Can you believe that American Airlines’ loyalty program has an appraised value of between $19.5 and 31.5 billion? And that’s just the U.S. portion of the AAdvantage program. That astonishing revelation came to light during my conversation with Al Lalani, co-founder and chief strategist of Annex Cloud, about the Customer Loyalty Cloud app now available on SAP App Center.
“Loyalty and retention programs have become a tangible asset – and not just for obvious companies like airlines,” Lalani said. “Across industries, business-to-business marketers are using business-to-consumer techniques as they look for ways to influence behavior and increase wallet share.”
Pressing Need to Retain Customers
The trend began to catch on during the last recession, he noted, as buyers were suddenly questioning every expenditure. “Some 52% either stopped buying or switched to a competitor, and companies had to find a way to retain customers.” Now, the effects of the pandemic have supercharged that trend as companies find it difficult to meet customer expectations, whether because of supply chain disruptions, shuttered retail outlets, or the outright inability to deliver services—think cruise lines, think theme parks, and—of course—think airlines.
And maybe think outside the box about how a customer loyalty program could become an asset for you. There’s no limit to the use cases; the uptake for Customer Loyalty Cloud ranges from professional services to the public sector, Lalani told me. Organizations from dentists to car dealerships and even city governments are using the app to design programs that best suit their purposes.
Value of Influencing Behavior
The key concept is to drive retention and loyalty organically through every aspect of the customer journey, offering engaging experiences via incentives at the first touch, then as the consumer becomes a prospect, a customer, a repeat customer, and an advocate. The app guides customer behavior by offering loyalty points for a variety of actions, including purchasing, referring friends, writing reviews, sharing pictures, signing up for newsletters, and more. Along the way, the app integrates with all relevant SAP Customer Experience solutions: SAP Marketing Cloud, SAP Sales Cloud, and SAP Commerce Cloud.
But how does this work for a dentist? The practice can offer a discount on a routine office visit for a referral. What about a car dealership that sells a new car only once a decade? Offer a free rental car during a service appointment, for example, or an extended warranty, or rebates on the purchase of tires or parts. And a city government? Isn’t that pushing it? Not at all, Lalani told me: here, the incentives are likely to tend toward encouraging behavior – for example, rebates on solar panels or energy-conserving appliances.
Customized Reward Structures
The idea is to use Customer Loyalty Cloud to design a customized reward structure that suits your customers and brand, and to deliver incentives for any behavior you choose to encourage. With dynamic on-site tracking, any activity that is visible on your website can be turned into a rewardable loyalty action. Ultimately, the loyalty program leads to more repeat purchases, increased retention rates, easier customer acquisition, and higher conversion rates – thus, an asset that only grows in value.
I asked Lalani how he discovered the customer loyalty niche. “In 2010, when social media was taking off, I wondered, ‘Could you build a loyalty program to monetize it?’ Whether on Facebook or Twitter or LinkedIn, your followers are your loyalists, and I figured there had to be a way to take advantage of that. Initially, we created a referral program based on social media. But that’s just one side of it. From there, we morphed into a full-scale loyalty platform that’s driven by a customer retention mindset.”
Ten years later, the company has more than 200 employees, with headquarters in Los Angeles and offices in Germany and Mumbai and Pune, India.
Loyal Partner with SAP
The partnership with SAP began in 2019, when SAP was looking for a product to replace a loyalty solution that was being retired. Annex Cloud offered a strong candidate, and after a thorough evaluation process, a highly productive bidirectional relationship ensued.
“Essentially, we go together from strength to strength, promoting each other’s products and working hand-in-hand,” Lalani commented. “And because Customer Loyalty Cloud integrates with multiple SAP solutions, insight into SAP’s product road map is essential for advance planning on integrations and innovations.”
Annex Cloud also offers the User Generated Content Cloud app on SAP App Center, which helps create a channel of soliciting and collecting useful content from customers, working with SAP Cloud Platform and the SAP Commerce solution.
Check out Customer Loyalty Cloud today—you might become a loyal advocate yourself.
Anne Yi is general manager of SAP App Center.