To stay aligned with consumer wants and needs, loyalty programs must constantly be evolving. That’s never been more true than now, which loyalty programs are experiencing nothing short of a renaissance.
Here are the six biggest trends that we’re seeing with our Breakloo CrowdTwist customers.
1. Non-Purchase Engagement
The biggest trend at the moment is the transformation of many legacy spend-to-get loyalty programs into engagement-based programs.
The impetus behind these transformations is the need to create emotional loyalty, rather than simply transactional value. By stressing engagement with polls, surveys, videos, articles, and other content, brands are able to develop deeper connections with their customers, because that engagement provides zero- and first-party data that can fuel segmented, personalized, automated campaigns that demonstrate deeper customer knowledge and improve the relevance of campaigns.
These efforts should build brand trust, foster a stronger community, and make individual loyalty members feel like they’re a part of something bigger. Accomplishing that leads to many rewards for brands. For example, 70% of loyal customers spend up to twice as much with brands that they feel connected to, according to CapGemini research. Plus, 86% of customers say those brands are immediately top of mind when they are making shopping decisions. And perhaps most importantly, 80% of emotionally connected customers say they’ll become brand advocates and will actively promote the brand to their friends and family.
2. Brand Partnerships
Another way that brands are adding value and deepening connections with their members is through brand partnerships. The biggest newsmaker here lately has been the partnership of Delta and Starbucks, which allows their loyalty members to connect their loyalty accounts and earn miles from their Starbucks purchases. Other standouts include the recent marriage between beauty brands and mid-tier retailers, including the loyalty partnerships between Sephora and Kohls, and between Ulta and Target.
These and other brand partnerships are working well for programs, helping all the brands appeal to wider audiences and add value through complementary rewards and benefits. We expect this trend to continue to grow with brands collaborating in new ways.
3. Choice & Flexibility
Accelerated by the pandemic, consumer expectations have changed both rapidly and drastically over the past several years. Customers are now demanding that they have a say in how they interact with brands. They want to choose how they are rewarded, how frequently they’re contacted, and how they purchase. Customers now place more value on experiences and brand values and expect brands to meet them where they are and treat them as individuals.
For brands, it’s no longer enough to be on par with your competitors. It’s critical that your loyalty program not only drive predictable and incremental revenue to the company, but that it also provides endless opportunities for zero- and first-party data collection to help power these personalized experiences that customers now expect.
4. Personalized Experiences
To successfully develop emotional brand connections through personalized and relevant loyalty experiences, brands must acquire data in new and responsible ways. Loyalty is critical to these efforts. It serves as one of the primary opt-ins for zero- and first-party data collection, enabling a single view of your customers across channels utilizing loyalty IDs.
And as third-party cookies sunset, global privacy laws strengthen, and platform privacy protections grow in the years ahead, loyalty programs will be increasingly important sources of zero- and first-party data. That data will be central to helping brands reap the benefits of living up to consumers’ continued expectations for individually tailored experiences.
5. Premium Loyalty Programs
A premium program is one that requires a fee to join, such as Walmart Plus, Swarovski Crystal Society, and RH Members Program. It can be a completely premium program or a paid component of a free loyalty program, like a higher tier that unlocks additional rewards. We’ve seen an increase in brands exploring a premium option due to the fixed incremental revenue they offer.
While premium programs typically drive stronger retention, they’re not for every brand. It’s key that the benefits and rewards associated with the paid loyalty structure provide tangible and differentiated value to customers. Members must feel like the benefits they receive outweigh the costs, otherwise it’s not a value proposition that should be considered.
6. Metaverse & Gamification
As brands increasingly test and learn within the Web3 space, we continually hear that the biggest challenge is determining how this expansive new world can realistically add value to consumer relationships and loyalty programs. The most common way that brands are entering the metaverse is through non-fungible tokens (NFTs), which are entirely unique items that can only be held by one person at a time, unlike social tokens.
NFTs are a great fit for loyalty programs as they are designed to offer people the opportunity to get something special that cannot be copied. NFTs offer companies a whole new avenue for defining and creating exclusivity and this is stimulating program member engagement. Across a variety of industries, companies are using NFTs as rewards that gain access to events, conferences, VIP lounges—essentially replacing digital invitations and tickets.
For example, for their first-ever NFT campaign, Clinique made three NFTs available to win, but you had to be a Clinique Smart Rewards member to enter. That requirement promoted program membership and incentivized customers to join and deepen their relationship with the company. Announced by a Clinique brand ambassador, the winning members for each NFT got the right to receive an assortment of Clinique products every year for 10 years, which really connected the digital world to physical benefits.