Loyalty and payments: a perfect synergy

Loyalty and payments: a perfect synergy

Loyalty strategies have changed dramatically in recent years. With digitization, the available offers, to which the user has scope, are many and varied.

The programs and strategies to create loyalty are totally different from what the user had access to 10 or more years ago. Of course, as in everything, there are some proposals that were left without evolving.

Among the most important evolutions, there is the combination of loyalty with payments. It is important to mention that the foregoing does not refer to the scheme that has been in operation for many years and that is related to credit cards, that is, to the loyalty plans that bank cards, mostly credit, offer for spending made with that means of payment.

This model is the classic one that, for each certain amount of payment with the card, the user obtains points, miles or cashback.

What this evolution refers to is that today the most successful loyalty strategies are those that are immersed in or lead the creation of ecosystems, which offer broader alternatives to users on how to earn benefits and how to use those benefits without restrictions and with flexibility. . The main ecosystems converge their loyalty platforms with payments: Klarna and Revolut are cases to mention a few.

For example, Revolut combines everything in its app, from payments, sending money, investing, converting to crypto, travel, and a rewards program that allows the user to save on certain purchases they want. The proposal is wide and offers a great experience.

Likewise, it offers a credit card loaded into an Apple or Google Pay digital wallet without having to wait for a plastic and offers 1 percent cashback. The Revolut ecosystem is connected from the registration to the use of the benefits and connects the payment method to complement the offer.

In ecosystems like the one above, loyalty is generated when the user receives a series of personal benefits with an excellent user experience and receives value in return.

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There are other schemes that are also disrupting the conventional way in which loyalty was typically generated. The digitization of the experience brings everything closer to being connected: apps with digitized means of payment help loyalty proposals offer a better experience.

An example of this is the Starbucks loyalty program, which allows you to have in the app the means of payment with which you can recharge to pay in coffee shops. By doing this, the user can gain very simple benefits but that allow the customer to feel special and recognized. A large part of Starbucks sales go through the app, the average user ticket is higher and the abandonment rate is lower.

Another reason why payment methods have a very powerful synergy with loyalty strategies is because they cover the entire customer experience journey. Affiliate programs that offer benefits such as discounts, coupons and cashback for purchases that are deposited directly into the user’s bank account. An example of the latter can be the Brazilian platform Meliuz.

When the technology can link the means of payment with the loyalty strategy, the need for the user to present two identifiers (means of payment and loyalty) is completely eliminated. This also has the benefit that all the transactions made by that user will be identified, both the financial transaction as well as the detail of what that user buys at the product level. This enables deeper analytics.

Finally, there are other benefits inherent to this technological coexistence between loyalty and payments, such as an increase in the average ticket, an increase in the frequency and value of the customer over time, and greater customer satisfaction with the brand (NPS).