Rewards Programmes are Evolving, and We’re Not Complaining

Now, this was a marriage we didn’t see coming. On 12 July 2023, NTUC FairPrice and ComfortDelGro (CDG) signed a Memorandum of Understanding (MOU) to collaborate on their respective rewards programmes, in hopes of providing customers with “greater value and savings”.

The partnership allows Fairprice’s NTUC Link Points and CDG’s ZigPoints users to integrate their spending across apps to enjoy joint-tiered benefits offered by both parties. In addition, those who successfully unlock both tiered-up benefits will enjoy additional special rewards such as bonus points, exclusive vouchers and deals offered jointly by FPG and CDG Zig.

It’s a first-of-its-kind collaboration between the retail and transport industry. But honestly, why didn’t anyone think of this sooner? In a world where rewards programmes have us jumping through hoops to get a meagre discount, this collaboration seems to be a no-brainer. (Not me offering to use my Starbucks membership to order coffee for office events so that I accumulate stars in exchange for a free drink.)

This got me thinking: What other trends can we expect to arise in the rewards and loyalty programmes scene, especially in this competitive landscape?

 

1. Strategic partnerships that make sense

CDG and FairPrice may be the first in their industries to partner with each other but they most likely will not be the last.

We believe that strategic partnerships between companies to offer customers unique rewards and the chance to earn points, in a way that makes sense and is convenient for them, will continue to grow.

They not only give an existing reward programme a different spin on things but also gives customers access to other products and services through deals.

Think about how Grab has partnered with various merchants across F&B, transport and even accommodation providers to offer deals. Such partnerships are great for consumers who appreciate variety and want to maximise the deals and rewards they get across multiple brands.

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ALSO READ: Best Hotel Rewards and Loyalty Programmes That Work Around the World 2023

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2. Data-driven personalisation

Customers all want personalised experiences and amidst all this flurry of news about data privacy, our data is unfortunately what’s needed.

In the age of data, personalisation has become a key driver of loyalty programmes. Brands are leveraging customer data to offer tailored rewards and experiences that make customers feel valued and understood.

According to a McKinsey report, “Personalisation is especially effective at driving repeat engagement and loyalty over time”. It’s so convenient when brands know what we like so that we get what we want immediately, and we keep coming back.

Brands can derive customers’ preferences to deliver recommendations and targeted offers to attract customers. From their perspective, personalisation not only enhances the customer’s shopping experience but also increases the likelihood of repeat purchases and brand loyalty.

However, with personal privacy at stake amidst a landscape of scams happening, brands must navigate the fine line between personalisation and privacy.

 

3. Gamification for continued engagement

Going beyond just mere transactions, gamification of loyalty rewards programmes can add some fun, competition and challenge for customers who want more engaging experiences.

By incorporating game-like features such as point-based systems, leaderboards, and achievements, brands can drive customer participation, loyalty, and brand advocacy. I’ve unwisely wasted time on Shopee games just in the hope of collecting some small rewards, and I know that I’m not the only one.

Reports have also shown that gamification can increase customer engagement by up to 47%, as well as improve brand awareness and enhance brand loyalty.

Numerous beauty brands from YSL to Sephora have used gamification where users can play different games and complete quests to receive some type of reward.

However, implementing effective gamification is not easy. Companies need to make sure that all elements are well thought out and lead to rewards or outcomes that customers would like to ensure they keep coming back.

 

4. Paid membership programmes

While we all want some freebies or deals, paid membership programmes offer something extra that customers are willing to pay for. Paid membership programmes have gained traction as customers seek more exclusive benefits and personalised experiences. Brands are offering enhanced rewards and premium perks to customers who are willing to invest in a higher level of loyalty.

A simple one is Amazon Prime. The cheap $2.99 monthly subscription gives members accelerated delivery of just 2 hours for items on the Prime Now app, free 1-day delivery on eligible items and free shipping for eligible US items with minimum spend, and access to Amazon Prime Video.

 

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A post shared by Accor Plus (@accorplus)

Another is from hotel group Accor. Its Accor Plus membership fee starts from $308/year and gives you access to exclusive events and experiences at its hotels all over the world, up to 50% off dining and hotel stays and extra discounts during sales.

While these involve some amount of payment, people are willing to pay for it. A McKinsey survey found that members of paid loyalty programmes are 60% more likely to spend more on the brand after subscribing. As consumers seek more premium benefits and experiences, we can expect to see paid membership programmes to further grow as brands compete for customer loyalty.

However, the challenge lies in striking the right balance between the membership fee and the perceived value of the benefits. Brands must ensure that customers find the programme worth the investment and consistently deliver on their promises to avoid losing their customers.

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ALSO READ: 7 Best Rewards Credit Cards in Singapore (2023): Citibank, OCBC, DBS, and More

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5. Experience-based rewards

Experience-based rewards go beyond traditional discounts and coupons, offering customers memorable and unique experiences.

Brands benefit from creating positive brand associations, fostering long-term loyalty, and differentiating themselves from the competition.

Sephora is yet again another winner in this regard. Its Beauty Insider programme offers members a variety of experience-based rewards, including free makeovers, exclusive product previews, and access to members-only events.

 

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A post shared by The North Face (@thenorthface)

Another example is The North Face XPLR Pass, which unfortunately isn’t in Singapore. It offers members access to exclusive experiences, such as guided hikes, outdoor workshops, and gear rentals. Members also earn points for every dollar they spend on the brand’s products and services, which can be redeemed for more experiences or gear.

However, while these may be all fun and games, creating such experiences may involve higher costs and may just be a one-time experience which may not do much for brand equity. Then there’s also the challenge of ensuring that the rewards align with customers’ preferences and expectations.

Such rewards programmes have certainly changed the way brands engage with customers. We can expect to see more of these trends as brands compete to gain customer loyalty amidst a crowded landscape and tightened customer purse strings due to inflation. With consumer preferences ever-evolving, brands will have to get more creative and innovative to retain their loyalty.

 

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