2020 was a memorable year for many of us: COVID-19, the start of a global pandemic, numerous lockdowns – you name it. We remember it as the year when consumer loyalty took a real beating. Nearly one in two shoppers switched brands, which got us thinking: what is the future of digital loyalty? Even in 2023 retailers are thinking about their ‘new normal’, which mainly involves figuring out how to use data, media, and measurement tools to create new loyalists from the pandemic’s promiscuous consumers.
I was pleased to be a panellist at the Future of Digital Loyalty Technology webinar this week to talk all about this topic, hosted by Hadie Perkas, The Gift Club. Here’s a summary of what trends we think should be on every brand’s radar and shopping list this year when it comes to digital loyalty technology:
1. Data-driven marketing
Although an impressive 91% of marketers report knowing the importance of data, only 55% are confident in it. Data is an essential tool for marketers, helping them to understand and connect with their target audience more effectively. However, there’s a huge issue with trust and reliability, for example, data silos are a major problem for modern businesses because they can lead to serious issues like data loss, data inaccuracies, and even security breaches. But the biggest issue is that data silos can result in a fragmented view of your customer, product, or market. This leads to inefficiencies, missed opportunities, and even costly mistakes. It becomes difficult for marketers to create targeted and personalised campaigns; without a full picture of your customer base, you can merely guess what could work — and that can cost you loyalty.
Loyalty technology can analyse data for marketers and help them gain insights into their customers that they may not have been able to discover on their own. However, most businesses do not have the time, budget or resources to build effective data collection systems internally; that’s where investing in data capture technologies pays off. For businesses that want to collect first-party data, helpful methods and solutions include coupon/receipt scanning and card linking, as they can gather insightful customer information.
2. Open Banking
Open banking is when third-party payment services – such as GoCardless and Keebo – access banking transactions and other data from banks and financial institutions through application programme interfaces (APIs). As the global economy continues to evolve, open banking is becoming more popular due to its fast and secure transactions. It also gives consumers an opportunity to better manage their finances.
For marketers, Open Banking and payment-linked loyalty solutions have been invaluable in terms of the data received. But a question on our minds here at Catalina is: what do customers get from sharing their data? For us, it’s about value creation for the end customer, if you make it ‘easy’ for them, then it’s a worthwhile investment for them.
3. Artificial Intelligence (AI)
AI has been around for a long time – nearly 70 years! Huge volumes of transactions are being processed every day, allowing retailers and organisations worldwide to access a wealth of data in which they can learn from, and use to personalise their services. In our industry, AI promotes product discovery, creates memorable experiences, and helps retailers understand their buyers’ motivations. For example, retailers can offer loyalty-based discounts or adjusted payment options, all to help boost conversion rates at the point of purchase. AI-powered solutions are making their way into virtually every sphere imaginable. But how will it differ in just two years even? The possibilities are endless. Many companies have the capability to manage AI and understand what it can actually do for the end customer and business overall. We know that customers will usually do what’s ‘easy’, so lead the charge and make it simple for them.
4. Digital Wallets
Digital wallets are the future of money; they will account for 52% of e-commerce transactions by 2025 . And despite what many of us think, digital wallets have been around since before the 20th century, with the likes of PayPal debuting in the 90s. In short, a digital wallet is an application that runs both online and on mobile platforms. They allow users to securely store payment info and passwords and to conduct financial transactions. They can also hold gift vouchers, loyalty points, loyalty cards, coupons, various ticket data, and more, bringing up everything you could possibly need with just a ‘double-click’ of the button on the side of your phone. The likes of ApplePay, Monzo, and more all use AI-powered solutions and budgeting tools, making them an invaluable part of every consumer's shopping bag.
5. Subscription Models
Standouts like Netflix and Glossybox show us exactly what convenience and personalisation mean to consumers. But with inflation and the costs of goods rising, consumers are getting wary of them. But for retailers, subscription boxes can be invaluable in terms of the mass amounts of consumer data and recurring revenue that’s at stake. To survive – and to sustain long-term value in 2023 – they must provide an equal or greater value to the customer, while still being profitable to the brand. And that can be physical value or even just value by customer experience.
6. Loyalty Platforms
Businesses are increasingly aware of the impact that customer insight has on informing an effective loyalty programme and the potential cost and risk of not introducing one. Did you know that it costs five times more to acquire new customers than to retain existing customers? If not already, businesses will eventually face the existential question of whether they should implement a loyalty programme or not.
Understanding the value in doing so is paramount— customer loyalty is a big question for a lot of brands, and few know where to begin to devise a promising loyalty scheme, with many brands lacking an understanding of the potential return on investment. Also, there are so many programmes out there, but how easy are they to embed into the loyalty eco-system?
Many brands have a loyalty program of their own already in which they offer discounts, freebies, or other incentives to customers after they make repeat purchases. They make consumers feel rewarded and appreciated. But, when it comes to earning and spending these rewards, customers are looking for flexibility. So, getting it right matters.
There are risks you need to consider. Loyalty programmes that are improperly planned and executed can result in hefty costs for businesses. The last thing you want is plummeting bottom line profit figures and an inability for revenues to bounce back! A few tips for success:
1. Get the value exchange right If customers don’t understand the point or see the value behind your business’ programme, it won’t be successful. Getting it wrong can erode your brand’s reputation.
2. Get the level of innovation right Loyalty programmes must be innovative and uniquely tailored to a diverse customer base. Your business must meet customers’ expectations in one cohesive programme versus through multiple solutions, which demonstrates the importance of value exchange. You can meet the value needs of your customers by connecting the data dots.
3. Get the loyalty mechanic right Know what customers are looking for (do some research and ask them) and ensure it’s backed by a data-driven approach that allows you to understand the unique selling point which will appeal to your customers.
Customers have proved to us how they can adapt quickly to new ways of interacting, switching the brands they love, and being open to new discoveries. In response, retailers can embrace the changes they have made and rebuild their loyalty all over again.
But first, Future Loyalty Tech must help marketers answer three important questions: Why did it happen? What will happen? What should happen? What consumers want to see from their favourite brands is constantly evolving so retailers need to do the same. Creating loyalty is undoubtedly one of the most critical ways to retain more of your customers and grow your business faster. It can also be a powerful competitive edge. My advice is to stay ahead of the curve! Focus on fostering strong loyalty and engagement by staying on top of what your customer wants. A long-term above and beyond approach will keep your customers coming back and importantly, ensure they stay true.
If anyone wants to talk about this further, then my messages are always open. Catalina’s engaging and thoughtful platforms can be seamlessly connected with any shopping channel and enhance multiple key areas, but most importantly, they enrich loyalty.
1. CMO Council 2. Santa Monica Mirror, 30th December 2022 3. HubSpot Annual State of Service in 2022