Loyalty programs are becoming more popular as consumers continuously desire personalized experiences. They’re so popular, in fact, that the global loyalty ecosystem is predicted to reach $24 billion by the end of 2029, up more than 328% from roughly $5.6 billion in 2022, according to Statista.
“The current state of the industry shows that consumers love loyalty programs more than ever,” says Len Covello, CTO of Engage People. “Given the state of the economy over the past few years, the value of loyalty is more prevalent now than ever for consumers. Whether it’s offers, discounts or points, we’re seeing a lot of customers take up those opportunities to invest in these programs.”
Technology Presents Opportunities for Loyalty Programs
Covello explains that there are many opportunities for loyalty programs that technology can bring to the table. Whether it’s an enhanced omnichannel experience or additional capabilities, technology can bring a lot of excitement to both you and your customers.
Here are four prevalent technology trends that are currently redefining loyalty programs:
- Artificial Intelligence (AI). There are so many things retailers can do with AI today, and helping to improve your loyalty program is one of them. Some major benefits that AI can bring to your program are increased personalization, data-driven insights, enhanced engagement, efficiency and omnichannel integration.
- Digital Wallets. The continual integration of digital wallets in loyalty programs presents a promising future, which will continue to offer convenience and personalization. Digital wallets have grown to become one of the top technology trends and can help boost convenience, accessibility, integration and multi-currency and loyalty points.
- Predictive Analytics. Predictive analytics is poised to revolutionize loyalty programs, offering insights into customer behavior, helping retain high-value customers, behavior reinforcement and effective marketing campaigns.
- Digital Beacons. Digital beacons are emerging as a transformative trend in loyalty programs, offering proximity engagement, personalized offers, consumer insights, seamless experiences and enhanced loyalty.
Best Loyalty Programs for 2024
Newsweek just released its ranking of America’s Best Loyalty Programs for 2024, rating more than 300 rewards programs across 40 categories, based on surveys of more than 4,000 loyalty program members. The annual rankings rate a sweeping range of retailers, from Starbucks to Nordstrom, Nike, Apple and Amazon, on their loyalty offerings, giving each a score on a scale of 1 to 10.
There were many retailers, including Banana Republic, Tillys and Pampers that ranked a 9 or 10 on this list. Covello explains that this most likely has to do with their offers.
“You can only offer so many discounts, and Starbucks just recently relaunched their loyalty program to offer other rewards rather than just discounts,” notes Covello. “This is prevalent across multiple sectors, and it’s not just one or two companies doing this ― it’s a lot.”
With Starbucks, for example, loyalty program members get freebies with every few drinks, they can order ahead and pick up at any location, and the coffee brand even partners with a few banks in which members can get extra points as well as earn cash back by linking their Starbucks membership with their bank account.
Loyalty Program Must-Haves and No No’s
According to Covello, every rewards program should have consistent experiences across all channels and personalized offers for their customers.
“Consumers have been producing so much data, such as their purchase history, so you need to collect that data and create personalized offers,” Covello advises. “The data has always been there, but AI allows you to speak with shoppers one-on-one. Personalized experiences are a must-have.”
On the other hand, Covello says that a very simple way you can push customers away is by allowing their points to expire. This creates a barrier between you and the shopper and gives them an out to go somewhere else and start a new account since their points at your store will be gone.
“Another no no is giving shoppers offers that aren’t relevant to them,” notes Covello. “If you know the customer has a family and is of a certain age, don’t send them offers for specific experiences that don’t align. You need to know your customers, and if you don’t, be very careful of the offers you promote.”
When asked what the future holds for the loyalty programs segment, Covello says everything will be fluid and seamless for the customer.
“I think we’re very much on our way to where loyalty will be wherever the consumer is, and that’s ultimately the goal,” he says. “The consumer shouldn’t have to pull out a special card in order to get a better discount. Loyalty will be an experience that you don’t even know is happening ― it will flow as nicely as speaking with someone.”
