Why Loyalty Schemes Can Be An Utter Waste Of Money

Why Loyalty Schemes Can Be An Utter Waste Of Money
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The market is inundated with brands pushing out loyalty programs, however people are jaded towards them, says Greg McAweeney, group executive of marketing at digital banking company, RaboDirect.

“A lot of loyalty schemes can be an absolutely monumental waste of money, because often you end up giving away heaps to clients who are probably already loyal and you probably didn’t have to pay them that in the first place,” he says.

“And also because there are so many out there people get very jaded about them.”

Recent research from consulting company Capgemini Consulting says many loyalty programs haven’t adapted to the digital age.

The research showed most loyalty schemes are a transactional offering where the rewards (like points) are based on purchases.

For RaboDirect, points-based schemes don’t work. Instead, McAweeney prefers to use surprise-and-delight. However, he sees it as the “icing on the cake” rather than a loyalty scheme per se.

“It’s part of our overarching customer relationship management strategy for us,” he says. “A loyalty scheme can be one part of that, but surprise-and-delight for us is the icing on the cake.”

The banking brand’s recent sponsorship of the Apia International Sydney Tennis 2015 saw it bring the surprise-and-delight mentality to Sydney.

Having been a firm sponsor of rugby team Melbourne Rebels down in Victoria, Sydneysiders were missing out.

Calling up customers and inviting them to games is one way the digital brand interacts on a more personal level, says McAweeney, which they were able to do in Sydney with the sponsorship

While you’re not usually clicking onto online banking when you’re in the sweaty throes of match point, McAweeney says the tennis provided a great way to spread the brand awareness.

“You’re going to the tennis to watch tennis,” he adds though. “You’re not going there to open a savings account.”

However McAweeney says it did help drive traffic to the website.

“One of the things we look for in the various sponsorships that we do is to have some sort of experiential element to it for our clients, and obviously have some good media value for ourselves,” he says.

“When the Sydney tennis opened it gave us a chance to reach out to our NSW-based customers.”

“The places we were able to get, just from a media value, represented really good value for us. It was quite useful from an ROI perspective on that.”

However McAweeney says they weren’t sure what to expect in terms of sponsorship results.

“We knew from what we’d paid for it that it would deliver some good media value. I think the fact that it has brought coverage on the secondary channel on Channel 7 [7Mate] really helped.”

Looking at the overall package as a “bang for buck” kind of thing, the most successful part of the sponsorship was the rotating and back-of-court signage.

“I think we had numbers of one and a half million domestic impressions. It was 10 million internationally, which is less important to us, as even though RaboBank is a global bank, for the RaboDirect business we were more concerned with what we could leverage in the domestic market place,” he says.

“It was a healthy return for what we paid for, we were pretty pleased with that.”

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