Kadence Research... Suggests the time has come to refine what is

Loyalty isn’t E
bought with
benefits;
it’s earned
through
quality
arlier this year author Alena
Dillon wrote a piece in the
Huffington Post in which she
jokingly described the suffering she
felt upon losing her gold card status
at Starbucks. When her gold card
work colleagues celebrated a text
message from Starbucks offering
them a discount on a new menu
item, she went along with them,
too embarrassed to reveal she no
longer bought enough venti-halfcaf-double-frapps; crest-fallen to
not be considered “one of them”.
Around the same time, in the UK
Guardian, Daisy Buchanan wrote
an article detailing her obsession
with booking holiday flights based
solely on how many air miles she
could earn and how far they could
get her on her next holiday.
Kadence research suggests
the time has come to
refine what is expected
of benefits programmes.
“loyalty
programmes
continue to grow
in influence,
tapping into
consumers’ innate
entrepreneurial
spirit.”
And back in 2012 in a commentary
in the Singapore Business Review
a contributor noted that benefit
programmes in Singapore had
become so driven by discounts and
rebates that Singaporeans were
becoming highly adept at getting
discounts on their discounts.
These three entertaining pieces of
journalism (links at the end) serve to
highlight that loyalty programmes
continue to grow in influence,
tapping into consumers’ innate
entrepreneurial spirit.
The modern template for these
programmes was formed in the
1980s when the United States
deregulated its airline industry and
giant airlines, who had hitherto
experienced little or no competition
on their routes, panicked at the
fear of losing their previously loyal
customers. American Airlines moved
first, launching the eponymous,
frequent flyer programme. Everyone
else fell into the slipstream.
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However, some of the earliest known
formal loyalty programmes go back
to the 1800s when companies
selling flour and oats would put a
stamp on their boxes which could be
accumulated and posted back to the
company to receive a complementary
bowl or pot. An enduring practice,
currently being used by Cold Storage
and Fair Price and their stamps
for cook-wear programmes.
Our research also informed us that
6 in 10 Singaporeans have taken
their business from one company to
another – purely to take advantage
of a benefits programme. So, if you
don’t have a programme in place,
maybe you should, no matter how
simple, simply in order to compete.
Of course we can’t discuss benefits
programmes in Singapore without
talking about credit cards. For
years the tag line, “a card for every
occasion”, has been the hook of the
greeting card industry, but it is safe
to say it can now be applied to how
Singaporeans view credit cards.
We have established that these
programmes are integral to business
acquisition, but what about their
role in generating loyalty within
existing customers? Here, the
academic community is not fully
aligned on the long-term retention
benefits of such programmes. The
only area of agreement in academic
circles is that tier or thresholdbased programmes such as, ‘buy
ten coffees get one free’ or ‘travel
50,000 miles a year to maintain
elite status’ are proven to deliver an
increase in purchase frequency.
Depending on what study you look
at, your average Singaporean has
between 7 and 10 different credit
cards. We enjoy the various privileges
of a dining card, travel card, shopping
card, grocery card, petrol card,
everyday card, buying red shoes on a
rainy Tuesday card and on and on...
There is a salad restaurant in Raffles
Place where I become a regular
fixture when I approach my 7th or 8th
stamp, and I am sure their owners
would agree with the academics!
It is difficult to know for sure if
this is what Singaporeans have
always prioritised or if the rebates
phenomenon has spread from
the credit card sector to all others.
However, a very clear conclusion
that we can draw is that benefits
programmes are now an acquisition
tool with little thought to retention.
“6 in 10 Singaporeans have taken
their business from one company to
another – purely to take advantage of
a benefits programme.”
Today we have reached the point
where it is difficult to think of a
major consumer category where
there isn’t some sort of benefits
programme available. The Kadence
team recently carried out proprietary
research looking at benefit
programmes in Singapore - possibly
the most saturated and competitive
consumer market in the world.
We learned that in each of the
mobile service provider, auto,
insurance, airline, bank, credit card
and café sectors more than 50% of
Singaporeans state that it is important
that a company offer some sort of
benefit programme in order to even
be considered for their business. And
for a whopping 91% of
Singaporeans some attention is
paid to benefit programmes when
selecting product or service providers.
The average Singaporean
has between
7-10
Our research revealed that for
Singaporeans, across all consumer
sectors, the feature they most desire
in a benefit programme is rebates,
and by an overwhelming extent - 77%
of us in fact are seeking rebates.
91%
91% of Singaporeans
pay attention to
benefit programmes
when selecting
product or service
providers.
different credit cards.
77%
Say rebates are the
most important part of
a benefit programme.
6 in 10 Singaporeans
have taken their
business from
one company to
another - purely to
take advantage of a
benefits programme.
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Best practice in customer retention
remains unchanged; you must deliver
good value, quality and service
– time and time and time again.
Brands are moving into dangerous
territory if they become fixated on
acquisition to the detriment of the
obvious, (and surely easier?) job of
keeping existing customers happy
– and not just happy, but happy
enough to become your advocates.
“Best practice in customer retention
remains unchanged; you must deliver
good value, quality and service – time
and time and time again.”
A few years ago a business book
called Raving Fans (Blanchard &
Bowles) made a simple but important
point; satisfied customers aren’t good
enough, you need your customers to
be raving fans in order to make money.
Our recent research drove this point
home powerfully – and highlighted
that it’s simply not correct to
assume that all Singaporeans are
habitually promiscuous. We asked
Singaporeans, “If you were very
impressed by the quality and value
of a brand’s/company’s product
or service what would you do?”.
One in five said they would use
social media to “sing their praises”
and more than half said they would
positively mention the company to
family, friends and co-workers.
12%
only
1 in 5 Singaporeans said
they would use social media
to “sing the praises” of a
company that pleased them.
of respondents felt that they
end up paying for the perks they
receive in some form or another.
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Our research also showed that
Singaporeans are not at all cynical
about rebates and rewards, only 12%
of respondents in our survey felt that
in some form or another they end
up paying for the perks they receive.
However it is possible to imagine a
day in the not too distant future where
every purchase we make comes with
a discount and it is at this point where
consumers will start to question where
the true value in their purchases rests.
True emotional loyalty and
advocacy can be achieved
amongst Singaporean consumers
– it means brands reprioritising
their efforts on committed, longterm relationships, rather than
passionate but shallow dalliances.
said they would positively
mention a complany that
pleased them to
family, friends
and co-workers.
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http://www.huffingtonpost.com/alena-dillon/on-losing-my-starbucks-go_b_4549124.html
http://www.theguardian.com/commentisfree/2015/jan/29/airmiles-ba-points-loyalty-firstbusiness-economy-class
http://sbr.com.sg/financial-services/commentary/there-any-loyalty-in-singapore
To discuss this research or any of your research needs contact Todd, Greg or Phil at 6372 8710.
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