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Mastercard’s Loyalty Chief: Rewards Are Not Enough

This article is part of CMO.com’s Industry Spotlight 2019 collection. Click here for more.

More than 60% of consumers worldwide say experiences define success—not things. That’s why loyalty programs are changing to become more focused on how to deliver those types of rewards, according to Francis Hondal, Mastercard’s president of loyalty and engagement.

“I absolutely believe that consumers are redefining their affection for brands, not only on what the brand offers in terms of the product or the service, but how they experience that brand through their products and services,” she said.  

Since Mastercard launched its “Priceless” marketing platform two decades ago, the company has been increasingly focused on experiential marketing, as it repositioned from a credit card company to a technology company that enables purchases with merchants. But the industry has been catching up, consumers are demanding more, and loyalty programs have to add more content and features to remain relevant, Hondal said.

Now the focus for the next evolution of loyalty is trying to make personalized rewards work in the real world and online, regardless of the channel. “How do you make sure that you’re facilitating all those choices through really simple, frictionless technology experiences?” Hondal said, who also spoke about the future of loyalty, as well as the importance of connecting digital and physical worlds for consumers.

Beyond Table Stakes
Rewards are “still unbelievably popular,” both for attracting new customers and for retaining existing customers with perks, Hondal said. Consumers have become used to rewards and now expect them, she added. But because rewards are table stakes these days, loyalty programs need to focus on the end-to-end consumer journey.

“That entire consumer experience is what brands have to focus on and really work through: What are those soft benefits? What are those other experiences that they need to bake into their program?” she said.  

Sephora has done a good job complementing its points-based program with its in-store experience, Hondal noted.

“They’re still talking to you as their rewards program customer, but when you’re in the store, you’re experiencing other benefits of being part of this Sephora loyalty program: You have a personal shopper, you have a community that’s helping you make some choices around the best tips,” she said. “This is exactly the direction that loyalty programs are going.”

Target Experiences That Matter
Travel is still the most sought-after reward in many programs, so it remains a key category, but as Hondal pointed out, “10% of our time is traveling and 90% of our time is living,” so other industries are important, too.

For example, Hondal noted Mastercard added a Pay with Rewards program that allows customers to use their loyalty points to pay for all or part of their everyday purchases at any merchant, whether it’s at the point of sale in a store or online. The company recently added new travel ad lifestyle features to its digital platform for its World Elite cardmembers, including a hotel stay guarantee, plus a lifestyle manager to sort out any problems during the stay.

Partnerships are also key to enhancing experience-related rewards, Hondal said. She noted that Mastercard has added partnerships with vendors, such as movie ticket site Fandango and ride-share app Lyft, that dovetail with Mastercard’s focus on expanding the value of services across the consumer’s lifestyle.

You Are What You Buy
Content and context have to work together to deliver “that ‘wow’ experience,” Hondal said. Personalization and serving the right product at the right time go hand in hand, and digital channels now enable brands to extend their reach. 

“In the past, you were predicting future behavior from a past buying pattern: You are what you buy. And that sort of linear relationship was actually pretty simple,” Hondal said. “Today it’s super-dynamic because, yes, you still are what you buy, but you are buying in many, many different forms and in many different channels. We know that context matters. Where you are is going to influence what you buy.”

Mastercard works with its partners, particularly its card-issuing banks, to offer personalized offers and services to consumers. Doing so helps the company pull together large amounts of data-driven insights from disparate sources and apply it to their consumer relationship to bring contextual marketing into play.

“I love this concept that [the consumer] carries her bank, her friend, and her retailer in her purse. She’s not going to come to you necessarily. She has everything she needs,” Hondal said. “So how do you make sure you’re weaving into that reality the delivery of those experiences?”

A Technology Company
Mastercard, which is constantly evaluating emerging technologies, started a Labs as a Service team that works with its clients to apply new technologies to their particular needs, Hondal said.

“We have a whole team that's dedicated to helping customers test those new ideas around consumer experience, bring new product innovation, new product development, and really help them along the journey of development,” she said.

For example, Mastercard recently worked with the drive-through restaurant chain Sonic to apply voice response, artificial intelligence, and contextual targeting to create a dynamic menu that displays items based on time of day, season, location, and weather.

“This is going to be key to the type of thing that we are doing to help customers, because the technology is evolving,” she said.

Chatbots are another emerging technology Mastercard is studying to help the company navigate the customer experience. For example, a chatbot could serve as a concierge for a consumer traveling abroad.

“I think things like that are going to go a long way to help brands stay connected to their consumer along that consumer journey,” Hondal said.

Artificial intelligence and machine learning offer a number of additional opportunities, especially in parsing data, bringing out rich conclusions, and finding opportunities to segment consumers in an effort to reach them. But Hondal stressed that it all comes back to understanding the consumer.

“Ultimately, bringing technology and human understanding [together] with creativity is the formula for what’s next,” she said.

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