The beginning of 2020 brought to us a great deal of market turbulence and uncertainty. The coronavirus outbreak completely changed the environment and forced every business to rethink its strategy.
While working on the Loyalty Trends 2020 report, we asked top loyalty professionals about their thoughts and predictions for the future of loyalty programs. You can read some of them here.
Predictions for the loyalty program trends
David Canty
Founder & Principal at Gen-Z Loyalty
US Partner at New World Loyalty
What challenges do you see in Loyalty Marketing for 2020?
The time for loyalty programs to shine is now, organizations need to ensure they don’t go totally dark on their most loyalty customer base. Being in tune with what people are enduring, while also keeping them informed of what you as a company or an industry is doing, can help create a level of confidence that there is something to look forward to. Programs need to evolve and become much more relevant to Generation-Z, especially in travel where there is an over-dependence on members that are >50. Keep humanity at the core of everything you do, members need to relate to your brand on an emotional level.
How do you see the future of Loyalty Programs in 2-3 years?
Programs need to engage members much earlier in the lifecycle, there needs to be achievable hurdles and instant rewards. Sustainability and Badging & Gamification can allow you to engage members between transactions, while also being more relevant to younger generations.
Nick Chambers
Director at Mobile Loyalty Technologies
Managing Partner at the CSN
What challenges do you see in Loyalty Marketing for 2020?
Our fundamental challenge for 2020 will be how we provide support for companies as they emerge from COVID 19. In a period that promises to be highly promotional, as companies attempt to re-engage with customers. Only well designed and operated loyalty programs will enable companies to capture customer interest over an extended period maintaining both purchase frequency and average transaction values.
How do you see the future of Loyalty Programs in 2-3 years?
I believe the future of consumer loyalty programs will be in their convergence with the payment process in all their various forms. Loyalty programs provide permission-led communications and associated personalization. These features will become tightly integrated with how we make a payment: by digital wallets, cryptocurrencies, wearables, biometrics, in addition, of course, to payments by cards and cash.
Paweł Dziadkowiec
Head of Loyalty Strategy at Open Loyalty, former BP Loyalty Manager
What challenges do you see in Loyalty Marketing for 2020?
The great challenge is to give end-users more savings while maintaining the same level of income from the loyalty program, less budget for CRM activities, and higher profit per segment. This is the ideal win-win situation and that underpins loyalty programs and needs to be constantly improved.
How do you see the future of Loyalty Programs in 2-3 years?
Loyal programs will improve in direct correlation to how well they understand customers. Further improvement will come by using data analytics to predict needs, refine customer segmentation, and create dedicated offers for loyal customers. Data gathering and sharing among partners can help with this goal; there is also a need to simplify processes, select data for customer profiling more effectively, and find ways to monetize data.
Pete Howroyd
CEO at The Loyalty People
What challenges do you see in Loyalty Marketing for 2020?
The biggest challenge the market has in 2020 is now surviving, maintaining and recovering from the COVID-19 outbreak. This unprecedented event has shaken the market beyond any predicted outcome and there will be many pieces to pick up as a result. CFOs all over the world will be looking at their P&Ls and loyalty programs will certainly be in for a rough time unless the loyalty division can prove its worth and why they should keep their budget.
How do you see the future of Loyalty Programs in 2-3 years?
Loyalty Programs will take a pivotal role as businesses discover that customers look for reward mechanics and give their custom to those who reward repeat purchases. The traditional look and feel of a loyalty program will change into a different more experiential, cross channel engagement tool. Customers will want to be rewarded for more than just purchases. Loyalty programs that give advanced insights on customers will flourish as businesses realise the value of their data.
Radek Hrachovec
Partner of PRICEWISE
What challenges do you see in Loyalty Marketing for 2020?
This year’s survivors will be the companies who’ve already paid attention to their returning customers and established some kind of loyalty program. In a crisis, we focus our spending on those we trust. The real challenge in 2020 is to quickly change the company’s’ culture from acquisition to retention.
How do you see the future of Loyalty Programs in 2-3 years?
Prove the subscription (pre-paid) loyalty model. I guess more and more firms will be discovering the beauty of recurring revenue. But remember, subscribers are far more demanding and expect to be rewarded for their loyalty.
Paul Kanwar
Director of Loyalty & Engagement at ScanTrust
What challenges do you see in Loyalty Marketing for 2020?
COVID-19 will force people to live, work, and shop from home. As retailers, banks, and entertainment venues close, a brand’s capacity to discount, differentiate, and directly connect with their customers will vanish. Programs which scan cards/key fobs into a retailer’s POS will not survive unless the whole program can be digitized. As many programs are designed to drive members from online participation to offline purchase, re-program for eCommerce focus. To succeed, start with digital-only proposition and design to deliver value that is not possible offline: brand protection, supply chain transparency, and personalized customer engagement.
How do you see the future of Loyalty Programs in 2-3 years?
Going forward, most new programs will be born online, often as an essential pillar to DTC marketing, with a physical tag-on. Premium/subscription programs will grow in popularity simply for speed & convenience of being able to fast-track privilege and exclusivity. Regulations will make it possible for program members to monetize their declared data, and earn a fair return for the scrutiny and analysis of their online behaviour.
Paul Malcolm
CEO at Vivid Engagement
What challenges do you see in Loyalty Marketing for 2020?
Right now, COVID-19 and the follow on impact to general life, not just Loyalty Programs. I do feel that Loyalty will continue to thrive, despite the lack of physical interaction; programs need a strong digital footprint or an extremely adaptable strategy. Prior to this, I see the challenges of suitable and dedicated resources to a project for my clients. Many have great intentions; however, another new project without additional resources or minimal budget is a challenge to successfully implement, operate, and achieve optimum results.
How do you see the future of Loyalty Programs in 2-3 years?
Decentralised Programs > Coalitions Programs. Many smaller programs may struggle to maintain market share and relevance, and a voice in a competitive and noisy market, therefore will not leverage the true benefit of a proprietary program due to internal issues such as budget, longer-term strategy, use of data, disparate technology and so on. I see Coalition Programs to benefit many brands coming to the fore. They are likely not to be a traditional Coalition (i.e. Nectar) but newly-developed, generated by market opportunity, and fast thinking.
Adam Posner
Founder at The Point of Loyalty
What challenges do you see in Loyalty Marketing for 2020?
1. Proving value and viability: Loyalty marketing will face pressure and challenges when the leadership team is not aligned on the program’s goals and measures of success and do not have the regular visibility of the value and viability of loyalty marketing.
2. Data use and misuse: The data gained from the value exchange with members is a privilege and 'having it without using it’ with sensitivity is disrespecting the exchange, thus reducing trust and longer term member interaction.
3. Emotional connectivity: Loyalty programs that continue to focus on transactional offers without extending to experiences will lose the opportunity for emotional connectivity.
How do you see the future of Loyalty Programs in 2-3 years?
1. Programs solving a community problem (selfless) rather than providing rewards for transactions (selfish) will be the hero programs over the next few years. This means programs with a ‘purpose beyond points for purchase’, those with a greater focus on the wider environment or social needs as part of their proposition will give members greater connection to the brands.
2. More programs will seek partnerships outside their internal structure ecosystem to add to the life of the member.
Iain Pringle
Managing Partner at New World Loyalty
What challenges do you see in Loyalty Marketing for 2020?
Until this month I would have said that the biggest challenge facing loyalty today is that creating a transactional loyalty program is no longer good enough. Programs now need to have a clear utility for customers and must resonate with the brand. Now I would simply say the the virus and business response to it is by far the biggest challenge in 2020. With travel bans, squeezed budgets, and changes to customer shopping habits, the impact of this will be felt across the industry.
How do you see the future of Loyalty Programs in 2-3 years?
Loyalty programs will need to become more relevant and useful or they will die off as customers lose interest.
Philip Shelper
CEO at Loyalty & Reward Co
Author of "Blockchain Loyalty"
What challenges do you see in Loyalty Marketing for 2020?
A substantial decline in retail demand for non-essentials due to COVID-19. Companies which have invested over many years in building a quality loyalty program can use their database to support members, communicate trading changes, and promote offers. This will enable rapid, personalized, low-cost communications, providing a distinct advantage over competitors who have not invested in loyalty apparatus.
How do you see the future of Loyalty Programs in 2-3 years?
Plastic cards will still be the main member identifier, although apps will gain substantial traction. Artificial Intelligence (AI) powered analytics and marketing will give major brands a substantial advantage over smaller competitors by allowing them to improve advertising while reducing costs. Card-linked, merchant funded offers will boom. Email unsubscribes will spike, negatively impacting companies who have failed to invest in loyalty and more sophisticated marketing systems. 5G will revolutionize connectivity, making experiences real-time, rapid, and richer.
