As loyalty programmes change, what opportunity does this present for retail banks?
Loyalty programmes traditionally offer incentives in exchange for repeat business: stamp cards in our wallets remind us to buy at a particular shop for freebies or discounts, credit card companies offer rewards like air miles. But they can be about so much more. Loyalty is defined as an affective bond leading to actions as strong as advocacy. Repeat purchase has many drivers that can even be largely unrelated – such as sheer convenience. However, it generates revenue, so why question it?
Recently, the Covid-19 pandemic has been accelerating trends that are changing the core of customers’ needs and wants. This is impacting customer loyalty in two ways.
Firstly, a growing number of choices and an all-encompassing shift to digital makes today’s demanding customer less likely to stay with a particular brand or provider than ever.
Secondly, customers are looking for shared values and meaning that goes beyond a traditional buyer-seller relationship, as proven by the spectacular rise of ESG and increased focus on CSR. All customer segments – but particularly younger segments - now pick who they will buy from based, at least in part, on their ethical bona fides. In a B2B environment, enabling the customer-facing end to drive their business is the name of the game. Data-rich FIs like acquirers strive to be seen to proactively help develop their clients’ businesses and even support their ESG ambitions with data and tools.
Loyalty programmes now have the chance to become what they have been designed to be all along: a tool to meaningfully bond with customers. In the recent past, Capco designed and implemented a loyalty programme for a leading UK bank, turning a dormant customer base into frequent spenders with the help of a compelling value proposition.
Now, to succeed in the face of changing expectations, Capco can help you leverage data and AI to establish a holistic single-customer view, draw on its vast product design expertise to build a customer-centric offering and shape a strategy that empowers you to foster a strong long-term relationship with your client base.