Customer loyalty innovation is still alive and well

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By: Wise Marketer Staff |

Posted on November 14, 2007

Innovation is alive and well among coalition loyalty programmes around the world, according to the 'Independent Coalitions Around the World 2007' study and report from South African loyalty research firm Razor's Edge Business Intelligence.

Despite their advancing age, coalition loyalty programmes are continuing to innovate to keep their programmes fresh and relevant to their target members, the company found.

Relevance still a strength
According to Bruce Conradie, managing director for Razor's Edge, and the principal researcher for the study, "Loyalty programme operators have always been revitalising their programmes. In fact, if they don't, the programmes tend to become irrelevant and fail. But we were pleasantly surprised to see that, after decades of running these programmes, marketers are still able to innovate in a relevant way."

Green innovations
Developments that caught the attention of the report's researchers included a number of environmental awareness measures and charity-supporting options. For example, in 2006, the UK's Tesco Clubcard (although not a true coalition programme) introduced Green Clubcard points, which are awarded to Clubcard members for taking eco-friendly measures such as using their own shopping bags or depositing waste material into bins for recycling.

Similarly, in Canada, a loyalty programme has recently been launched that rewards programme its members for purchases of environmentally friendly products such as hybrid cars, bicycles, car-sharing club memberships, and passes for public transport.

In the UK, the Nectar coalition introduced a mobile phone disposal benefit in January 2007, allowing members to turn their unwanted handsets into Nectar points by giving their old phones away as donations. Nectar's operator, Loyalty Management UK (LMUK), then arranges for the collection of the donated handsets, and then organises distribution to under-developed countries. (This is done through the Greener Solutions charity organisation.)

Purely from a corporate image point of view, Conradie argues, loyalty programme operators may wish to innovate along these lines regardless of the support they receive from programme members.

Innovating with customer data
Some innovation arises naturally from intelligent use of customer data. Both Nectar and Tesco in the UK send letters to members who move house, providing them with information and maps on the locations of their nearest partner stores.

Another area the researchers believe is fertile ground for originality lies in the types of rewards offered by loyalty programmes. Experience rewards and money-can't-buy rewards are gaining popularity among loyalty marketers. For example, in 2005, the South African programme eBucks offered members the chance to win a trip into space (a reward that others including Virgin frequent flyers have also been offered).

What's in the report
The new Razor's Edge report profiles ten loyalty coalitions in seven countries. The fieldwork was started in August 2007, and was undertaken by Razor's Edge in association with the University of Johannesburg (South Africa), The Wise Marketer (UK), and our friends at Colloquy in the USA.

Commenting on the report's major findings, Conradie said: "If you study loyalty programmes year after year, you can easily develop the mindset that real innovation in loyalty is no longer possible. But that is dangerous ground, as we know from the often-quoted statement by the US patent commissioner who, in 1899, said that 'everything that could be invented has been invented'. Loyalty marketers should never fall into that trap."

While Conradie had previously wondered if loyalty programme innovation had largely become a thing of the past, industry experts attending the Loyalty World conference in London in September 2007 felt otherwise. As a result, Razor's Edge paid particular attention to loyalty innovation as a topic in its ongoing survey work, concluding that innovation is definitely not dead.

Application of skills
The skills demonstrated by the loyalty programmes surveyed for the report can also be applied more generally, Conradie suggested. Most innovations in evidence are not wholly new products or ideas but are often simply fresh perspectives on older concepts.

"Innovation created in this way tends to be cheaper and easier to implement than attempting to break completely with what has gone before," Conradie concluded. The Independent Coalitions Around the World 2007 report is available for purchase for US$750 directly from Razor's Edge.

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