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October 7, 2021

Do loyalty schemes travel?

5 minute read

Marketers, for the most part, are now highly sophisticated in customising their strategy when entering new international markets. Even the essential MarTech that supports a range of activity can be ‘lifted and shifted’ without too much difficulty, but what about loyalty schemes?

Customer loyalty across different cultures

As we know, the levels of investment needed to set up and run a loyalty scheme, including programme design, platform installation, reward liability and management, are significant, so the temptation to ‘lift and shift’ a successful loyalty scheme from one market straight into another is high, but beware!

Loyalty schemes that have worked for companies in one market have failed in others, either from the outset or have just run out of steam due to lack of engagement.

Hardly breaking news that there is notable economic variation across the globe, but on the issues of loyalty programmes specifically, research done by the Journal of International Marketing* established that culturally based attitudinal and psychological factors, not GDP, were at play and there were notable differences on how specific cultures viewed how shopper loyalty should be rewarded, whether it be points and related rewards, or immediate promotional offers.

As a result, rigid, multi-market ‘one size fits all’ loyalty programmes, or ones with basic differentiation i.e., developed v less developed markets, are very likely to fail unless there is insight-driven customisation, especially with regards to the reward mechanic.

Tailoring rewards to different loyalty schemes

In order for loyalty schemes to avoid falling into this ‘one-size-fits-all’ strategy, they need to focus on using highly customised tactics, based on data-driven insights from customers, communities, countries and more.

In their research, Thompson and Chmura found that consumers from countries with established social hierarchies and low in individualism values prefer loyalty programmes that offer related rewards, whereas consumers from countries low in masculinity values and low in uncertainty avoidance values prefer unrelated rewards.

The analysis also indicates that consumers from countries high in masculinity values and high in uncertainty avoidance values shun loyalty programmes altogether and prefer immediate promotional offers.

An in-depth understanding of local cultures and behaviours, derived from data analysis and insights in local markets, have been a fundamental component of the IKEA Family loyalty programme for many years.

An international loyalty programme example from IKEA

Ikano Insight, the agency behind the IKEA Family loyalty programme, have deployed versions of the programme in various international markets, based upon extensive experience of implementing both points and discount-based reward mechanics. Although it may not be immediately apparent to users, a notable amount of customisation is built into how each country’s programme operates.

This customisation and refinement are driven by an initial, in-depth analytical process, incorporating a host of variables and key historical learnings. Given that the Family loyalty programme performs well in all its markets (IKEA Family members are typically worth three times more than non-members**), it really does pay to get a ‘feel on the ground’.

Localising the IKEA Family loyalty programme in the Philippines

One of the most recent projects from Ikano Insight was the launching of the Family Loyalty Programme with IKEA Philippines, where many cultural differences and hard-won data insights were incorporated, to tailor the programme in a way which would work for local customers, and deliver greatest value to IKEA Philippines.

  • In market brand awareness
  • Engagement with loyalty schemes
  • Media consumption habits

These key variables ensured relevant customisation was built into the loyalty scheme and also informed the vitally important media launch of the scheme.

The launch of Family was extremely successful with over 200,000 people signing up for the loyalty program within the first few weeks and the scheme engagement level remains high.

If you’d like to know more…

Ikano Insight specialises in creating bespoke CRM, loyalty and engagement strategies that help brands better connect with their customers and leverage the power of big data to deliver constantly improving solutions.

For more information on how loyalty schemes can be localised and enhanced on an international scale, get in touch with the team on 020 7836 5656 or visit our contact page for more information.

* Thompson FM, Chmura T. Loyalty Programs in Emerging and Developed Markets: The Impact of Cultural Values on Loyalty Program Choice. Journal of International Marketing. 2015;23(3):87-103. doi:10.1509/jim.14.0125

** Ikano Insight tracking analysis 2020 – 2021

Posted by Ashley Patterson

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Do loyalty schemes travel?

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