Grab switches up loyalty strategy: A much needed correction or math gone wrong?

Grab has changed up its GrabRewards loyalty programme. This includes changes to its membership tiers along with its policy for earning and redeeming GrabRewards points.However, the move which occurred last Friday, has seen some pushback from netizens, who criticised the changes in Grab’s credit multiplier system when it came to its rewards points. Some issues include changes in the point multiplier system, which results in lesser points being earned from spending on the app. More points are also required to redeem rewards such as Grab rides.That being said, some other new changes include making it easier for GrabRewards members to move up its tiered rewards system (Silver, Gold, Platinum).In a statement, Grab explained that the changes reflect the different ways users can use the platform as an “everyday app”, which extends to not only its ride-hailing but also its food delivery services.  It added that spending through GrabPay via credit card, debit card or GrabPay credits instead of cash is also rewarded with more value.Several loyalty players Marketing spoke to said that while Grab has made some good moves such as giving customers choice to earn points on GrabFood and in-store purchases. However, the reduction in points earned through Grab rides is, indeed, not a very welcome move for members.According to loyalty analytics company Aimia, as with every business, Grab might be seeking to optimise their program cost and that its initially generous earn rate could just be a strategy to attract more customers to the Grab platform.“Now with an established market presence and limited competition, the brand might be seeking to align its program investments to the member value,” a spokesperson from Aimia said.Oliver Spalding, chief customer officer, APAC at Digitas, explained that such a process is “notoriously tricky” and that many businesses find this kind of forecasting challenging, or worse, skip the process entirely.Most likely Grab got its math wrong and needed to reel things back in."Ultimately points are liabilities, if they go unclaimed they sit on a company’s balance sheet or if they are too popular they cost more money than they generate," Spalding said. He added that given the high frequency of Grab’s usage the move is also a big risk and comes at poor timing. He explained that the move may also appear to customers "as a show of monopolistic behaviour" of cutting incentives, as it is now dominating the market.“To safeguard its market share, Grab needs to keep offering the widest availability of taxi and ride-sharing options to ensure there is no major threat to its standing,” Digitas’ Spalding said. This is given the entry of more players into the ride-hailing market.For Sanchit Mendiratta, partner at Happy Marketer, the move is a “much needed correction” for the Grab rewards programme.“Honestly, I empathise with Grab, and appreciate the corrections that they bring in time to time to keep its platform a win-win for all stakeholders - passengers, drivers and merchants,” Mendiratta said, adding:Brands, especially the ones growing at a pace similar to Grab's, sometimes need to take drastic measures from a sustainability perspective.He added that there is "value in moving away from promotions and discounts to more stable mode of operation”. Given that most consumers use Grab out of convenience, and rewards section usually only influences a consumer choice when there is a choice.“Even if we bring the old heart-throb Uber in the conversation, until a couple of months back, most of us were loyal to money and not to an Uber or a Grab. In all probability we will continue to Grab, Hitch and Share just like we did last week,” Mendiratta added.For Aimia, the taxi industry is a commoditised business, where customers choose a brand based on the value (price) they offer. As such, Grab in the short term may not see an adverse impact as its prices are still on par with competitors, with the competitor’s value proposition still not being strong enough."However, with potential entry of competitors such as Ryde and GO-JEK, the brand might need to re-evaluate their loyalty strategy to keep itself differentiated in the market. Additionally, they might have to make some extra efforts to gain back the customer trust, which may have been jolted with this program change," the Aimia spokesperson added.A lack in communication?Anything that takes money out of a customer’s pocket is bound to cause upset, Spalding said, explaining there was no way around that notion. That being said, proper communication and transparency with respect to the changes is crucial. Currently, Grab's announcement is done largely through an app notification which isn't recommended in the loyalty practice. In today's world, the customers increasingly want transparency in their relationship.“[The communications should be] tailored to each tier of member and with at least some tangible expectation of why the change is being made rather than vague promises,” Spalding said. In addition, the company should also have proper loyalty analytics solutions in place so such surprises would not happen as this appeared to be a reactive move by Grab, he added.“While most of my thoughts and comments are pro-Grab, I do agree that this announcement could have been made in a better way. The awkward-no-details notification on the evening of 20 July just did not cut it for me as a Grab passenger who spends north of SG$1000 a month on rides,” Mendiratta added.Agreeing with Spalding and Mediratta that announcing the move via an app notification is not a great customer experience, Aimia added that Grab can try to compensate customers by giving additional benefits.