From Gentiana Duka
Nowadays, an impactful change in how customer relationships are built has become increasingly evident. Customer relationships and services are considered an innovative strategy by financial institutions, causing the creation of a strong and personalized bond between the two parties. Loyalty cards are part of loyalty programs, a crucial part of business strategies, not just as a reward platform, but also as an instrument to build lasting relationships with customers.
In the financial industry, these programs are built based on customer engagement, gathering points according to purchases. Loyalty cards are presented as:
Point-based Loyalty Cards – Work based on the accumulation of points, which rewards customers with offers, preferential prices, or simply monetary rewards.
Tiered Loyalty Cards – Structured in various levels of product selection, they offer increased opportunities to reward customers in proportion to their use.
Cash Back Loyalty Cards – They are focused in two directions: Cash rewards according to accumulated points or based on purchases made with the card.
Coupon Cards – Often used by small businesses: customers receive a coupon for each purchase and after a certain number of purchases, they earn a reward.
Membership Card – Customers pay a recurring fee to receive regular benefits, such as discounts, free products, and enjoy significant rewards compared to non-members.
Referral Program Cards – Customers earn rewards by referring friends, and after a successful referral, both the referring and the referred receive a bonus or discount on the company’s products.
Digital App Cards – They work the same as traditional loyalty cards but are managed through a mobile application. Customers can receive real-time information about the rewards, accumulated points or discounts they benefit from.
Exclusive VIP Cards – These belong to dedicated programs that offer high-value benefits, such as exclusive events or significant discounts to a group of customers with a specific profile.
On March Monzo has launched a loyalty program to attract more individuals through referrals. They are experimenting to understand whether different rewards can inspire more people to bring their friends to Monzo. A group of randomly selected customers are invited to follow this adventure, where both the referrer and the referred customer can win £10, £20, or £50. After registering themselves on Monzo’s platform and make a payment, they automatically become part of the program.
Which are the factors that drive customers towards preferred products?
Loyalty programs create advantages for customers and businesses. Customers benefit from special status, while businesses build strategies by reducing costs for new customers. Through these programs, businesses improve their image, create preferences, new purchasing habits, and orient customers towards effective marketing strategies, turning existing customers into ambassadors of their brand. But for loyalty programs to be effective, and provide real value to customers while helping businesses grow, several basic elements must be considered:
Product stability – The fundamental principle of a loyalty program is the consistent quality of the product. If a customer identifies that the selected product meets his needs and has the required quality, he remains loyal. Even if the price or process change, the quality of the product manages to influence customers not to turn to a competing product.
Monetary value – According to a KPMG study, about 66% of customers say that one of the factors able to convince customers to be loyal to a product, is the benefit of a monetary value. This does not mean that customers choose the product with the cheapest price, but a product that provides perceived value in relation to the cost. Customers who feel that they are getting more than they paid for, or the price justifies the product, are more likely to continue selecting the same product and have a lasting relationship with the company that offers it.
Product quality – Creating value through quality is a never-ending challenge for businesses. The higher the quality of the product offered, the higher the customer trust and loyalty.
Customer care and service – The way information is transmitted to customers can either build or damage the relationship with them. Anticipating customer needs, personalized recommendations, and initiative-taking communication contribute to customer perception.
Product Pricing – Customers are satisfied when the price of the product they are purchasing matches the value they receive. Therefore, businesses should carefully consider a pricing strategy that balances quality, perceived value, and customer expectations to ensure positive experiences with the business.
Brand Trust and Transparency – Customers need to believe that a business will deliver on its promises, oversee their personal data responsibly, and provide services according to standards.
Which are the elements that financial institutions and businesses should consider in building a successful and impactfully loyalty program to customers?
Building loyalty programs presents advantages for customers and businesses, but there are also challenges that require careful attention and management. A program of this type to be as effective as possible requires a detailed process of personalization according to the customer’s profile and digital integration of processes.
Knowing the customer and their preferences: Customers behave differently towards products, therefore adapting strategies to their preferences remains essential. Analysing customer reactions is one of the mechanisms that helps to understand the target audience.
Personalized, flexible, and digital programs: Businesses and financial industries must build personalized loyalty programs according to the customer profile. Real time information is necessary for customers, so flexibility and digitalization remain just as important.
Simplicity of use of loyalty programs: Long processes in registering as a loyal customer, unclear conditions, and complicated platforms, irritate customers and reduce the return on investment of the company.
Clarity, information, and transparency with customers: Failure to inform customers continuously and correctly, leads to the failure of the program. Customers create distrust in the company and think that the advantages have not been real, conveying this feedback to other customers.
Educated Customers: If customers understand the benefits correctly, they are more inclined to become part of loyalty programs. Customer education directly affects their choices.
Reputation management and online ratings: Negative comments, and the company’s reputation can damage customer loyalty. Actively monitoring comments and addressing them affects a reputation as positively as possible.
To build the most efficient and successful loyalty programs, businesses must consider technological developments, analyse consumer behaviour, and continuously building customer trust. Also, digital presence remains an essential element, so businesses should pay special attention to creating a virtual identity.
Last year Revolut has introduced “RevPoints,” the first Pan-European Debit Loyalty Card Programme.With “RevPoints,” customers can accumulate points from everyday spending and unlock a world of travel benefits, including airline miles and exclusive discounts on travel, accommodation, and experiences. Unlike traditional loyalty programmes, “RevPoints” do not require a credit card, making rewards available to all users. This new initiative allows customers to turn their everyday spending into extraordinary rewards, including coveted airline miles and exclusive discounts on travel, accommodation, experiences and more. “RevPoints” offers broad and accessible redemption options that cater to a variety of lifestyles and preferences – without needing a credit card. Customers can transfer their “RevPoints” to 30+ airline loyalty programmes including British Airways Executive Club, Flying Blue and more, making travel more attainable than ever despite surging flight prices.
A key factor in successful loyalty programs is knowing how to communicate product values or benefits simply and clearly, where brand loyalty is driven primarily by shared values.Customer loyalty does not come overnight. Continuous efforts must be made to be sure that customers will return repeatedly.
Like their close friends, customers expect financial institutions and businesses to know what they value. The relationship between business and customer is based on sharing common values, creating mutual trust and an emotional connection to the product.
Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do it again, and they will want to bring others and show them how well you do what you do (Walt Disney)
Gentiana Duka
