Sky says it is on track to have 4.5 million VIP customers within the next year, around a third of its UK customer base.
1.8 million people have already signed up to Sky’s 10-month-old loyalty programme – which rewards tenure rather than spend – which launched last summer following complaints from existing customers that newer ones were getting better deals.
It was also an attempt to reduce churn amid growing competition from the likes of BT and Netflix, as well as to encourage more people to download the mobile app, which is where Sky VIP sits and one of Sky’s core metrics.
The loyalty scheme now accounts for 33% of the weekly traffic to the app, while Sky claims churn is at its lowest level ever having entered a fifth consecutive quarter of decline. Figures for the second half of 2017 reveal the number of customers leaving Sky fell from 11.6% at the end of 2016 to 11.2%.
Sky’s head of customer loyalty, Rob Chandler, says the tenure framework of the programme allows Sky to play into a “far more emotional space” – something that more functional rewards schemes like Tesco Clubcard and Aeroplan lack.
“They’ve still got a value but they’re not really about loyalty in the emotional sense,” Chandler says.
“We can link [emotional engagement] directly back to churn, intent to purchase and intention to upgrade in the first place. We are in a unique position where we can focus on these sorts of brand metrics but deliver the hardcore metrics of a traditional programme.”
Sky has no plans at present to reward customers for anything other than tenure. While schemes like Virgin Red encourage people to interact with gaming mechanics to gain points and open vaults, Chandler says Sky made a “very deliberate decision” not to use the programme to entice people to change their behaviour.
“Right now we don’t need those mechanics where you’re going to get points and you’ve got to get to this. We don’t need any of that bribery action of traditional loyalty programmes; we can do it through making people feel valued,” Chandler says.
“The big transition for loyalty programmes is they need to start thinking about loyalty and not reward. It’s about businesses being loyal to their customers, not the reverse. I’m really trying to embed this into the culture at Sky: it’s about us looking after them, not demanding their loyalty. That’s where we need to shift the industry to.”
While Sky isn’t currently interested in partnering with other brands and business to bolster the rewards and deals it offers, Chandler says it will likely open the scheme up further down the line.
“But it’s not something for us right now,” he says. “For us it’s a focus on the relationship we have with our customers.”