Customers seek value and flexibility in rewards programs based in the financial industry, according to Bob Grothe, Vice President of Strategy and Analytics & Loyalty and Reward Solutions at MasterCard.
During Loyalty 360’s Thursday webinar, “Rewards in Interesting Times,” Grothe said that loyalty marketers can manage reward costs by using point tiers to their advantage.
“Continuing to give greater control to customers as it relates to reward redemptions is key to future success,” he told attendees. “Allowing customers to use points anywhere for anything they want will move your program from “close to what I want” to “exactly what I want.”
Nicole Klein, Vice President & Senior Business Leader of Rewards and Offers at MasterCard, told attendees that the next generation presents great opportunities for loyalty marketers
“Customers will have more flexibility and influence on marketing efforts,” Klein said. “Customers want immediacy and will look to use points anywhere for anything, moving rewards programs from ‘close to what I want’ to ‘exactly what I want.’’’
Grothe said that deepening customer relationships is critical to the future of loyalty programs – especially ones that take advantage of cross-sell opportunities and add more value. When polled about their primary rewards programs, 58% of attendees said credit cards, followed frequent flyer at 24%. Grocery store, other, and hotel rounded out the responses.
Grothe discussed merchant-funded rewards programs, and said unlocking the transactional data and leveraging that data for more personalized, relevant offers should be the focus.
“Deliver personalized, card-linked merchant-funded rewards, and integrate offers within existing channels such as online banking, email, and mobile,” Grothe said. “Drive spend with incentives funded from participating partners. This is really a win-win, leveraging transaction data to target the right customer with the right offer. Making offers more relevant makes them more valuable and more likely to get a response from a customer.”
In the future, Klein said the value of points will be more transparent.
“Studies have shown that customers are willing to pay a premium for flexibility to use those points anywhere their hearts desire, in whatever channel they’re in,” she said. “They want to be able to interact with the program in that channel.”
Redemption at point-of-sale is a growing trend, Klein said.
“Another area to evolve over time will be real-time offers being relevant to customers and integrated with their mobile wallets,” she explained. “Relevant communication will be so important because customers are bombarded by emails. That’s the only way you’ll get better responses.”
Leveraging transaction data is one way to “break through that clutter,” Klein said.
“Integrate those offers with service channels and tools customers are already using,” she explained. “A lot of loyalty programs have profiles. Are you leveraging information from your profiles to make the communications for those merchant offers more relevant?”
Merchandise will continue to play a role, Klein said. Instead of focusing on future expansion of catalog items, companies might look to rotate featured items.
“Smartphones will continue to the point where they become the first point of brand interaction through location and time-based interactive services,” Klein said. “Restaurant recommendations will open doors to cross marketing opportunities.”
Grothe said that banks have a “real opportunity” to capitalize on these trends by becoming hubs or anchors for these rewards programs.