Is Loy­alty Just a Points Game?

No mat­ter how at­trac­tive the loy­alty pro­gram, con­sumers will lose in­ter­est if they feel they can’t quickly and eas­ily re­deem their points.

ISO & Agent - - INSIDE 07/08.2017 - BY JOHN ADAMS

Loy­alty pro­grams are only ef­fec­tive if they can keep con­sumers com­ing back into stores. Thus, there is a new fo­cus on mak­ing re­demp­tion easier and faster.

Loy­alty pro­grams are get­ting more so­phis­ti­cated, but they still typ­i­cally boil down to a game of col­lect­ing and re­deem­ing points. This setup doesn’t help the is­suer or the mer­chant, par­tic­u­larly when con­sumers feel com­pelled to hoard points for one big splurge rather than make more trips re­tailer, ac­cord­ing to tech­nol­ogy in­vestor Spencer Hoffman, a part­ner at Lovell Min­nick Part­ners.

Lovell Min­nick’s port­fo­lio in­cludes En­gage Peo­ple, a com­pany that en­ables re­demp­tion for loy­alty pro­grams on most e-com­merce sites. It com­bines this with data an­a­lyt­ics to add per­son­al­ized mar­ket­ing to the loy­alty.

While its roots are mostly in air­line miles and e-com­merce, En­gage has started work on an off­line ver­sion of its pro­gram for phys­i­cal stores. It’s us­ing Lovell Min­nick’s in­vest­ment to ex­pand its loy­alty pro­gram both func­tion­ally and ge­o­graph­i­cally.

En­gage plans to launch the new loy­alty tech­nol­ogy in 2018, en­abling the e-com­merce re­demp­tion ex­pe­ri­ence to work at re­tail­ers.

The con­cept of is the same as the e-com­merce ver­sion, ac­cord­ing to Jonathan Sil­ver, CEO of En­gage, ad­ding con­sumers will be able to re­deem points at a wide range of re­tail­ers seam­lessly with­out an in­te­gra­tion with the re­tailer’s point of sale sys­tem, deep­en­ing the re­la­tion­ship with the is­suer. “It broad­ens the abil­ity to use loy­alty to man­age a day to day life­style rather than sav­ing up over a long pe­riod for a trip,” Sil­ver said.

En­gage’s ini­tia­tive is a sim­i­lar model to Sionic Mo­bile, in which loy­alty points can act as a form of vir­tual cur­rency.

The strat­egy is to lure com­pa­nies that of­fer loy­alty and in­cen­tive pro­grams, such as fi­nan­cial in­sti­tu­tions and air­lines, by of­fer­ing a pro­gram that’s more likely to lead to re­turn busi­ness.

“Con­sumers, es­pe­cially mil­len­ni­als, ex­pect a dif­fer­ent en­gage­ment model with brands,” Hoffman said. “En­gage is play­ing into the mil­len­nial mind­set of the ‘on de­mand’ cul­ture. They want to use the points now on some­thing they want, not look­ing at a gen­eral cat­a­logue of older stuff...we’re not aban­don­ing points”

“Con­sumers, es­pe­cially mil­len­ni­als, ex­pect a dif­fer­ent en­gage­ment model with brands,” said Spencer Hoffman, a part­ner at Lovell Min­nick Part­ner­slovell Min­nick.

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