Adding value to win loyalty

A fleet of airline taxis, a bargain loyalty card which doubles as a make-up mirror and the first social credit card are just three examples of new ways of doing business, as Annich McIntosh discovers


airBALTIC

Low cost airlines have realised that significant revenue and goodwill can be gained from selling things other than the seat or providing additional services that make a difference to the customer.

While these carriers admit that nothing but price and schedule are going to affect which airline an economy passenger chooses, in situations where there is a choice of carrier to a particular destination, and the price is similar, then the extras, including a loyalty scheme, are beginning to act as differentiators.

Ryanair started the trend to charge travellers for extras, including baggage. Chief executive Michael O’Leary argued that he wasn’t out to get more money from travellers; he simply wanted to change their behaviour.

Other airlines are taking a more user-friendly approach. Fast growing low cost airline airBaltic recognised the need to provide an alternative to high-charging cowboy taxis for reaching Latvia’s capital Riga from the airport. They launched a fleet of airBaltic green branded vehicles which offered a set price for the journey. It solved the travel problem for passengers and has proved a very powerful marketing tool, according to Janis Vanags, airBaltic’s vice president, corporate communications.

The airline went one step further and is now operating a fleet of bikes for tourists to ride around the city. “Every one of them is promoting the airline,” says Mr Vanags. “It is a powerful message – and the bikes are much appreciated by our customers.”

With EasyJet joining the Nectar loyalty scheme, only one out of the top ten low cost carriers is now without a loyalty reward programme.

Superdrug

On reflection, a loyalty card can be so much more… It seems a ridiculous question now, but why on Earth didn’t anyone think of putting a mirror on a loyalty card before?

Superdrug launched its first ever loyalty card in May last year with this essential feature and now has over five million users. The Superdrug Beautycard enables cardholders to earn points and discounts both in Superdrug stores and on its website.

Using customer analytics to find out exactly what customers wanted, Superdrug offers the ability to part-pay for products with their points (not possible at its rival Boots, where you have to have enough points to pay for the whole item).

In addition, the Beautycard holder can choose favourite brands on which to collect extra points during promotions. It offers one point for every pound spent. Points at Boots on the other hand are more generous, offering two points for every pound spent. The value of the points is the same.

To celebrate the first anniversary of its card, Superdrug is offering special promotions in May. Dan Jarvis, Superdrug director of e-commerce and customer relationship management (CRM) comments: “The Beautycard has quickly become a fixture for our customers and, in less than a year, millions of customers use their card to collect or spend points every day.” As part of A.S. Watson, the world’s biggest health and beauty group, Superdrug were able to utilise worldwide expertise for a successful launch.

Barclaycard

Barclaycard US, the payments business of Barclays in North America, is trialling a credit card where cardholders influence what rewards are on offer.

Barclaycard Ring MasterCard claims to be the first social credit card designed and built through the power of community crowdsourcing.

The company says the card will offer a low interest rate (8 per cent), low fees, simple terms, and the opportunity for card members to shape and share in the product’s financial success.

“We want to change the way people think about credit cards and their credit card company by putting the power back in the hands of customers,” says Paul Wilmore, managing director, Consumer Markets, Barclaycard US. “Barclaycard Ring will give card members a voice to help decide how the card can best work for them along with the unique opportunity to benefit from its collective performance.”

“Let’s be candid”, says Barclaycard as it offers to pull back the curtain on its profit-and-loss balance sheet. An online framework will provide card members with the ability to influence decisions that impact how the card is managed and serviced, and its Giveback programme will enable the community to share in the profit generated from its collective decisions.

Questions still to be answered are whether cardholders will be responsible enough to play by the rules and whether a card run by cardholders can actually make a profit? Mr Wilmore says he was inspired by the sense of community shared among credit union members, as well as the way social media is helping people learn from each other.

Using social media, it is hoped the community will provide a forum where cardholders can exchange ideas, share knowledge and provide direct feedback to Barclaycard US to help determine future features of the product. If the card is successful, it could be rolled out in the UK.