Imagine a world where prioritizing customer loyalty is even more relevant tomorrow than it is today. We see this future just ahead of us and believe that adopting the right strategic mindset will separate loyalty leaders from laggards. Brands navigating this fast-changing landscape by exploiting dynamic approaches will rise above the noise to make significant impact with their customers.
In planning for the future, we should accept a few important assumptions:
- Consumer expectations will continue to shift
- Technological disruptions will consistently evolve in waves
- The spectrum of approaches to customer loyalty will diversify as brands seek to adopt new tech that delivers on the ever-shifting customer demands, while also streamlines internal operations
Navigating these challenges requires keeping your finger on the pulse of shopper trends to future proof your loyalty strategy. Let’s count-down 5 salient trends that will revitalize your loyalty program and drive success.
#5 Shift to “Outcome-Based Loyalty”
Marketing strategies of the past relied on controlling inputs like segmentation or time-bound offers, “hoping” for desired outcomes. And with this, traditional metrics like impressions and click-through rates provided insights into reach and engagement. However, this approach often failed to demonstrate the impact on creating desired customer behaviors like increased visit frequency, wallet share, and retention. That misplaced focus results in in marketers continuously having to defend the efficacy of their loyalty marketing budgets.
These strategies, using descriptive and diagnostic analytics, lacked the sophistication necessary for true outcome-based decision-making. Simply put, we can do better.
Today, technological advancements have transformed marketing. Processing speeds have increased tenfold each decade, storage costs have dropped by 90%, and machine learning capabilities have surged, enabling precise and actionable insights.
Loyalty programs should now embrace the shift towards outcome-driven marketing, which ties efforts directly to measurable business results. Outcome-based marketing prioritizes specific outcomes—such as increased sales, higher margins, and enhanced conversion rates—aligning goals with broader business objectives.
This approach, instead of focusing on the “who” or “what”, starts with the “why”. And with this, we focus on defining business goals, budgets, and timelines. Advanced algorithms then identify relevant audiences, personalize messaging, and optimize channel selection to ensure maximum impact and efficiency.
Adding the benefits of marketing efficiency to the mix, outcome-based loyalty can not only increase conversion, but do so at reduced cost. Targeting customers with the offers that will move the needle and avoiding spamming customers that are already expected to convert without is just one example.
This shift is crucial for future-proofing customer loyalty, enabling brands to build lasting relationships that are mutually beneficial. Learn more about the what, why and how of outcome-based marketing here.
#4 Find the Right Fit with AI
Even in its relatively formative iterations, AI is revolutionizing the landscape of customer loyalty, transforming how brands engage with their audiences with ease and relevance.
While the debate continues about where AI will have the greatest impact in customer marketing, we know that the capability allows for the creation of highly personalized experiences that resonate on a discerningly individual level, fostering deeper emotional connections that are hard to replicate in any other way. This results from the sheer power of AI’s ability to process and analyze data in a way that far surpasses human capabilities, enabling brands to anticipate and respond to customer needs they may not have previously known about, and in turn delivering proactive solutions that enhance overall sense of satisfaction.
Applying AI to customer loyalty operations means that communications become sharper, recommendations of “next to buy” make contextual sense, and customers are encouraged to spring out of inertia and into action.
The potential of AI to create elegant customer engagement can be seen through advances in the sophistication of recommendation engines at Netflix and Amazon and strong results from the advanced targeting and offer delivery capability use by Starbucks (reported to increase customer spending by as much as 25%).
As AI technology continues to advance, its role in loyalty programs will become even more integral, ensuring brands can build and maintain lasting relationships in the face of steadily increasing competition.
#3 Elevate Your Customer Relationships
2024 is a crucial moment for brands to elevate the way they engage with customers. The internet is a bustling hub of activity, and it is a challenge to break through the noise to capture customer attention. In just one minute of 2023, people sent 241 million emails, conducted 6.3 million Google searches, and spent $455,000 on Amazon alone.
The digital realm is now inseparable from our daily lives. The average user spends over six hours online each day, underscoring the importance of digital presence for businesses. To stand out amidst this vast digital activity, brands must adopt strategies that build and maintain meaningful customer relationships.
Three key steps constitute a quick start to success:
- Every channel does not need to drive a purchase, but every channel needs to deliver a connection. This represents a shift in mindset for many marketers, but it is a path to creating trust with customers in an increasingly uncertain world.
- Meet customers where they are to get them to where you want them to be. By meeting customers in their preferred channel and personalizing their experiences, brands can elevate the quality of relationships. Marketers must focus on creating tailored digital experiences that cater to the unique needs of their desired audience.
- AI & ML open the door for predictive insights & optimization. We mention AI and ML again because, despite all the hype, a study conducted in March 2023 revealed that only 15% of marketing professionals worldwide had plans to use AI for automation. We believe it's perfectly okay to start small, but it is time to start somewhere!
Read more about these three steps here.
#2 Use Analytics to Inject Rewards Innovation
Repeatedly offering the same rewards is not an ideal recipe for long-term interest. Current research shows that consumers value immediacy in obtaining program benefits and want this incorporated in each shopping experience. People are interested in their loyalty programs delivering daily value to their lives. But the key is understanding what “value” means. This word means different things to different people.
Only 31% of specialty retail consumers globally say that they have a deep understand of the benefits and value they receive from a loyalty program. The majority (52%) only say they somewhat understand.
Brands that invest in leveraging data analytics to tailor rewards to individual preferences and constantly experiment with changes to their rewards categories will discover their customers’ “sweet spot” and demonstrate the value customers expect. Today, nothing’s off the table – from content subscriptions to music lessons, if it aligns with your brand and is valued by the customer, it can work.
#1 Get Real (Real-Time, That Is…)
Today, advancements in mobile technology, data analytics, and digitization enable highly customized rewards programs that complement the same spontaneity that drives every day decision making. That’s why we believe the future of loyalty lies in real-time engagement where responsiveness, even instant gratification, replaces the inferior pace of traditional schemes.
Travel is an industry that has historically been centered on batch-processing but is becoming more and more real time in program execution. For example, Delta SkyMiles members can now see their tiering status and reward balance updated immediately, even before a flight journey is completed, a process that used to require a nightly update.
Real-time tactics remove the friction of tracking and accumulating points, providing instant discounts on everyday purchases. This approach is particularly appealing to younger audiences who, as mentioned, value immediacy and convenience in their interactions.
To future proof their customer strategies, brand loyalty programs need to focus on holistic, relationship-based models. Financial institutions, retailers and others must use real-time data to offer personalized rewards that cater to individual behaviors and preferences, enhancing customer engagement and loyalty. This evolution towards real-time, customer-centric rewards will only strengthen the bond between brands and consumers, ensuring lasting loyalty in an increasingly dynamic market.
Adopting these top 5 trends will not only help you revitalize your loyalty program, but ensure you exceed customer expectations to surpass business results.
Why trust us?
At Kognitiv, we’ve been helping global brands build and maintain strong customer loyalty for over 30 years. Contact us to learn more or to speak with a loyalty expert about how we can help you extract greater value from your loyalty program.
Editor’s Note:
Sara Galloway is VP Strategy & Consulting, Kognitiv and leads Kognitiv's global strategy and consulting group. Sara deftly unites strategy, process, customer experience and data expertise to serve her clients across retail, CPG, entertainment, financial institutions, QSR and telecommunication sectors.
References:
https://hiverhq.com/blog/customer-experience-statistics
https://techjury.net/blog/customer-experience-statistics
https://ninetailed.io/blog/customer-experience-statistics
https://www.kognitiv.com/articles-post/outcome-based-marketing-from-inputs-to-ai-driven-outcomes
https://www.fisglobal.com/fintech2030/experience/future-of-loyalty
https://www.fisglobal.com/insights/fis-client-stories/walgreens
