In today’s economic climate, building a more diverse, sustainable revenue stream and increasing consumer trust and loyalty is key for almost every industry. Banks face pressure as consumers are given more opportunities to compare and switch services, not to mention the rise of the dynamic fintech sector. Traditional banks must now work twice as hard to retain their existing customer base and entice younger generations into the fold.
Building a bank loyalty program with an attractive redemption proposition is one way to improve customer engagement, while also generating additional revenue. However, our Value of Redemption 2 report found that almost half of Americans currently do not feel satisfied following a loyalty program redemption experience.
Building on this insight, there’s an opportunity for banks to extend their customer engagement capabilities and offer a greater choice of rewards.
The value of choice
Every customer is different, and should be treated as such. A loyalty program is made up of a diverse collection of consumers, from baby boomers to digitally native millennials, all with different expectations of loyalty programs and what the accompanying rewards and promotions should be. But how do you satisfy such diverse demographics while also making the program commercially viable?
One of the answers lies within the number of products and services available to consumers. While a simple observation, it is imperative there is enough on offer to satisfy the needs of your entire customer base. For banks, there is real commercial value in offering benefits and rewards that sit outside of the more traditional or core inventory.
Nearly half (43 percent) of American consumers told us that they wanted financial service companies to improve loyalty programs by offering a larger selection of rewards. And four in five stated that the value of a program decreases when there is only a limited range of rewards available.
This trend resonates across other industries too. Our research found that it is financially viable to offer a broader redemption package to consumers, as this increases the likelihood of customers going on to purchase other products and services from a company. For example, 61% of airline loyalty program members went on to book a flight, and 56% of hotel program members went on to book a hotel room (core inventory) following a redemption on non-core inventory rewards such as electrical goods or day experiences.
Use offline options to drive further engagement
While expanding the set of rewards available through an online redemption store is one option for financial services brands, it’s also important to consider the role of offline, in-store engagement redemption solutions – as this mechanism for engagement is experiencing somewhat of a renaissance in popularity. In-store redemption provides a smart way for program providers to extend the customer engagement opportunity and can help brands further tap into the “everyday engagement” that all brands desperately crave with their customers.
With over half of US consumers stating that they would like this capability within their own financial services program, it’s another option for program providers who are serious about driving deeper engagement and more value from their program.
Focus on simplifying the user ‘shopping’ experience
Providing a frictionless redemption experience should also be a top priority for loyalty program operators. 46 percent of loyalty program members in the US say they’d appreciate a simpler user experience when redeeming rewards. For consumers, simplifying the user experience also means making payment easier. A further 46 percent of research respondents also said they would like an option to redeem items by using a combination of points and cash.
Consumers have grown accustomed to e-commerce sites with easy navigation and streamlined transaction options, so loyalty programs need to make sure they’re keeping pace with customers’ expectations when shopping online. Leading online retailers such as Zappos, Amazon and eBay define the benchmarks that we all now take for granted and consequently, your redemption store must maintain, and if possible, surpass these high standards.
Further, intelligent data analysis can provide customer engagement professionals with the insight needed to deliver customers personalized offers, rewards and promotions that are timely, relevant, and easy to access, creating a more seamless experience that leaves the customer feeling truly rewarded.
Consider your global audience
Prior Collinson Group research highlighted that only 37% of financial loyalty program members believe they are offered rewards that reflect their lifestyle and interests. It is important to remember the changing preferences of your audiences from different geographical regions. While those from the Middle East favor electronics such as TVs and headphones, and travel related goods like luggage, Americans list airport lounge access, concierge services and unique social and cultural experiences as their top preferences. To better meet the need for a personalized and diversified rewards program worldwide, seek to work with partners who have robust ecosystems that enable access to a vast array of global merchants and reward partners.
In an age of increasing industry disruption, the competition for customers isn’t going to get any easier, particularly with talk last month of the US banking market being opened up to Chinese firms. Customers now have greater access to information than ever before and are always looking for the best value for money. As we all know, it’s more cost-effective to keep existing customers happy than acquire new ones. As reward and recognition becomes increasingly important for customer retention and revenue growth, banks must ensure that they are evolving their loyalty program redemption offering in-line with consumer demand.
To learn more about the Value of Redemption 2 report, download it here.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Banking.com or NCR Corporation.