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.
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.