business to have a loyalty programme for its customers. A very small percentage of customers return to make a second purchase from a company without motivation. The need to have loyal customers is what necessitates the need of a loyalty programme. The programme allows the company to reward loyal customers at each step of the shopping experience, thus improving the lifetime value of the customer. There is also a refer to friend feature in loyalty programmes that allow customers to recommend the company to other people, thus the customers act as brand ambassadors for the specific company. This improves the loyalty of the customer as they now become ambassadors of the brand, and also helps in acquisition of new customers.
The digital world is enabling customers to compare prices of products and services with just a few clicks. This means that if customers pay attention to your products over your brand then your company will lose to the more established companies like Amazon. Having a loyalty programme hinders developing businesses from competing on price by giving them another way to make their stores unique. This can be done by offering a more enhanced customer experience which allows the company to connect personally with its customers. This way, the company retains its already established customers as well as increase the lifetime value of the customer. The programme provides behavioural data of the customer and the buying frequency and habits, monitoring the steps of each customer for better service.
Benefits of Conducting Loyalty Programmes
Retention of customers
The main aim of having a loyalty programme for any company or business is to retain and have loyal customers. The programme gifts the customers depending on their shopping frequency for products and services. The programme ensures retention of customers by awarding them solid motives so that they come back to the company for future purchases, and eventually they stick to the specific company or business. When a business retains its customers, the overall revenue of the company automatically increases by 5-10%. The programme is effective in that the loyalty members have been found to spend averagely 5-20% than the non-members and they buy the products more often. Businesses which have a 60% rate of retention of customers lose more customers than a company with an 80% retention rate. Increasing customer retention has been found to boost the profits of the company by 25-95% which is a good marketing strategy for businesses.
Improved customer communication
Some loyalty programmes work by giving loyalty cards to customers. These cards act as a direct link between the business and the customers. They are a direct line for businesses to reach their customers and vice versa. The programme comes in handy when the business needs to announce new products and services and also in promotion of sales. The loyalty programmes also enable recalls when required which is made possible by the purchase dates and barcodes found on the recalled products. The actual purchase by the customer can be traced using the loyalty programme which gives businesses an easier time dealing with recalls.
Better cart data
A company can use the data collected using the loyalty programme to up-sell and cross-sell. It is also possible to offer an extension on warranties after an item has been bought as well as give a suggestion of the most suitable accessories to go with the purchased product. Through loyalty programmes, a business is able to provide discounts to loyal customers on the related purchases. This way, the programme gives a better and higher cart vale to customers because the communication links between the business and the clients is direct and open.
Customer data and consumer trends
As soon as a customer registers their details in a loyalty programme, the data is recorded in the database of the company. This data can later be used by companies for various purposes such as ecommerce segmentation, profiling the best customers, tailoring offers to customers, and for omni-channels. Customer data helps the marketers of the specific company to weigh the results of special promotions according to the use of additional channels, additional purchases and also the reduced time between purchases. The data collected gives the company a clear and complete view of the purchasing habits and frequency of different customers, as well as the preferences of each. The information is then used to revitalise the inventory management of the company’s pricing and promotions.
Reduction of unprofitable customers
The loyalty programmes have been used by companies as a way of shedding off unnecessary weight. A loyalty programme that has been designed with expertise enables the companies to categorize their customers into profitable and non-profitable customers. This way, the company is able to tell apart loyal customers from those who avoid premium ranges and make purchases on discounted lines only. The programme enables the companies to award the better and more profitable customers only which reduces the pay-out to customers who are not very profitable. The programme is an effective way of retaining customers who generate the most profit to the company and laying off those whose profiles cost more than they generate for the company.
Customer Loyalty Trends Emerging in Singapore in 2020
Loyalty programmes are becoming more sophisticated — moving from the transactional “spend-and-earn-loyalty-points” model to omni-channel programmes that work on restoring the emotional bond between business owners and customers to run a stronger (and more profitable) customer loyalty campaign.
2020 marks the beginning of something different. Loyalty programmes will be replaced by personalised loyalty marketing, which rewards customers with the things they value most, not just loyalty points.
In this section of the post, we’ll be compiling a list of top customer loyalty trends to observe in 2020.
Convenience Stores will be shifting towards Data-driven Loyalty marketing
The C-store shopper report of 2019 confirms the prevalence of loyalty programmes in convenience stores.
More than 42.5% of consumers now belong to a loyalty programme of some kind, compared to 36% in the previous year.
The report also goes on to indicate that about 73% of convenience retailers have now adopted a loyalty programme.
As a marketer, that’s a call for a change of strategy. It’s not about implementing the programme but optimising it.
Figure out how to transform the programme into a reliable revenue-generating tool. You can do this by capturing the right customer data, after which you’ll have to translate this data into actionable insights.
The more data you capture on your customers, the more you’ll be able to personalise the programme and come up with relevant rewards for each member of your programme.
Artificial Intelligence in Loyalty Marketing
As already mentioned, loyalty programmes will be moving towards data-driven loyalty marketing. Much of this new improvement will be facilitated through AI.
Here are the two ways that AI will be influencing loyalty marketing:
- Segmentation: AI will be tracking how members interact with a loyalty programme. It will analyse their information, and even help you segment its members based on different common factors, such as preferences and demographics.
This will allow you to customise your messages and other offers.
- Personalisation: Through AI, C-store owners and marketers will be able to build customer profiles based on the engagements they have, which they’ll be using to personalise consumer experiences.
Whether it’s offering them a discount of their favourite drink or snack or sending them birthday messages, AI will see to it that they’re able to tailor their offers and significantly improve on their customer relationships.
Gamification of Loyalty Programmes
Gamification is becoming a popular trend in the loyalty landscape. C-store owners and marketers are now focusing on making the programmes more fun and engaging and less transactional as it’s always been the case.
The point is to get as many customers as possible to be part of the programme while working on improving their experiences as users.
Programme members don’t like dealing with complex solutions at any stage of their buying journey. They prefer it when these programmes try to make the engagement process clear and easier.
Consumers don’t have to wait for their loyalty points to accumulate to a certain point before they can go ahead and redeem it for anything. In 2020, all the rewards that come with being part of a loyalty programme will be available at your fingertips, ready to be redeemed at your time of convenience.
Whether its customer support services, food delivery, or anything, customers don’t have to wait for their points to accumulate to redeem them for anything worthwhile.
Mobile loyalty app will become customers’ best friends. Customers will skip queues, secure exclusive table services for VIP, enjoy instant support, enjoy free shipping, and so many other perks almost instantly.
Loyalty Programmes will be Integrated with Sales Funnels
Reward programmes will not go away. But they’ll undergo major changes.
Marketers and C-store owners will be using them to incentivise their customers to move through sales funnel.
Any additional touchpoint will be rewarded. For high-end products, customers will be taken through 15 to 20 touch points before they take their wallets out.
More rewards will lead to higher conversion rates and vice versa.
Emerging trends reveal that many non-purchase interactions with a brand will be rewarded.
Examples include Tarte Cosmetics, which has been rewarding members for engaging with the brand and not just for the purchases made.
This would see to it that their revenue grew by 44% within one year.
More Budget for Good Omni-channel Experiences
Customers expectation bar rises a notch higher, with many of them expecting to be accorded an Apple-like or Uber-like experience.
Old members prefer a call centre, while newer generation prefer self-service, chatbots, and one-on-one live interactions.
Loyalty programmes with omni-channel functionalities are among the top beneficiaries of self-service, better data captures, and frequent engagements.
That works to ensure that every member of your programme is satisfied by the services they receive.
Loyalty Stats and Challenges to Watch in 2020
The loyalty landscape has never been stronger. Retailers are working on giving more meaningful and personalised options to their customers for loyalty and repeat businesses, and the programs are proving to be more effective now than they’ve ever been through the years.
A win-win situation for both customers and retailers, and here are a few stats to back up this claim.
- Consumers are signed up with 13 different loyalty programs on average. However, they’re only active in 6 or 7 of these programs, according to the latest report by Brand Bond Loyalty
- 55% of consumers admit to abandoning their loyalty programs after finding out that their loyalty points expired.
- 71% of customers are quick to point out that they joined loyalty programmes because of the price cuts that they receive on the purchases they make.
- 63% of customers say they joined a loyalty programme because of the free products.
- 81% of customers say they’re loyal to brands that stand with them at their time of need. They, however, want these brands to respect their time more.
- 94% of customers chalk up their loyalty to good customer experience. If they feel respected, and served to their satisfaction, they’re more likely to return for repeat purchases.
- 43% of consumers belong to at least one loyalty programme.
- According to many C-store operatives in Singapore, the biggest challenge they face with reward programmes is keeping up with the latest technology and dealing with customer fraud.
The Top Loyalty Programmes in Singapore
This loyalty programme operates with 26 restaurants and bars around Singapore. The customers with loyalty cards of Harry’s Bar enjoy seasonal deals and promotions and they also enjoy convenient cashless services with the invention of online payments. This programme guarantees members a discount of up to 15% on all regular priced products and services.
This is an international loyalty programme player that is very successful in Singapore. The My Starbucks Rewards in Singapore has a 3- tiered system which allows members to earn points depending on their bills. The levels are Welcome, Green and Gold, depending on the points accumulated by the customer within a year. The Gold status for instance is for customers who have a total of 300 points and they get to enjoy special and exclusive privileges that the Welcome and Green customers don’t enjoy.
This is a fashion brand which has gained a lot of global recognition and success in Singapore. It has a 2-tiered loyalty program comprising of the Silver and Gold statuses. The Gold status makes shopping very enjoyable for customers because they enjoy many and exclusive rewards. Gold membership is for customers who have a total accumulation of $500 or a $250 one-time purchase. The Gold members get a free gift with an online purchase annually within their birthday month as well as access to private events.
The loyalty programme of UNIQLO is packaged in a mobile app for convenience. There is a Scan to Win system which is a game that is very simple and engaging and It allows members to win coupons per $20 spent. There are more offers for members accessed after scanning the mobile barcodes and a one-time $5 discount during the customer’s birthday month.
The mission of this loyalty programme is saving the world, one beauty product at a time which acts as a very good motivation to customers. This program is a 2-tiered one which provides members with amazing discounts on all regular-priced products, the discount depending on the tier. Members who spend $40 or more at any Body Shop store get immediate membership to the loyalty programme which is a motivation to customers to spend more. If you spend more than $400 annually, your membership is upgraded to the highest status and you become a “Fan”. The app alerts members of their points to keep tabs on their progress as well as to inform them of specific vouchers offered.
This is a loyalty programme phenomenon that has been in operation since 2007. The Sephora Beauty Pass is also classified into tiers which gives its customers reasons to aim for the highest level to benefit the most. This loyalty programme uses consumer data to make emails personal for their clients and also provides tailored recommendations for specific customers depending on their profiles and purchases.
This loyalty programme follows up on the purchases of customers through out the year once they have signed up for the ExtraCare card. The customers who have signed up for this card are rewarded with ExtraBucks which acts as a payment mode for the next time shopping trip. The customers can use this ExtraBucks as free money and the customers also get to enjoy access to distinct prices for products and services that regular customers don’t have.
The Nordstrom’s reward programme has a loyalty program that allows customers of The Nordy Club to earn points for every dollar they spend at Nordstrom Rack, Nordstrom and HautetLook. The points earned can later be cashed in for store credit. In addition, the customers who have these Nordstrom cards can earn points thrice as fast. The programme allows customers to have exclusive access to style workshops, curb-side pick-up and also first-to-shop select brand shipments.
The loyalty program for Sears rewards customers with a Shop Your Way loyalty programme that gives customers a range of benefits. The programme gives Sears customers personalized savings and unique, exclusive coupons. The customers also get 10 points for every dollar spent and surprise point offers for products and services. This programme has an additional feature which allows customers to upgrade to a $39 membership which allows customers to earn double the points for every dollar spent and a free 2-day shipping of products.
The loyalty programme of Lululemon is just getting off the ground, but the programme is already gaining popularity in Singapore. The loyalty programme allows customers to get free pair of pants or shorts and a special access to classes and events of Lululemon. The customers also get a free expedited shipping for online orders. In addition, the return policy of this store allows loyalty programme customers to return products with no questions asked.
The loyalty programme for Target shoppers requires the customers to have the REDcard. This card is used by Target shoppers to save them some money on the purchases they make. Customers enjoy a 5% discount on every purchase as well as free shipping for all online orders. Besides, the programme guarantees an extra 30 days for returns with no extra yearly fee which makes it very popular in Singapore.
This loyalty programme has been categorized as the best on the market because of its offers. Customers enjoy a 20% discount off purchases as well as free shipping for only $29 annually.
This loyalty programme requires shoppers to sign up to get approved for a credit card for Amazon shopping. The shoppers get a $30 gift card after signing after which they enjoy a 3% discount on every dollar spent, 2% on drugstores, restaurants and gas stations services and 1% on other items.
The loyalty programme for Marriott is inclusive of member-only rates, VIP upgrades and also mobile app check-in.
The loyalty program for Kohl’s has a Yes2Rewards program which awards members with a free birthday gift and enables them to earn a point for every dollar spent. Each first day of every month, members get a $5 gift for every 100 points earned as well as more rewards earned during special events.
The Ulta’s Ultamate Rewards is a loyalty programme which allows members of Ulta to earn a point for each dollar spent and 2 points for members with the Ultamate Rewards credit card. The points can be used for future purchases and the members also get free gifts on their birthdays. These points are used by the company as a way to increase customer loyalty and also to acquire new customers.
Tarte Rewards members earn points through shopping and engaging on social media through referrals to friends and opening Tarte emails. This expands the brands organic reach and also provides motivation to existing customers. Tarte cosmetics has a loyalty programme which allows customers to benefit most from their loyalty to the company as well as enjoy the offers and discounts given.
The loyalty programme of REI offers a lifetime membership for $20 to customers. REI is popular for having the best no-questions asked return policy on products. As all purchases are logged through the customer’s membership, there is no issue even if you lose the receipt. There’s also a 10% back on purchases and access to REI classes and events for members as well as significant discounts.
The Top 5 Loyalty Programme Books You Should Read
Some of the top books to read about loyalty programmes and improving customer loyalty for your business are inclusive of the following:
The Ten Principles Behind Great Customer Experiences – Matt Watkinson
Outside In: The Power of Putting Customers at the Center of Your Business – Harley Manning
Farm Don’t Hunt: The Definitive Guide to Customer Success – Guy Nirpaz
Customer Experience 3.0: High-Profit Strategies in the Age of Techno Service – John Goodman
Chief Customer Officer 2.0: How to Build Your Customer-Driven Growth Engine – Jeanne Bliss
The Top 5 Platforms for Loyalty Programmes
The platforms for loyalty programmes comprise of the software used by businesses to attract more customers and retain the already existing customers. These softwares are such as:
- Goody: an automated and customer loyalty marketing tool.
- Revetize: helps grow reviews, referrals and repeat purchases through texts, voicemail, emails and PenWritten letters.
- Ovation: this software measures and improves customer experience as well as manages the reputation of the business for running of a successful marketing campaign.
- Flok: this is the only automatic mobile loyalty platform in the market.
- Belly: this platform offers customers customized rewards, email marketing campaigns and social media integration.
Singapore Government Grants
The government of Singapore provides grants and incentives to companies to help them grow. Some of these grants are used by different companies for loyalty programmes to help them expand their customer profile and retain the already existing customers. These grants are inclusive of the following;
FAQs for loyalty programmes
What are the benefits of loyalty programmes?
Loyalty programmes aid businesses in retention of customers as well as in acquisition of new customers. They also facilitate brand awareness through referrals to friends by loyal customers. Loyalty programmes come in handy when businesses have promotions and offers and also new products in the market because they enable marketing using the data gathered when customers register for the loyalty programme of the specific company.
What are the different types of loyalty programmes?
Some of the types of loyalty programmes include tiered programme, spend programme, paid programme, partnered programme, value-based programme, game programme, point programme and Game programme among others.
What determines the success of a loyalty programme?
The success of a loyalty programme is measured by the repeat purchase rate of customers, the engagement rate, customer lifetime value, net promoter score and the average order value of loyal customers.