What consumers expect from their loyalty programmes is evolving. To improve the experience in line with these expectations, financial service organisations must obtain a better understanding of their customers’ behaviours and motivations. Traditional banking loyalty programmes tend to segment individuals by income, spend, or the products they buy. Instead they should focus on what motivates and inspires their customers, and deliver value in line with these needs.

A common point of consumer dissatisfaction of loyalty programmes in general is that it is often hard to earn enough points to access the best returns. There is also a feeling that redemption processes are too complex and do not offer a wide enough range of rewards to appeal to distinct customers. 

Giving customers greater flexibility in how they earn and access rewards will enhance the experience and differentiate the programme. For example enabling consumers to earn more for spending on day to day purchases, or enabling redemption with cash, points or a combination of both, and offering mobile wallet style services, enhances the interaction. Most financial service organisations do not have the technology to offer this degree of flexibility, but rethinking systems to offer this approach can greatly improve engagement and loyalty.

A loyalty programme has no value unless it genuinely benefits the customer, and that customer value is typically created at the point of redemption—the so-called ‘Golden Moment’. Providing relevant, appealing and attainable rewards prompts earlier redemption. The sooner a customer redeems, the more value they see in a programme, and these customers are twice as valuable as those who do not. Managing redemption proactively is key to customer value and driving an engaged relationship.

Here are three tips to think about if you are interested in driving loyal customer behaviour:

• Understand what makes customers tick: this is as important as understanding your customers’ purchase history, and can provide the foundation for a stronger customer relationship. Understanding what sorts of benefits and discounts to offer, to whom, and when, depends on the ability to meaningfully analyse data from across product categories and channels. You might even want to consider developing a "self-service" programme, that allows customers to choose what rewards that want, such as Waitrose's Pick Your Own Offers.
• Focus on experience: money can’t buy experiences and access to exclusive events, destinations, restaurants, hotels and services is increasingly important for consumers. In return consumers are willing to talk about and share their great experiences, and can even act as brand advocates. These experiences also provide the emotional hook that any robust loyalty programme should offer, beyond the rational value exchange implicit in a loyalty programme.  
• Plan promotions and rewards around long-term customer goals, rather than short-term business ones: Consumers have different expectations in terms of when and how they receive promotions and rewards from brands. A large proportion of middle class consumers for example are focused on saving for the future and are unlikely to redeem points quickly, opting to save for the higher value rewards. This audience will be far more engaged if they feel companies are helping them achieve their longer-term goals.