Loyalty programs have had to adapt because of the ever increasing competitive market. To retain customers, loyalty programs are implementing new and creative ideas—ensuring that the value perceived by customers remains high. Loyalty programs have come a long way from the well known punch cards or getting a free product/service after the Xth visit. Based on this, companies should be aware of the new upcoming customer loyalty programs trends that are going to appear in 2020:
1. GDPR enforcement: The General Data Protection Regulation (GDPR), enforced since May of 2018, is an EU regulation that aims to protect personal information of all individuals in the European Union to ensure their privacy. For a company to be able to use an individual’s personal information, they have to have that contact’s permission to do so. Because of the GDPR, companies will have to adapt their loyalty programs and communication strategies to attract customers and gain their consent to actually use their personal information if they want to continue increasing their customer database and gain valuable insights that will allow them to take intelligent business decisions. Companies have to keep a lookout for these kinds of regulations as many countries/continents have started imposing limits on customer information use.
2. Loyalty programs are rewarding more actions – and diverse ones – that take place in the sales cycle rather than just rewarding the purchase itself. Companies understand that every customer is different and may have unique and specific behaviors. So incentivizing different behaviors and rewarding them as well not only helps customers progress down the sales but also it recognizes their likes and preferences, what they value and how they behave. For example, imagine you give customers the possibility to choose how they earn points by rewarding 3 different paths with points: total spend, average purchase transaction size, and frequency. Allowing for customer choice gives them the freedom to determine how they want to demonstrate what they perceive to be the value of their relationship with you.
3. Simplification is also an upcoming trend, aiming for short term satisfactions and redemptions rather than the long term accumulation and saving up of points. Loyalty programs are now incentivizing specific behaviors that lead customers to more short term redemptions – for example cashback, discounts, surprise and delight instances, etc. Companies are going for these shorter term objectives because the alternative is harder to administer and is more costly. So many companies are choosing solutions that allows for the delivery of vouchers, discounts, rebates and cashback – solutions that today, Fielo can offer.
Build a business case for a consumer loyalty program
Read “The Business Case for a Customer Loyalty Program ” and learn why maintaining customers is more cost-effective than finding new ones.Read the eBook
4. Gamification is also becoming increasingly popular in loyalty programs. Gamification makes the loyalty program more fun, engaging and incentivizes the customer to participate. But, as a tool, it has to ease the user experience as much as possible. Program members do not want to have to deal with complex solutions during any stage of their customer journey. The messaging and actions to be taken must be clear every step of the way.
5. Companies that are choosing to provide their customers with premium loyalty programs for which they have to pay for are becoming increasingly popular. Research has shown that customers are willing to pay for a loyalty program if they perceive great value and benefit in what is being offered. If a company plans on offering both a free and premium loyalty program, the key is to offer the latter’s customers some really unique perks and privileges to make them feel special and willing to keep paying for the service. If satisfied with the benefits provided by your loyalty program, customers will stick around even if your competitor is offering lower prices and they will still become brand advocates and refer you to other people.
Loyalty programs have to change and adapt to the market’s and customers’ expectations. Being one of the tools that lead to an increase in loyalty, long term relationships with customers and, ultimately, help increase customer lifetime value, a company that decides to implement a loyalty program must make sure to be up to date and always focus on the customer. This way, business decisions taken will be smarter and more effective as what will be offered the customer will satisfy their needs and will be perceived as modern and valuable.