December 13, 2019 CPG, Loyalty Strategy, Loyalty Trends, Personalization, Retail, SmartJourney®, Telco, Travel & Hospitality

Loyalty Trends & Best Practices – 2019 Round Up

Two women looking at loyalty rewards website

Today, more brands than ever are adding a loyalty component to their growth strategies. With this influx of new programs hitting the market, 2019 saw innovation and an evolution of loyalty tactics. Here are the key trends and best practices we saw leading the industry this year.

 

Charitable Loyalty Hits Emotional Engagement

With the rise of buying power from Generation Z and Millennials, who want to see businesses do more good in the world, brand social responsibility was a huge driver for emotional loyalty in 2019. Primarily, retailers were the leaders in tying these initiatives to their loyalty programs. The Target Circle Program, for example, gives members the opportunity to vote on which nonprofit organizations will benefit from Target’s philanthropic efforts; the more members shop at Target, the more they can influence these efforts. The Body Shop creates a value exchange of mutual benefits between consumers, brand and philanthropic causes alike by making a commitment to animal welfare, which members can contribute points toward.

Similarly, DSW hits social philanthropy on both the earn and burn sides. The brand rewards members with 50 points who donate to Soles4Souls, and VIP members are invited to choose their VIP MyPERK, including the option to donate 2.5% of purchases to charity.

Why this matters: Newer generations are looking for brands that reflect their own values of social giving. From our Global Emotional Loyalty Study, we’ve seen that social giving and “cause loyalty” helps hit key emotional triggers for customers. Additionally, brands can use this tactic to continue to push their corporate causes, while not adding additional costs to the loyalty program.

 

Gamification Strong Tactic for the Right Programs

Gamification is the leading tactic for rewarding members for engagement outside of transactions. While this tactic may have been overused in the past, brands that properly leverage gamification are seeing tremendous ROI. For example, Nike’s gamification is key to the brand’s loyalty program success and amplifies overall its brand building. The NikePlus app tracks running statistics and measures members’ progress towards goals and links to social media so members can compete with (or show off to) their friends. The more Nike members engage, the more benefits they can experience. The payoff from this gamification for Nike is that the more people are running, the more people are buying running shoes.

A familiar leader in gamification loyalty is Starbucks, which has one of the most renowned gamification programs in the industry. Their program motivates consumers to continue making everyday purchases through points challenges to unlock status and rewards. Starbucks Rewards keeps influencing behavior and enticing customers to visit stores while also creating fun brand engagement.

Why this matters: Gamification allows brands to stay in front of their customers and influence key brand touchpoints. The more interaction a brand has with a consumer, the more the brand becomes an integral part of their customers’ lifestyles, which of course increases the brand’s stickiness and retention. While not appropriate for every industry, this tactic is making a concerted comeback.

 

AI & Machine Learning Tools Bring Loyalty to Scale

As we saw from the results of our Global Emotional Loyalty study, brands are still struggling to find the right blend of martech and methodology to scale personalization across their programs. In fact, our survey of global CMOs found that 21% of are not investing in personalization at all, and many don’t know how to personalize to massive volumes of customers. Predictive churn models, next best experience models and other machine learning enabled tools are boosting personalization by increasing the relevance of offers to send the right message at the right time to re-align customers.

Walgreens enabled personalization to such depth that it has made the brand synonymous with a healthy lifestyle. The drugstore retailer uses data from offline and online devices, such as data uploaded from FitBits, to deliver highly targeted offers for its members based on behavior and transactions. On the other hand, PC Optimum uses personalization to remove the need for base points, and incents members as they change their behavior through the targeted offers.

Why this matters: Personalization is a major key to unlocking emotional customer loyalty. Relevant content sent at the right time boosts retention and helps to grow your advocates.

 

 

Loyalty Indicates Company Health and Growth Potential

Throughout its history, loyalty has gone through several transitions. Currently, some leading brands are finding value in their loyalty program in and of itself, which is having huge implications for the stock price and potential growth indicators of overall company health. With programs such as Amazon Prime and certain airline programs, thinking of the loyalty program as a business line in addition to a marketing program opens new possibilities and a dramatic increase in budget. Speculation over Lululemon’s share price boost pointed to the increasing value of loyal customers, who are rewarded through the company’s new loyalty program. Delta’s focus on passenger experience and loyalty had profits and stock prices soaring, while investors loved Chipotle’s approach to drive sales and engagement through its new loyalty app.

Why this matters: Investors and key company stakeholders see how loyalty done right boosts retention and how insights into customer data can unlock additional revenue. Loyalty data can be used to identify business-wide opportunities and risks, such as identifying those customers most likely to churn, the products that will appeal most to valuable customers and more. Our SmartJourney® methodology uses machine learning to classify, quantify and predict customer behavior across key engagement stages to identify opportunities and potential risks for business inside and out of loyalty.

Looking to the future, we know the loyalty industry is going to continue to change. AI & machine learning tools mean the age of Individualized Loyalty is at hand and data is more valuable and more influential than ever before. 2020 is sure to bring even more revolutionary changes!

 

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