According to the US Bond Loyalty Report^TM  published in partnership with Visa, the average consumer has 19 loyalty memberships – but they tend to be active in only 9 of them. In fact, the average person is holding on to £47 worth of points – a figure that equates to £6 billion-worth of unspent rewards in the UK and over $360 billion-worth languishing unused, worldwide.

These incredible figures indicate that something is sorely amiss in the loyalty world. If customers see so little value in loyalty programs that they sign up with (and with multiple competing brands) and then let their rewards sit unused, what does this imply about the value of loyalty in terms of engagement? And how can brands use these programs as a way to increase customer engagement, thereby making a meaningful impact on the business’s bottom line?

It seems clear that to truly increase customer engagement and spending, brands must increase the perceived value of their loyalty programs. To do this, one must first understand the Achilles’ heels of loyalty – the unwanted side effects that are preventing brand’s from maximizing their loyalty performance.

Same old, same old

The loyalty industry hasn’t really undergone too any dramatic change in recent decades. The basic premise remains as it has always been: customers are rewarded for their spending with a brand with some kind of loyalty-asset; those assets are redeemable within the brand’s own outlets, or in some cases, at a select group of participating merchant partners – and according to certain rules that may or may not relate to customer preferences.

The result of this lack of differentiation is that consumers may find themselves members of multiple loyalty programs in the same domain – say supermarkets. After all, they’ve nothing to lose and everything to gain: one week, Tesco might offer a double points promotion, so the customer does their big shop there; the next week, they see that Sainsbury’s has an offer on their favourite brand of coffee, so they shop there too. It’s a win for the customer, but less so for the brand.

Focusing on the benefits rather than the brand itself fosters opportunism, not loyalty.

Aligning benefits, choice, ease of access and loyalty is key, and this requires seamless, simple redemption payment solutions. By coupling loyalty with payments, CoinBridge is changing the paradigm of how loyalty is practised and perceived. Yes, the loyalty assets themselves are a reward for brand loyalty but if spending them is brand agnostic, it provides greater and more relevant choice. In this way, loyalty and opportunism are able to happily coexist, giving the brand a huge edge over traditional loyalty programs, with all their limitations.

Dazed & confused

Another challenge relates to how loyalty programs work. While it’s usually clear enough how assets are collected, understanding the system for spending them can leave customers feeling frustrated and disillusioned – the opposite of what the program is designed to achieve!

The value of a ‘point’ tends not to be intuitive – 1 point rarely equals £1 or 1p– and may even change, depending on the item for which it’s being exchanged. What’s more, seasonal offers, in which the value of points may be doubled or tripled “for a limited time only”, or tiers in which members get different points-to-cash exchange rates as they hit specific milestones, only add to the confusion. Frankly, it can be hard to keep up. Such complexities cause friction in the redemption process, making points seem more hassle than they’re worth, and giving customers the feeling that their loyalty isn’t valued after all.

The CoinBridge Loyalty-to-Payments solution simplifies redemption, by enabling customers to turn their hard-earned points into spendable money in a seamless way. Each point has a defined monetary value, set of-course by the brand, which stays the same at any outlet and redemption opportunity: this monetary value is clearly shown in the loyalty app alongside the reward balance and that is the amount the customer has available to spend, no further calculations required. Furthermore, they can spend it on whatever they like, in a simple ‘Tap & Go’ experience. Giving customers such clarity and simplicity, brands ensure there are no surprises at the checkout – just a natural, pleasant shopping experience that reflects well on the brand itself. 

Turning effort into tangible value

The third reason that customers fail to engage with their loyalty programs is that rewards accrual can be a Sisyphean tale, and thus the rewards they receive are perceived to have little impact on their day-to-day lives. With traditional collection-based programs, it can require a lot of effort on the part of the customer to accumulate a ‘usable’ amount of assets. Consider airmiles, as an example. After spending thousands of pounds on their credit card, the airmiles customers accumulated may only be enough to take a local economy class flight, with limited availability on relevant seats, meaning that tickets have to be bought months in advance. Then, tax has to be paid – sometimes costing as much as a low-cost ticket with another airline! The points value is too low to be meaningful, and the loyalty pay-off simply isn’t enough to be enticing.

Once again, Loyalty-to-Payments has the answer. By converting points directly to a monetary value, no amount is too small to be redeemed. This means that customers can enjoy the benefit of their available balance at any time and on anything they like, without having to wait to hit a given minimum. Even a low-value, ordinary purchase – say a bar of chocolate, or pint of milk – feels like a win when bought with points, increasing the feel-good factor along with the impact of the loyalty program. Another benefit for the business is that enabling customers to spend smaller sums increases engagement frequency (through the loyalty app), keeping the brand top of mind.

Use ’em or lose ’em

Many loyalty programs have expiration dates for rewards, which is typically one to three years after accrual. Limited redemption windows can create a sense of urgency that causes customers stress, at best, and leads to missed redemption opportunities at worst. Imagine seeing your balance of thousands of points suddenly disappear before you’ve managed to use them. This may even give the customer a feeling of being cheated, causing a sense of frustration and dissatisfaction with the brand – not exactly conducive to building loyalty and advocacy.

By allowing customers to redeem their rewards in any amount, at any shop, on any goods, Loyalty-to-Payments reduces the risk of reaching the expiration date – if there even is one – with a large balance. It’s so easy to use the assets that there’s no reason not to use them to the fullest, so there’s no chance of customers developing negative emotions toward the brand for losing their points.

Shifting the paradigm

There are several unwanted side-effects of how loyalty programs are currently practiced, which can potentially alienate customers, rather than fostering engagement, loyalty and spending. Introducing CoinBridge’s groundbreaking Loyalty-to-Payments solution is a key way to maximise the performance of loyalty programs, ensuring that they have a positive, meaningful impact on the customer experience, and with it, business results.

 

The Loyalty-to-Payments revolution has already begun! Visit coinbridge.com and see for yourself how this solution is changing customer perceptions of loyalty.

Consider these statistics from Marigold’s 2024 State of Loyalty Report for 2024: 88% of consumers say their favourite brand rewards them for their loyalty, 55% of consumers want brands to offer points/rewards programs, and 80% like to get product recommendations based on their previous purchases.

In the beauty industry, too, rewards programs have been a gamechanger, promoting faster business growth, for years. In a market flooded with different brands, instant accessibility facilitated by online shopping, not to mention the rise of the “beauty influencer” phenomenon, it has never been more difficult, or crucial, for beauty companies to embrace direct customer engagement, and thereby secure loyalty.

So, how can beauty brands optimize their loyalty programs? Let’s take a look at some of the pains that arise, and how CoinBridge’s Loyalty-to-Payments solution relieves them.

 

Facing up to the Challenges

The first challenge to loyalty in the beauty industry is purchase frequency and the desire to constantly stay in touch with customers.

Although consumers buy products like cosmetics and perfume regularly, they do so much less often than items, such as groceries or petrol, that tend to be bought much more frequently – weekly or even daily. This poses a big obstacle for beauty brands looking for the type of continuous engagement that ensures they stay ‘top of mind’ for customers. 

Another significant challenge facing the beauty industry – where purchase decisions are frequently influenced by recommendations, trends, fads, and social media campaigns – is the low inherent loyalty among consumers. Recent studies revealed that only about 30% of consumers stick with the same product long term, while 93% have recently purchased a product based on a beauty blogger’s recommendation. In this fiercely competitive market, beauty brands cannot depend solely on product quality and pricing to drive sales.

The third limitation on loyalty programs in this industry relates to the collection of data that can further be leveraged to personalize offers and promotions. Beauty brands typically have a narrower range of product types, which doesn’t reveal enough about their customers’ preferences and lifestyle to be useful for personalization and micro-targeting. Additionally, they lack insight into what other or complementary products customers are purchasing from competing brands. For a brand to create a full and detailed customer profile, which can then be used to improve the quality of engagement, it cannot rely solely on purchase data gathered at its own stores.

The fourth and last hurdle, for now, is that the beauty industry is highly competitive – a so-called ‘red ocean’. There are so many products out there, and so many brands, ingredients and marketing practices. Yet, when it comes to loyalty, everyone offers customers the same kinds of rewards: samples, early access to new products, experiences like community events and product masterclasses. Differentiation has become the name of the game for brands that want to catch a customer’s eye, and loyalty can be just the place to make sure you stand out.

 

Loyalty-to-Payments^TM: a Stunning Solution for Beauty Brands

Addressing these pain points, and breaking through the barriers of legacy loyalty, the CoinBridge Loyalty-to-Payments solution gives customers unmatched flexibility in redeeming their points and rewards, with a greater choice to spend them on their preferred goods or services, anywhere.

Using the brand’s existing app, any loyalty asset – whether points, coins, miles, or vouchers – is turned into money that can literally be spent in a convenient ‘Tap & Go’ payment experience at any shop.

This proposition turns on their head the issues of purchase frequency and low inherent loyalty: with unlimited opportunities to spend their rewards, customers engage with the brand far more often (through its loyalty app) than they ever would if points could be redeemed only for the brand’s own products. Basically, every time they buy a carton of milk, they think about the beauty brand!

Enabling loyalty members to spend their points anywhere also generates countless volumes of added-value data about individual customers’ lifestyles, likes routines and purchase behaviour. This more extensive picture can then be channelled into a deeper customer understanding and tailored offers that customers will genuinely appreciate, making them feel seen, recognized and better understood by the brand – a feeling that fosters greater brand loyalty. Data can also be leveraged in planning collaborations with other brands, optimizing loyalty programmes, and new business development opportunities.

The final clincher is the additional financial resource provided to households through the Loyalty-to-Payments solution. A 2023 IAG/Avios (UK) study found that 92% of consumers are turning to loyalty programs for everyday spending, to make their money stretch further. Consumers’ caution in their spending was also reflected in an unexpected 0.3% fall in EU retail sales in June 2024 compared to May, despite economists’ expectations of a continued rise in sales. In the context of such economic constraints, the ability to provide customers with an additional source of disposable income – by way of loyalty assets that can redeemed for any need, and at any store – makes this the holy grail of loyalty propositions.

 

A Shining Future

Bridging the gap between loyalty and payments, the CoinBridge solution gives beauty brands a smart, innovative avenue to reward customers for their loyalty. It also creates a tighter bond between customers and brands in an industry that struggles to foster long-term loyalty among its patrons. By facilitating positive and frequent engagement with the brand, generating invaluable customer data, and providing unlimited redemption opportunities, Loyalty-to-Payments is the golden ticket that can push a brand’s loyalty program to the top.

 

Join the Loyalty-to-Payments revolution, and experience for yourself how this solution can change the game for the beauty industry. Visit coinbridge.com – the first step in the journey that will take your business to the next level.

 

 

Loyalty programs are certainly worth the brand’s effort: with the cost of acquiring a new
customer estimated to be as much as five to seven times the cost of retaining an existing
one, it makes sense to invest in keeping customers happy and coming back for more! What’s
more, a study  by top US management consulting firm, Bain & Company found that a mere 5
percent increase in customer retention can result in a 75% increase in profitability. That’s an
incredible pay-off in anyone’s books.

 

Breaking the Velvet Rope: The Luxury’s Loyalty Dilemma

Even though 78% of affluent individuals consider member programs to be a vital aspect of their brand relationships (surpassing the average among consumers in general), this lucrative avenue for customer retention is often dismissed by luxury brands. This is particularly true of ‘earn & burn’ style programs, with luxury brands often prefer to use a more experiential approach when nurturing their relationships with these affluent customers.

Full Price, Full Pride: The Luxury Discount Tightrope

There are three key reasons why a luxury brand may choose not to participate in an ‘earn & burn’ a loyalty program.
First, there’s the risk of devaluing their own products value: if a customer is continually offered a loyalty discount, it may suggest that the goods are not worth the full RRP. From the customers’ point of view, too, there may be a perceived extension of the idea that “if you have to ask the price, you can’t afford it”; there’s a certain kudos in being able to afford to pay full price for a luxury item.

Fleeting Encounters: The Luxury Loyalty Frequency Conundrum

Secondly, luxury brands tend not to have high frequency purchase opportunities in the standard model of their customer relationship to make ‘earn & burn’ loyalty a relevant model. They are not in the business of daily-purchase type items, so points or rewards accumulation would only happen over a long period of time, and in the meantime the brand doesn’t get the benefit of ‘top of mind’ customer awareness. Furthermore, the lengthy accrual period may cause customers to perceive the rewards as unappealing or unworthy of their interest.

Exclusive Touchpoints: The Luxury Personalization Puzzle

The third reason relates to personalization. Bespoke experiences are the holy grail of the luxury industry, but luxury brands are short on customer data: the very narrow range of products they offer do not reveal much about customers’ day-to-day lives or broader preferences. Other methods are often employed to forge an enduring connection, for example asking customers to complete questionnaires, or offering experiential loyalty rewards, such as invitations to exclusive VIP events. Traditional ‘earn & burn’ style loyalty programs don’t provide sufficient additional data to support increased personalization, and certainly not at the risk of devaluing the brand’s products.

Bridging the Gap Between Luxury and Loyalty

However, there is now a way to make points- or rewards-based loyalty programs more
attractive and effective, especially for luxury brands. The CoinBridge Loyalty-to-Payments
solution enables customers to convert loyalty assets – points, rewards, miles, vouchers, etc. –
into actual money to be spent on anything, at any store, anywhere in the world. Basically, turning loyalty assets into a seamless payment method. This, in turn, drives higher purchasing frequency and higher spending at the loyalty brand itself, enabling retailers to optimize spending volumes and the programs.

Essentially turning loyalty into currency, brands take the perceived connection between brand value (their high-end goods) and discounts out of the loyalty equation: customers gain something valuable – being able to burn points elsewhere – while the brand protects the perceived value and desirability of its products.

Offering monetary rewards for purchases also enables the brand to be present in the customer’s life, even in a domain characterized by infrequent purchases: say if the customer accumulates points worth £100 in cash that they can spend on everyday shopping anywhere, they will be engaging more with luxury brand each time they tap to pay through the luxury brand’s loyalty app.

As for getting to know their customers better, Loyalty-to-Payments ticks this box big time. Each time the customer redeems their points, no matter where and no matter on what, the brand gets access to the transaction data. As such, brands can now have a much more complete, in-depth individual customer profile, without segmenting or grouping them into broader categories. This data can then be used to become intimately familiar with each customer and understand their personal  preferences. A win for the brand, and a huge win for customers who feel recognized as individuals and better understood.

The Way Forward

The road to business success is paved with innovation, new strategies and even a certain amount of reinvention. CoinBridge Loyalty-to-Payments is a novel, smart approach to customer loyalty that not only rewards shoppers with limitless redemption opportunities, but encourages them to engage positively and frequently with the brand – even a luxury brand -without diminishing the perceived value of its products. Together with the added-value data sources the solution provides, this is a proposition that changes the paradigm of how loyalty is perceived and practiced in the luxury sector.

Unlock the future of luxury loyalty with CoinBridge. Visit coinbridge.com  to discover how our Loyalty-to-Payments solution can elevate your brand’s exclusivity and customer engagement while maintaining the prestige and desirability of your products. Experience the ultimate blend of loyalty and luxury today.

The basic principles on which loyalty programs are based have remained the same for decades. In theory, it’s a win/win for both brands and consumers… and yet most programs today are struggling to increase redemption rates and improve customer engagement

For the brand, low redemption rates mean missed opportunities to engage with customers – the prime raison d’être of the loyalty program. Retailers have a vested interest in making it easy for their customers to spend their points. And yet, loyalty today is a red ocean, and it seems that the current paradigm has reached maximum efficiency. Consumers are unable to differentiate between the different, overwhelmingly similar, propositions – a situation that fosters opportunism over real brand loyalty.

What Consumers Expect from Loyalty

Life is expensive, and many households are struggling to keep afloat. When money is tight, loyalty points can have real impact. In fact, IAG found that 92% of UK consumers depend on loyalty programs to help them manage the cost-of-living crisis. Even for loyalty members who are not seeking out additional financial resources to supplement their income, there’s a certain thrill in getting something you value, for free. So, in principle, a loyalty program has the right ingredients for success.

But, it’s not quite that simple. In the modern world, customers look for ease of use and convenience. They want the control that comes with having freedom to redeem their points for a wide range of goods, at a broad selection of outlets. And, when they receive offers and promotions, they want them to be tailored to their needs and preferences. In short, points redemption must be straightforward, accessible and relevant – which, at the moment, they often are not.

What Brands Expect from Loyalty

The prime factor that motivates brands to invest time, money and resources in a loyalty program is to boost customer engagement, in terms of purchase frequency, basket size, satisfaction, and brand advocacy. As we all know, acquiring a new customer is much more expensive than retaining a loyalty one.

When they earn points on their purchases, customers are encouraged to buy more, so they can accumulate more points. Loyalty programs also enable retailers to collect valuable data about customer behavior and their transaction history, which can enable personalization and micro-targeting, inform sales strategy, and facilitate business optimization. Recognizing the importance of choice, many brands invest in partnering with other retailers for points redemption, thereby expanding their networks.

Yet, loyalty is never the brand’s core business. So seamless implementation of a hassle-free solution is essential – but not easy to come by.