2021 — a Renaissance for Loyalty Programs?
The coronavirus pandemic has made this year full of new challenges, both business and organisational ones. Widespread social distancing has changed our habits in almost every aspect of daily life. Many industries have faced new, unfamiliar and unpredictable challenges and crises. More than one idea or project failed and others had to be postponed and wait for a better time. The year 2020 has changed the way we think about business, at least for the foreseeable future, and it has made its mark on loyalty programs as well.
We have seen for ourselves what works, what functions well and what is profitable — even in this time of global economic crisis — and what does not, and thus has been irretrievably lost. Therefore, it is worth drawing conclusions from the past few months, applying the predictions and approaching the challenges we will face in 2021 with more enthusiasm.
Although customer loyalty is extremely valuable, it is increasingly difficult to maintain. 70% of customers admit to checking out competing brands’ offerings to find the best product or service. And yet, it is still more profitable to keep regular customers than to acquire new ones. Loyal, recurring customers spend at least twice as much as new customers. Advanced loyalty programs rich in personalised offers help retain regular customers and improve their consumer experience.
For Loyalty Point, 2020 has proven to be a huge lesson, and, in fact, we will still have to test this new knowledge in the coming months. Based on our own experience, knowledge of the market and lessons learned from the pandemic era, we have prepared a description of several trends we are likely to encounter in the new year. It’s hard to say how long the changes that have taken place in the loyalty program market will continue. Nevertheless, in the nearest future, it is worth drawing conclusions on the situation. Let them guide you to ensure that your organisation has a better, and certainly more stable position on the market.
The trends that will dominate the loyalty program market in the near future are primarily in the following areas:
- Use of new technologies, digitalisation
- Turning to the individual customer on a mass scale
2021 will focus on the consumer, and the sustainable economics of loyalty programs to deliver more value and a better customer experience. Given the rapid changes in customer engagement coupled with the reliance on digital technology, it’s now more important than ever to accelerate digital transformation in the field of loyalty. The following elements may be key in shaping loyalty programs:
1.Omnichannel and strengthening touchpoints
Omnichannel! This is a buzzword that has been at the forefront of all discussions about the future of CRM lately. The key is to plan activities in such a way that they cover all channels and points of contact between the brand and the consumer. They must be consistent and provide an identical experience in the physical and virtual worlds, so that we can ensure continuity in knowledge acquisition and communication regardless of the market situation and changes in the behaviour of a given consumer. The strategic combination of communication channels along with sales channels, as seen from the perspective of loyalty activities, requires flexible planning of the activities and mechanics. Adaptation to market changes must take place without altering the main features of the program. An omnichannel operation allows companies to better aggregate and process data, thereby personalising communications more effectively and providing customers with a better brand experience. Appropriate collection and analysis of data allows you to act on a mass scale, but, what’s important, in a highly personalised way.
2.Personalisation on a mass scale
The experience shows that nowadays, when consumers are much more cautious in planning and managing their spending, reaching them with a personalised offer gains in importance. In order to meet this challenge, the marketers must have the right attitude. Tracking consumer purchasing decisions has become the norm, and with the information gathered, you can provide better brand experiences and more personalised offerings. We are moving away from an intuitive approach or one based on general statistical data to a model in which we can verify with great reliability the effectiveness of the actions carried out, assess the real yields, compare them with each other, and act on a massive scale but in a highly personalised way. And the customer, because of attachment and a sense of uniqueness, leaves behind more and more information that can be used by the company to draw data for the future, while addressing customer needs much better and delivering the value they expect.
3.Appropriate and safe use of data
The question today is not whether to invest in data and technology, but how to best use the data that have already been collected. The loyalty programs bring real benefits to the companies, provided that they rely on the necessary knowledge about their customers, which becomes the basis for building the whole mechanism. The customers are increasingly aware of the consequences of sharing their data with companies. Trust is the foundation of loyalty, so over time, brands will increase the effort they put into protecting data. At the same time, customer identification methods will be enhanced, which will certainly improve the consumer experience. With most of our daily activities going online, the companies are also able to aggregate data about their customers more accurately. The rise of e-commerce will definitely accelerate the use of data to predict the future.
However, data are not just about online transactions. The shift of customers towards smaller formats in everyday shopping (“closer to home” stores) makes it even more important to know the habits of the customer, to encourage them to identify themselves. Customer identification allows us to get a full insight into their profile. Therefore, we can conduct effective actions aimed at using the potentials defined as a result of such an analysis.
Being able to move quickly in an increasingly digital world can be crucial. According to Deloitte Global Marketing Trends, more than 60% of respondents believe the coronavirus pandemic has increased their appreciation for properly designed solutions using new technologies. The same number of respondents will be much more willing to use modern, available solutions. Given the sharp changes in expectations towards customer engagement, coupled with their increased recognition for and reliance on digital technology, it is now more important than ever to accelerate the investments that enable companies to respond quickly with the most relevant messages and offers. Examples include mobile payments and e-wallets, which provide customers with greater flexibility and convenience in their payment choices. By 2021, most POS systems should be able to accept mobile payment methods and provide access to real-time data.
The trends mentioned are not separate mechanisms, but mutually complementary strategies that will help ensure the growth of loyalty programs and a stable position in the dynamically changing market in 2021.