Loyalty programs have emerged as one of the key marketing tools in the global retail banking industry. While retail banks have been offering loyalty programs for many years in developed economies, many such programs have become commodities to consumers. This has compelled banks to introduce new programs in order to remain both competitive and profitable. A key, low-cost platform for these programs is social media.
Loyalty programs can use social media to understand and track consumer habits and preferences, and build an understanding of lifestyles, purchasing behaviour, aspirations and levels of service satisfaction. This then enables the banks to design customised loyalty program offerings for each targeted customer segment.
Traditionally, banks and other card issuers have offered reward programs based on a customers’ income level and demographic profile. Banks are now segmenting customers based on their lifestyle choices and purchasing behaviour. Banks are targeting younger consumers, aged 18?25 years in particular, by offering reward points which can be redeemed for items in social media games.
This is a shift away from the previous strategies for attracting young users which centred on entertainment, travel and music. Social media is now the primary channel for this segment.
Advanced analytical tools are also enabling banks to provide location-based, real-time discounts in collaboration with merchants. The successful implementation of analytic-based reward programs has become a key differentiating factor for banks.
The Timetric report; ‘Retail Bank Loyalty Programs’ was published on the 28th June 2013.
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