What Can You Learn from O2 and Virgin's Customer Loyalty Platforms

Posted in Consumer Promotions and Loyalty, Customer Loyalty, Loyalty Platforms

by Chris Baldwin on Aug 3, 2016 2:00:00 PM

Lessons from Two of the UK's biggest loyalty schemes...

O2 Priority Moments has been one of the UK's most successful loyalty schemes for a while now, and Virgin Red is out to take its crown. What can we learn from the way they do things?

Feeling like a priority with O2

O2’s customer loyalty platform – Priority Moments – does what it says on the tin. It makes members feel like a VIP by offering them exclusive deals and experiences before everyone else. The rewards vary from discounts on entertainment, shopping and food, through to early access to concert and event tickets 48 hours before general release. There are competitions and prize draws too, which provide the opportunity to win an in-demand product, completely for free.

The sheer variety of rewards on offer means Priority Moments appeals to everyone - from a cost-conscious parent to a carefree gig-goer. But it's perhaps the experiential side of this particular customer loyalty platform that makes it such a success.

Early 2016 analysis from Visa Europe UK’s Consumer Spending Index shows that people are continuing to splash the cash, with recreation, culture, restaurants and bars performing incredibly well. Lord Wolfson, boss of clothing giant Next, has also been quoted as saying that consumers are now looking to spend their money on experiences rather than products.

O2 is therefore providing lower-cost access to the things consumers want, and, in doing so, is building positive association between the individual and the brand. As customers redeem and enjoy their rewards, perhaps with family and friends, they know they’re able to do so because of O2.

This goes some way to explaining why some people actually pay more for an O2 phone contract - to secure Priority Moments access. This is a great position for O2 to be in, especially given the highly competitive nature of the mobile operator marketplace. For many people, the added value and gravitas of being an O2 customer outweighs a potentially higher contract fee.

Within 18 months of the program’s launch, Priority Moments reportedly acquired millions of new customers – a 100% increase on the previous year – making it one of the fastest growing loyalty programs in the UK. Five Priority Moments are redeemed every minute of every day and, for every £1 that O2 has spent on the scheme, they’ve generated a £9.60 return.

Finally, it wouldn’t be fair to summarise Priority Moments’ success without highlighting the role of technology. This customer loyalty platform uses real time insight and intelligent user targeting to deliver the right rewards, to the right people, when they matter the most. The fact that the rewards are instantly received also helps the success of the program. They’re easy to get hold of and just as easy to redeem, reducing any potential obstacles for the customer to get involved.

 

Virgin Red – how does the new kid on the block shape up?

This is one of the newest customer loyalty schemes launched in the UK, having only hit app stores in June of this year. Its reveal was high profile to say the least, with Richard Branson himself fronting the kick-off campaign – a UK-wide treasure hunt to find one of a million physical and digital gold coins and the chance to win a trip to Necker Island.

In practice, everything boils down to points. App registration immediately gives the user 50 points. Shopping with Virgin brands earns more, as does participation in quizzes and challenges. As points accumulate, customers gain access to different vaults, which each contain offers such as a £10 rail voucher, Virgin Active gym membership, or money off Virgin Experience days. There are other deals available too, regardless of points. Points and offers reset on the first of each month.

While customer reward certainly lies at the heart of this concept, so too does the opportunity to cross-sell Virgin’s vast portfolio of services, from air travel to wine, hopefully turning customers into brand followers.

It’s perhaps too early to say how successful the strategy will be, but the creativity of the concept is sure to capture the attention of many. For others, who want a straightforward good deal, it could prove a little too convoluted.

So what does this mean for your customer loyalty program?

Of course there are thousands of brands throughout the UK that could benefit from the introduction of a customer loyalty programme, but few will have budgets and resources to rival O2 and Virgin. That said, there are still things to be learned from the platforms discussed here:

  • Relevance matters – it’s important to offer a variety of rewards and discounts, to suit customers with different likes, interests and needs.
  • Remember psychology – we all, as humans, like to feel good, and being treated like a VIP is something that many seek to experience. The exclusivity of offers is key to this.
  • Keep it simple – it should be easy to view and redeem deals. People are time-precious, so don’t create obstacles to engagement.
  • Analyse the data – reward redemption statistics provide greater insight into general customer behaviour, as well as the success of the scheme.

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