Most retail CMOs have endlessly heard about the most popular (and modeled) loyalty programs in the 21st century. If we mention Starbucks, Amazon Prime or Sephora you might think: “Sure, they are ahead of the trend, but they have huge resources”. But might it be that success does not come from innovative concepts, but rather from good implementation?
Whether you’re planning to launch a new loyalty program or to improve the one you have, it’s important to identify your specific program goals. Is your objective to increase year-over-year sales volume by a certain percentage? Do you want to increase brand engagement and encourage repeat purchasing? And once your loyalty program is officially running, how do you know if it’s on track to be successful?
While there are plenty of statistics proving customer loyalty programs work, there is far less statistical data that shows why or how.
On our recent webinar, 2022 Loyalty Trends in the Retail Industry – our guest speaker, Forrester VP and Principal Analyst Mary Pilecki, explained four trends that are shaping customer loyalty in 2022 and beyond: Mary leads Forrester’s global customer loyalty coverage. Her research focuses on loyalty strategy, loyalty programs, consumer trends, and the tools, skills, and processes retail marketers need to manage and measure loyal customer relationships.
Click here to watch the full webinar and read on for our summary of the research Mary shared on our webinar.
In this article, you will learn:
- A brief history of loyalty programs
- Trend #1: Investing in experiential loyalty
- Experiential reward examples
- Trend #2: Generating emotional loyalty
- Emotional loyalty tactics
- Trend #3: Appealing to values-based buyers
- Trend #4: Collecting zero-party data
- When do brands collect zero-party data from loyalty members?
- What makes zero-party data so revolutionary?
- Using Loyalty Trends to Enable your Retail Strategy
A brief history of loyalty programs
The truth is that Loyalty Programs have been around for a long time. Many believe that Loyalty efforts began in the 18th century, when American retailers gave clients copper tokens to be redeemed on future purchases. In the 19th century, companies moved to stamps.
In 1979, Texas International was the first airline to start a frequent flyer program, but such programs didn´t really take off until 1981, when American Airlines and United Airlines started their programs one week apart.
Forrester’s January 2022 CMO Pulse Survey indicates that today, 73% of brands have loyalty initiatives, and 24% are planning one within the year.
The average U.S. household has enrolled in more than 18 customer loyalty programs, according to Colloquy, “The Billion Member March: The 2011 COLLOQUY Loyalty Census”.
Among consumers, grocery store programs are the most popular, with slight differences among countries:
Beyond these fascinating stats, you might be interested to learn that successful grocery and retail Loyalty Programs today…
- are currency-based and use points, miles, cash off or some other currency to reward their members
- have a digital loyalty application and many offer mobile access
- focus on enticing members to buy more products and services
- are investing in data insights; but many lag here and don´t fully leverage the data they collect
What are the top trends in loyalty marketing?
TREND #1: Investing in experiential loyalty
Forrester´s CX Index score measures how successfully a company delivers customer experiences that create and sustain loyalty, based on 3 qualities:
- Effectiveness: The experience delivers value to customers
- Ease: It´s not difficult to get value from the experience.
- Emotion: Customers feel good about their experience.
They also found that there is a direct link between these 3 qualities and generating loyalty, whether it´s about retention (likelihood of keeping existing business), enrichment (likelihood of buying additional products and services) and advocacy (likelihood of recommending to others).
Obviously, traditional financial rewards remain highly valued among consumers, but experiential rewards are quickly catching consumers´ interest.
Here are some experiential reward examples:
- Enhanced customer experience
- Opportunity to provide feedback to the company
- Ability to earn special status
- Personalized experiences
- Ability to redeem rewards for charitable donations or sustainability initiatives
TREND #2: Generating emotional loyalty
It´s no secret that emotions are important because they drive behavior. In fact, when we think of the term “loyalty” in itself, it’s more of an emotion rather than a transaction.
At Loyal Guru we believe that emotional loyalty ****aims to bring consumers closer to the brand by creating trust and belief in the brand’s vision, and goes beyond rational or transactional loyalty.
According Forrester´s Customer Experience Benchmark Survey, US Consumers 2022, of consumers who feel appreciated:
- 88% plan to stay with the brand
- 83% plan to spend more with the brand
- 87% will advocate for the brand
How companies engage emotionally always goes back to their core messaging. What does the company care most about? How can you as a brand earn consumers’ trust and keep them engaged? A huge component is how you interact with your customers through your in-store service, email or phone support and social media.
Here are some emotional loyalty tactics:
- Surprise and Delight
- Make your customers feel special and appreciated
- Associate your brand or product with a specific emotion
TREND #3: Appealing to values-based buyers
Forrester´s Consumer Benchmark Survey 2022 shows that values-based online US buyers are more loyal.
The impact of the pandemic ripples into all aspects of our lives, from our emotions to our financial outlook and our priorities. Consumers today are more sensitive to certain company values and care about issues such as these:
- how brands are committed to reducing their environmental impact
- how brands prove they treat their employees well
- how brands find ways to help their local communities
- how brands show customers how they keep their personal data secure
TREND #4: Collecting zero-party data
Zero-party data is information that a customer intentionally and proactively shares with a brand. Their motivations often include that they want to feel special, get special offers or get more relevant offers.
According to Forrester´s CMO Pulse Survey, Q2 2022, zero-party data collected from loyalty program members includes:
- demographic information
- behavioral information
- buying intentions
- product affinities
- and more
When do brands collect zero-party data from loyalty members?
What makes zero-party data so revolutionary?
Brands have needed better data solutions for decades, and we’re well aware of the value of customer-offered insights.
Zero-party data removes the guesswork associated with third-party data by getting information about preferences and intent directly from the customers. Businesses can combine this information with transactional and behavioral data to provide the level of personalization that is needed today to successfully market to customers. When brands create experiences that are relevant to their customers, trust and loyalty will follow. This is why many call this the zero-party data revolution.
Using Loyalty Trends to Enable your Retail Strategy
You’re up to speed… for now. As long as you stay up to speed with these and future changes, your business will not fall behind.
But if you’re feeling overwhelmed by the idea of keeping up with all these opportunities, don’t worry. The Loyal Guru team is here to guide you through the process of developing or revamping your loyalty program and maximizing your customers’ potential.
Click here to get a free consultation from one of our top loyalty experts.