Cross Border Loyalty Programs

Making Sure Everyone Wins

If you are looking to set up a Loyalty Program that permeates borders, you are going to want an easy way to manage the challenge of a common points currency and multiple spending, or fiat, currencies.

Traditionally and still widely used today, a non-debatable, but most importantly, a measurable, unit such as miles, stays or nights.

It doesn’t matter whether you pay for the transaction in Dollars, Rubles or Pesos, or infract where you live. A flight between Singapore and London is 6,765 miles no matter which way you look at it. (Noting some FFP’s are now moving to price based earn).

Cross Border Loyalty Programs

A night in a hotel is, precisely what it says, a night in a hotel, regardless of price, location or season.

These are simple methodologies and easy to understand by the member and program owners alike.

However, what do you where you want to run a cross border (or more importantly, currency) program where you measure spend?

Especially in those countries differ dramatically in terms of household income and some cases the price of the same product?

Sounds challenging, but there are several ways to look at it. No matter what the solution is, it must create value for your member, and you. That’s before you look at cultural nuances.

1. Product Based Earn

This one is straightforward. A Big Mac is a Big Mac is a Big Mac, with a significant difference in price around the world. Regardless of the country, currency, and actual cost, the number of points earned is calculated on the actual product itself. The good thing about this is that your members and internal team know what the product is and the associated points.

Cross Border Loyalty

However, if you have a tiered program, there is much more thought to be had around the tier rules. For example, is a customer who buys 10 Big Mac’s worthy of moving up a tier rather than someone who bought 10 Cheeseburgers? Where do Nuggets fit? What about Happy Meals? A simple answer is having another unit of measure, which is fine internally and technically, but now starts to get confusing for the customer.

Confusion is the first step to customer apathy.

Also, the final price for the Big Mac, when converted to a consistent currency, may vary, plus the actual costs of operations given differences in overall efficiencies and salaries and other variables. Thus, the margin on the Big Mac may vary country by country.  So is the Big Mac in a thriving economy such as Singapore different to the Big Mac in a developing country like Myanmar from an earning perspective? It’s an answer you need to have solved early on.

This could be an accounting challenge for your Finance Team. Wouldn’t you be better having individual programs for each country? Maybe.

But read on.

2. Common Currency Earn

Still as straightforward as the previous scenario, and widely used today.  The process is to convert the value spent in the local currency, to another currency which the point value is tied.

For example, Marriott’s Bonvoy program rewards you with 1 point per 1 USD spent (excluding taxes and so on). That’s great, but how do you know how many points you will earn? According to their program Terms and Conditions:

Cross Border Loyalty

“The amount of Points earned at Participating Properties where a non-U.S. dollar currency is used will be calculated based on Qualifying Charges converted to U.S. dollar at the exchange rate selected by the Company.  This may be the foreign exchange rate used by a Participating Property at check-in, at check-out or another rate selected by the Company and may not be the same rate used for currency conversions on the Member's folio.”

https://www.marriott.com/loyalty/terms/default.mi#earn

For example, if you spend at a hotel in Singapore that charges in SGD, your points earned will be calculated using the USD conversion rate that Marriott chooses at the time. This rate could also be different from the rate used if you charged a USD based credit card for your stay. And different from the current FX rate.

It’s getting complex now.

3. Local Market Currency Earn

This option can potentially work also and will allow for the variations between the markets, on both the earn and redemption side. The question here is why actually have a consolidated program? Of course you can call the program ABC Rewards across the market, but in essence, what you have is multiple programs called the same thing.

Multiple programs ultimately mean an overhead increase in ongoing program management.

From a technical perspective, it may be feasible on one instance of your provider’s technology platform. However, it may ultimately cause ongoing program issues when you shoehorn multiple program structures and currencies into a solution designed for one. This approach will likely lead to operational (human) errors.

Let’s think that through. A Retailer with, say, 500 SKU's, five markets three tiers, plus any additional segmentation you may have. The chances are that someday, a member in Malaysia will receive a communication written in Vietnamese, and with pricing in Baht. Or worse, a segment of members receive a surprise with a bonus points error, and you have to wear the cost.

Cross Border Loyalty
Why did I hit 'OK'?

4. Non-Transactional Earn

Simplistic and non-location specific. Where a member performs an action, they are rewarded with a fixed number of points. For example, watching a published video, or sharing social media content, or checking in using social media. Even the action of purchase. All can be rewarded and earned at the same rate regardless of earn location and currency.

What this doesn’t do is reward members based on their value in terms of points earned. There are other ways to do this. However, most are less visible to the member, which may mean they likely do not see the value.

5. Tiered Benefits Program

No points.  No redemptions. Just benefits. It takes all the complexity away. What it does do is calculate the value (you would have the transactional data, right) as a means to determine tier access and associated benefits.

There are many elements here in terms of tier rules, similar to any program with tiers in fact.

The big questions are:

1. Is what you offer your members in the tiers of actual benefit?

2. Are the benefits logistically feasible to deliver?

Cross Market Earn

Now, what if your Singaporean Member goes to one of your stores in Jakarta, or Sydney, or KL? It’s highly likely to occur. You will need to decide on their points earning potential.

A good rule of thumb is that the member earns according to the rules of their home country.

Cross Border Loyalty

Redemption and Rewards

Let’s assume that members earn points in some fashion using any or a combination of the elements above. How do they redeem those points?

Assuming you can operationally deliver the benefits, this should be much easier to implement across the markets. If it is catalogue based, your technology platform ‘should’ have the capability in which to segment rewards to users within a particular market. Of course, this is the same logic mentioned above in the ‘Local Currency Earn’ section. The core difference is that the catalogue structure is a once-off setup, with reward items added and removed with attributes.

Regardless of the reward itself, you will need to be clear on the financial and ensure that the program across the board, and by market, delivers the expected financial returns.

Context Is Critical

Say the word ‘Lah’ to someone outside of Singapore, and you’ll have some confused looks. Similarly, saying ‘Kah’ to a non-Thai. Did you know that the Philippines has 22 Public Holidays per year, while Indonesia has 18, Thailand has 25? Mostly around the local majority religion. Not many coincide. You get the idea.

What may work in Market A, may not be entirely suitable for Market B, and so on. You can have local translations for copy, but most importantly be sure that the context of the communication is ideal for each market. 

Of course, this is in addition to using the data that you have from the program.

“Without context, a piece of information is just a dot. It floats in your brain with a lot of other dots and doesn’t mean a damn thing. Knowledge is information in context… Connecting the dots.”

Michael Ventura

Summary

There are no magical answers. The answer for your Cross Market Loyalty Program lays in the outcomes of capabilities, financial, technical and budgetary analysis, overlayed with the practicality of execution and ongoing management.

But, if you can get it right, you will have a great program. One that uses the right amount of data to deliver a contextual and engaging program across markets.

You need to join the right dots.

Paul Malcolm Vivid Engagement Loyalty Program
Paul Malcolm
Founder & CEO, Vivid Engagement

A specialist Loyalty and Engagement Consultant focusing on Loyalty Programs, Engagement Strategy, Gamification, and Marketing Technology.

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