Research from Flybits Reveals Brazil’s ‘Loyalty Paradox’
BRAZIL, March. 18, 2022 –
65.0%1 of Brazilians believe that bank cards are ‘essentially all the same’, and it’s the loyalty programmes (points and discounts) that really make the difference, while 42.8%2 confess to never actually looking at the fees and interest rates when selecting a card.
The findings published today by customer experience leader, Flybits, highlights consumer priorities when choosing between bank cards. According to the data, over a quarter of Brazilians (26.4%3) base their selection primarily on factors such as the loyalty points programme (13.6%) and the bank’s brand and partnership programme (12.8%).
At the same time, the research also revealed that – in practice – the majority of these loyalty programmes remain unused: over a third of respondents (34.4%4) currently rarely or never leverage their cards’ loyalty programmes, while a similar proportion (34.6%5) admit to rarely or never adjusting the purchase plans to take advantage of such offers.
Federico De Simoni, Flybit’s Regional Director for Latin America, describes the situation as the ‘great loyalty paradox’.
“Banks and financial services companies are steadily investing more resources in compelling loyalty programmes to differentiate their offerings. This is a direct response to research demonstrating the importance of the same when consumers are selecting a card. In practice, however, once they become cardholders, Brazilians are not actually enjoying the full benefits of these programmes,” he says.
“Over half Brazilians (50.8%6) are completely open to a loyalty programme that reflects their lifestyles and interests. In practice, however, over a third (38.5%7) never actually consider their loyalty programmes before selecting a payment method in shop or restaurant. This is the essence of Brazil’s loyalty paradox. The research provides a timely and actionable insight for banks into the mindset of the consumer with respect to their bank card,” Federico adds.
It also shines a light into the reasons for the low take-up of such loyalty programmes8. The offers are of no interest or not available where the consumer lives (26.0%), or card-holders simply never remember the loyalty programme at the time of purchase (20.8%).
“According to the findings, nearly a quarter of respondents (23.6%) ‘never seem to accumulate sufficient points to really take advantage of the programme’. This situation is often a function of consumers signing up to multiple, different reward programmes, reducing the probability of accumulating sufficient points on any of them. A common reality that benefits neither the consumer nor any of the issuing banks in the long term.”
Federico goes on to describe the loyalty paradox as the financial services sectors’ biggest blind spot.
“Banks have been investing exponentially in increasingly creative loyalty and benefit programmes to encourage sign-ups and use of their cards – at considerable expense. For instance, card companies are paying 1.3-1.5 cents per air mile to airline companies9, and these costs continue to rise. Data from Deloitte10, for instance, suggests a 30% increase in such bank card ‘loyalty expenses’ since 2015,” he says.
“Our research reveals that, while such programmes probably represent the single biggest attraction for consumers to sign-up, the low levels of exploitation (customers actually using and incorporating these programmes into their daily routines) means that only a fraction of this investment is delivering a return. As the levels of resources and investment in loyalty programmes increase, so does the wastage; effort and resources that benefit neither the brand nor the consumer.”
According to the data, despite the low activation levels of loyalty programmes amongst Brazilian consumers, the research reveals their priorities in terms of offers and benefits11: 47.8% would look for discounts on food and fuel, while 22.0% air-miles and travel discounts.
“The data provides a fascinating insight into the real trends and drivers behind card loyalty. A staggering 50.8%12 Brazilians describe themselves as ‘completely open’ to personalised loyalty programmes, while 63.0%13 would be very interested in a bank card that reflected their interests and priorities. The key for banks is to make these offers really relevant and practical for consumers to exploit; most customers have million other things on their minds (than their loyalty programme), so it’s incumbent on banks to make these experiences as intuitive and seamless as possible.”
“Interestingly, only 3.4%14 respondents cited airport lounge access – for years, the loyalty programme ‘staple’ – as a priority. This compares to nearly half respondents (47.8%) who would prioritise discounts on essential items such as food and fuel. It’s more crucial than ever for banks to objectively understand their customers’ genuine interests and priorities to shape a loyalty programme that really makes a difference,” added Federico.
Flybits works with banks and financial services companies to deliver genuinely relevant, contextualised experiences to their customers, through a customer experience platform that delivers data-driven, personalized recommendations and advice to customers via the Web or mobile app. Through this process, customers also gain full control of the use of their data, deciding whether, when and how to share it, for what type of return.
Flybits helps financial institutions scale digital value by mobilizing data as a strategic asset and creating enterprise-grade customer experiences that drive loyalty and business results. An Experience Design Platform for data-led banking, the company was founded in 2013 on the belief that data is the digital economy’s most valuable asset and can enhance people’s lives in powerful ways: helping them connect to loved ones, make better decisions, and filter out unwanted noise. Guided by this, Flybits helps complex enterprises to bring the power of data to life – transforming customer data into one-of-a-kind personalized experiences by launching predictive and contextual digital recommendations, at scale.