Loyalty Programs Are a Hygiene Factor

Loyalty programs have proven to be a cornerstone of the digital transformation that followed the Covid-19 pandemic. Retailers saw loyalty programs as a way to differentiate themselves, while eCommerce companies used rewards and incentives to keep nomadic customers. But how did companies in the Asia-Pacific region evaluate the state of their loyalty programs? In short: they had mixed feelings.

According to survey responses collected by Antavo, in the APAC region:

Overall, the answers provided by respondents from Asia-Pacific indicate a higher level of development in loyalty programs, but these program owners are less satisfied. This may suggest that ambitions and standards are very high in the region. Despite being less satisfied, the desire to revamp the program is still below the global score, though two-thirds of loyalty program owners are still planning to update their programs.

One of the reasons behind Asia-Pacific’s disposition is its consumers, who are very keen to embrace loyalty programs. For instance, in Southeast Asia, about 92% of customers are more enticed to shop where a loyalty program is part of the deal, according to a survey by Mordor Intelligence.

However, the same research indicates that lack of awareness is a serious challenge when it comes to reaching mass adoption. Facing a sea of offers from a plethora of brands, customers have a harder time identifying the loyalty programs that cater to their needs the most.

Struggling with awareness could be a potential reason why fewer Asia-Pacific brands are explicitly satisfied with their program’s performance.

Simultaneously, challenge breeds innovation. APAC companies may seek to stand out by focusing more on engaging program elements, such as emotional rewards. This potential is backed up by the fact that significantly more businesses in the region classify their loyalty program as emotional, compared to the global average.

Heavy Investment in Customer Loyalty and Less Attention on ROI

The Asia-Pacific loyalty management market is considered to be highly competitive, as it is populated by a large number of businesses, both large and small. The concentrated nature of the market pushes players to adopt strategies like product innovation, partnerships, and mergers & acquisitions to stay ahead of the competition. In regards to loyalty programs, Antavo’s APAC Customer Loyalty Report 2022 survey identified the following insights among Asia-Pacific companies.

These findings further underline the statement that loyalty programs play an important role in APAC companies’ business strategies. Organizations in APAC have not only made significant development efforts on them in the past years, but they also intend to keep investing in customer loyalty and program management in the coming years.

One particularly noteworthy finding is that fewer APAC companies are measuring their loyalty program’s return on investment (ROI). This may be an indication that, due to the crowded nature of the market, loyalty programs are viewed as a hygiene factor, a must-have item on the marketing strategy checklist.

The lack of tracked ROI also contributes to the neutral satisfaction with the programs.

Without clear, insightful reports on the program’s performance, it is difficult to judge its success, which could be the reason why so many APAC respondents feel “neutral” satisfaction toward their programs.

Another possible explanation is that many of the loyalty programs in Asia-Pacific are meant to build emotional loyalty, and the success of this initiative is harder to track.

This conclusion is backed up by another region-specific characteristic: 30.3% of respondents offering a loyalty program classified their program as more emotional than rational. Emotional loyalty focuses on long-term engagement and community building, which cannot be quantified as easily as ROI.

Personalization in Progress

Digitizing is crucial to engaging with consumers and adding value to their loyalty experience. There is much more that can be done in terms of curating experiences for each individual customer and maintaining regular two-way communication. But even though Asia-Pacific is undergoing digitization at a rapid rate, how companies in the region are prioritizing personalization and relevant communication deserves a closer look.

The survey responses paint an interesting picture of personalization in Asia-Pacific. The region falls behind the global trend when it comes to loyalty programs that are currently offering some form of personalized offers or rewards. Upon closer inspection, this low number doesn’t stem from the averseness of existing program owners, but rather the tech-readiness of the region.

The fact that personalization was ranked behind the need to implement or upgrade a marketing technology is quite telling: the success of personalization hinges on a number of factors, all of which require a serious investment in marketing technology.

In other words, APAC companies are most likely in a stage where they are laying down the tech foundations for their future personalization concept.

This is further underlined by the responses concerning future plans: 57.6% of APAC brands said that they wish to introduce personalized rewards and offers in the future. In this sense, Asia-Pacific brands rank above other markets in the industry.

When asked about what features they are planing to add to their existing loyalty program, APAC respondents ranked gamification in first position, followed by rewarding customers outside of the buying cycle and offering personalized rewards and offers.

This means that despite a desire for personalized loyalty program offerings, it still ranks below gamification and non-transactional engagement.

In conclusion, it can be stated with relative certainty that despite seeing the value of personalization, brands in Asia-Pacific are either in the process of establishing the technical foundations for it, or have prioritized other features, like gamification.

Still, a few years down the line, a major shift is expected for the region.

Technology Is the #1 Loyalty Investment

Strategy isn’t the only area worth investing in to improve the capabilities of a loyalty program. And in this new customer reality where buyers are keener than ever to try new brands, a significant foothold can be gained by being an early adopter of emerging technologies, such as augmented reality, AI-driven churn prediction, or blockchain. Loyalty programs have the potential to create new experiences by utilizing the right solutions, but they also have a day-to-day management side that needs to be taken into account when discussing loyalty technologies. Respondents shared the following opinions.

For Asian-Pacific businesses, having the most up-to-date, most reliable, and most user-friendly technology has a major significance, and companies in the region are far more tech-focused than others.

This commitment is demonstrated by the fact that almost one-third of respondents stated that marketing technology implementation or upgrade was their most important investment for the coming years. As such, it ended up being the highest-voted loyalty program investment.

Furthermore, APAC companies made it evident that they want to have the best technology out there. Their desire to equip their marketing team with the right tools — including no-code capabilities to make daily management more efficient — seems to correlate with a previous finding, where upgrading marketing technology ranked as the most important investment, with 30.3% of respondents planning to invest in it.

Collecting and Using Data Is Both a Challenge and Opportunity

In order to further evaluate the past, present and future of loyalty programs in Asia-Pacific, respondents were asked to share their thoughts about what loyalty program trends will become the most influential in the next three years and about the most pressing challenges they currently face.

Respondents were asked to select what they believe was the most important loyalty trends over the next three years. Then their answers were ranked.

This ranking further strengthens the idea that, for APAC companies, the ability to collect and use data takes precedence over personalization.

Once the data is gathered, it can be used to fuel personalization, which is why it ranked only as the second most influential trend. One possible reason why seamless omnichannel loyalty experiences received fewer votes is that accomplishing comes with a lot of challenges, therefore it may have less of an impact than smart data use or personalization.

For current program owners in APAC, offering a seamless omnichannel loyalty experience and experiential rewards are high-priority challenges, most likely because they are seen as a potent trend in the near future.

Furthermore, marking the integration of loyalty marketing into the company’s strategy and measuring its performance is also likely to correlate: companies that aren’t properly tracking their program’s ROI are likely to find it challenging to integrate the program into their overall marketing strategy.

Among companies planning to launch a loyalty program in the next three years, the need to collect and use customer data ranks higher compared to both the global trend, and the trend among existing program owners in the region.

One possible reason for this is that many companies that are planning to launch a loyalty program are upstart businesses wishing to gain a foothold on the market. However, their relative freshness makes it more difficult to accurately segment their developing customer base, as they lack sufficient data.