You understand the value of loyal customers, and the importance of a customer loyalty programme in 2020. But any old programme won’t cut it. Only 37% of consumers believe current loyalty programmes are effective in earning their favour. 95% of UK shoppers want brands to seek new ways to reward their loyalty.
The growing importance of customer loyalty programmes might, itself, be the number one trend on this list. But what we are going to talk about here are the cutting-edge trends in loyalty marketing that help brands deliver what customers expect.
Customer loyalty is a long-term investment. From tech tools to ‘thinking like the customer’, here are six customer loyalty trends to watch in 2020 and beyond.
1. Migration to phone apps
Gone are the days of simple analogue ‘loyalty cards.’ Technology allows for greater flexibility, higher rates of engagement and more precisely targeted loyalty offers. It’s estimated that 70% of loyalty programme members currently access their rewards using an app. For customers, apps offer convenience and ease-of-use. For brands, using technology simplifies delivery and provides the ability to change and update offers according to customer preference. Apps make it easy to experiment with different incentives and determine which ones entice your customers the most.
A good loyalty app should have an engaging and intuitive interface. Digital natives, in particular, are drawn to elegant and functional design — and 71% of Millenials and 65% of Gen Z report being influenced by loyalty programmes.
For 34% of all consumers, the top frustrations with loyalty programmes are user errors and confusing redemption processes. Careful attention to UX/UI design makes all the difference. A poorly designed app can lead your customers to seek rewards elsewhere. On the flip side, a well-designed app can make it easier for your customers to engage with both your brand and your loyalty offerings.
2. Gamification and geolocation
The second trend on our list (and it won’t be the last!) is tied directly to the first trend. Putting your loyalty programme on someone’s phone changes the ways in which you can interact with them. There are two standout examples of this that leading brands have capitalised on: gamification and geolocation.
Just to recap, Gamification is the application of game rules to non-game tasks — in this case, brand loyalty. Although gamification has probably been overhyped, one-third of consumers and 40% of millennials believe that loyalty programmes should include games.
Gamification not only makes your programme more fun to customers, it allows you to incentivise different types of behaviour — for example, buying slow-moving products or referring friends to become new customers. Brands as far afield as NBC, Taco Bell, Nike and Victoria Secret have found success deploying gamification techniques. Although it’s only one feature of a successful loyalty programme, we expect to see more brands include gamification options in 2020.
Geolocation is another flexible, tech-enabled trend making waves in 2020. 100% tied to phone apps, geolocating loyalty programmes use geofencing, wifi proximity and Bluetooth beacons to provide location-specific push-notifications to loyalty members. This not only provides you with an added-value method of reminding shoppers about your brand, it can have a big impact on consumer behaviour. Localytics states that 36% of those surveyed made a purchase after receiving this type of notification. Remember: with geolocation, precision is key — customers won’t take up offers that aren’t relevant to them.
For large brands, geolocated notifications are often tied to the store itself — offering promotional discounts. Businesses like McDonald’s, Starbucks and WholeFoods have all pioneered this kind of technology. Where we see this developing is with smaller brands (or simply less physically distributed brands) pairing geolocating loyalty apps with loyalty partner networks — providing relevant and location-specific offers for other businesses in the area. This brings us to our next trend…
3. Use of third-party offerings
In-house discounts are the traditional way to appeal to customers. But there is value in bringing onboard third-party offerings, and it’s not just limited to geolocation. Customers are increasingly drawn to rewards programmes featuring relevant lifestyle and community offerings, such as cinema and theatre discounts, dining deals and ‘experiences’.
For brands, third-party offerings provide a competitive advantage, with 42% of consumers reporting that incentives could sway them to choose one brand over another. But to do this successfully, brands need to think carefully about the partnerships they make. Third-party offerings will only be valuable if they are relevant to your customer base.
Large credit card companies have thrived on these types of programmes for years. But it can be hard for brands of all sizes to develop the networks required to deliver the relevant third-party offers your customers want. However, we expect to see the increased application of this broader approach to customer loyalty because of the fourth trend on this list.
4. Partnerships with loyalty marketing specialists
The increased technical and operational sophistication of effective loyalty programmes has increased the value of loyalty marketing specialists. Brands as big as GoCompare, carwow, Three and Visa have all had great success augmenting their customer loyalty outcomes with the help of strategic partners.
The concept of loyalty partnerships really grew out of the desire of brands to provide third-party offers to their loyalty members. With the added importance of technology, loyalty marketers have transformed themselves into all-in-one platform providers able to deliver the logistical and technical support required to succeed.
Remember: a trustworthy specialist should be flexible and willing to work with your existing capabilities. If necessary, they can handle all the technical heavy lifting, or if you prefer, they can partner with an in-house team. Brands with existing apps can also benefit from working with a specialist to integrate their offerings through an API. Finally, a partner should help you transform data into insights and outcomes.
5. Personalisation x 2
This trend might actually seem like a step back — personalisation has been ‘big news’ for years. But, it’s so vital that it really has to be mentioned. What’s more, modern loyalty programmes are actually a contributing source to improved personalisation — helping brands personalise their loyalty programme and decision-making more broadly.
A loyalty app will not only allow you to analyse and track how customers interact with promotions, but you can also connect names with shopping patterns. This allows you to build detailed customer profiles, make product/service decisions based on real customer data, and understand variations within your customer demographics.
91% of consumers are more likely to shop with brands that provide offers specific and relevant to them, and 31% of shoppers wish their shopping experiences were more personalised than they currently are.
Simply put: personalisation pays. A reported 44% of shoppers made impulse buys after receiving a personalised experience, and 71% expressed some level of frustration with an impersonal shopping experience. Currently, 51% of consumers expect companies to anticipate their needs and provide relevant recommendations. The most successful brands are integrating personalisation and data analytics into their loyalty programme and using their loyalty programme to better understand their own brand and customers.
6. Frictionless experiences
The ‘frictionless’ transition is likely something you have heard about in one form or another. It’s a ‘mega-trend’ sweeping the economy. It encompasses everything from the ‘cashless society’ to ‘everything-as-a-service’.
The idea is that if you make it easy for customers to make a purchase (remove ‘friction’), they will buy more things. And, they do. For example, shoppers spend up to 100% more when they pay with a credit card than cash.
The same reality applies to loyalty programmes — if you want to keep your members, you need to make the whole experience easy. Again, apps play a big role here, so does geolocation, personalisation and third-party offerings. But the heart of this revolves around “thinking like the customer”. This is the power play trend that might set brands apart in a future in which everyone is tech-enabled and gamifying their apps.
In a 2019 study, 54% of customers reported frustration that it took too long to earn a reward, and 39% of expressed frustration that it was too difficult to earn a reward. Offering different levels of rewards can keep customers engaged and help prevent them from feeling like redemption is out of reach. When it comes to a points structure, simplicity and transparency are key — think a simple 1 point equals £1 system. You might also consider the value in rewarding customers for non-spending activities, such as social media sharing, watching branded videos, playing branded games, or making new customer referrals.
Ultimately, a customer-centric, frictionless strategy boils down to a simple sentiment: give customers something they want, and make it as easy and straightforward as possible for them to earn it. This is the real future of customer loyalty.
There is no shortcut to customer loyalty
Nearly 60% of shoppers cited earning rewards as the aspect of the retail experience they valued most. Repeat customers spend more and buy more often — even when presented with cheaper alternatives. Retaining a customer costs five times less on average than acquiring a new one. Maintaining high customer retention rates will save money, grow profits, and increase the likelihood of valuable referrals and word-of-mouth marketing.
Brands want loyal customers, and customers remain loyal to brands who reward them. Although trends come and go, it’s clear that technology will remain an integral part of successful customer loyalty programmes.
Tech tools enable the personalisation that customers crave and help you deliver an engaging, relevant and seamless customer experience. Apps with analytical capabilities allow you to gain valuable data, which you can use to improve your programme and your brand over time. Deploying tech tools while thinking like the customer means providing easy-to-access, relevant loyalty offerings — and the best way to incorporate 2020’s trends into your loyalty programme is to work with a specialist. But no matter how you get there, you need a solid IT base and the courage to think creatively. Get planning and good luck!