Innovations in loyalty
Innovations in loyalty
“We found that people are frustrated with loyalty programs, so we wanted to make ours easy-to-use, transparent and offer members additional value beyond just earning and redeeming points,” says Bob Daly, SVP, retail payment solutions at US Bank.
The financial services company spent time interviewing customers and doing market research to find out which benefits worked and which didn't before developing the new card. The bank found that many customers were frustrated with blackout dates and the rising cost to exchange points.
“It had to have the ability to quickly earn the currency, the ability to very easily redeem that currency without any hurdles, and members should be able to derive tremendous value when using the currency,” says Daly.
US Bank also discovered that 85%-95% of airline tickets purchased using the Northwest card cost less than $400, so it set that figure as a base point for redeeming points, figuring it could make more customers happy at that level. Now 20,000 Flex Points equals a $400 flight, with the points going up as the cost of the flights go up. The new program also removed booking fees. “We wanted to be transparent. If there was a flight out there that cost $400, we would book it for 20,000 miles,” says Daly. “There is no smoke and mirrors like you see with some airline programs.”
US Bank sent out a series of direct mail postcards to former Northwest members, inviting them to join the new program. The postcards explained the new points system, highlighting their value and claiming that the competition's 20,000 points were only worth $200. The bank also relaunched its website, sent e-mails and ran print, online, TV and radio advertisements. During the campaign, US Bank gave away bonus points to members that shared their e-mail addresses during the campaign as a way to reduce list acquisition costs.
Loyalty marketers are also expanding the kinds of rewards that they offer to their members, including offering access to exclusive events and personalized perks. Rather than just offering reward points for free hotel rooms, members can exchange points for tickets to concerts or sporting events and they can even create their own rewards using a concierge service. For example, if a reward is not offered through Marriott or a partner, members can call the Marriott concierge to create their own reward and the concierge will then look into the cost and let them know what it would cost in points.
“Loyalty programs are a way to bring a brand promise to life, and the most forward-thinking companies are trying to make sure that their loyalty program stands apart, by offering more personalized benefits and rewards,” says Hlavinka.
Marriott has also extended its list of partners to include a variety of retail and services partners. For example, a member can redeem points from LifeLock, an identity protection company. “We want to offer them other options in case they don't want to travel,” says Goldstein.
US Bank is giving away extra perks to members that use their cards to purchase tickets to select events. Customers that used their card to purchase tickets to the new Minnesota Twins ballpark received a voucher for free food at the game and the chance to win access to a special US Bank “homerun porch.”
“Customers more and more are looking for soft benefits and access to stuff that is exclusive,” says Daly.
“These special opportunities are skewed towards offering members experiences that are out of the ordinary and are in line with whatever the brand promise is,” adds Harteveldt.
Out of the ordinary experiences work as a motivator in some customer relationship cycles while others might prefer an upgrade to first-class or even cash. Finding the right mix is what all marketers are struggling to understand. US Bank's soft benefits also include hotel upgrades and late checkout from its 300-plus global hotel partners or a free rental car day for booking a weekend day for customers that use the card to book with US Bank partner National Car Rental. It also offers a $25 travel allowance along with any reward ticket. Members can use it for a number of perks.
“You can use it to check a bag, or buy some food on the plane or to check into an airport lounge,” says Daly. “This comes from customer feedback. They were frustrated by baggage fees. It had been $20 and we increased it to $25 this year, when the airlines raised their baggage fees from $20 to $25.”