As the end of 2023 approaches, businesses are re-evaluating their priorities to align with the evolving consumer behaviour and expectations in 2024. The global loyalty management market, estimated at US$8.74 billion in 2023, is projected to reach $13.99 billion by 2028, growing at a remarkable compound annual growth rate (CAGR) [1].
However, this surge doesn’t reflect the traditional understanding of “loyalty.” Instead, economic and social disruptions, coupled with rapid technological advancements, have transformed the concept of loyalty. At a business level, loyalty has now firmly secured its seat in the boardroom, and business leaders recognise that loyalty management profoundly influences three strategic boardroom priorities: customer data, customer retention, and sustained revenue growth. Therefore, it’s now up to merchants to embrace this new concept or risk falling behind.
Most retailers recognise that technology is a powerful enabler that is extending the future of loyalty programs in more ways than one. For example, customers today expect brands to provide a seamless and consistent experience across all engagement channels. However, achieving this requires intelligent data management.
Data is the new uranium; it’s incredibly powerful; however, if not handled correctly, the consequences are significant. Combining secure technology with data empowers merchants to establish a virtuous cycle of insights, performance optimisation, and enhance return on investment. Customers expect their favourite brands to use data in a responsible and secure way. This means merchants will benefit from investing in data management and technology solutions that ensure loyalty programs are simple, secure, and scalable across digital, physical, and mobile channels.
Customers no longer want to jump through hoops to prove their loyalty, wait months to redeem points, or see their rewards expire. Today, they want to actively participate in a brand’s mission and are open to innovative loyalty concepts, including paid loyalty programs; charity and environment, social, and governance (ESG)-linked loyalty rewards; and enhanced personalisation in exchange for authorised use of their data.
As digital innovation continues to reshape the world, forward-thinking merchants are shedding outdated, legacy platforms in favour of modern solutions that capture critical customer metrics effectively. By making thoughtful updates, such as replacing traditional card-based membership reward programs with frictionless, payment-linked loyalty and reward systems, merchants can enhance the customer experience (CX) while benefiting from Software-as-a-Service (SaaS) solutions that eliminate the need for complex infrastructure provisioning.
Leveraging the power of digital innovations—particularly frictionless, SaaS solutions—offers two major advantages for retailers when it comes to optimising their loyalty programs in 2024:
1. Ease of implementation and use
Payment-linked loyalty programs are straightforward to set up and cost-effective, making them accessible to merchants of all sizes. This accessibility empowers small, independent retailers and larger chains alike to offer comprehensive rewards programs, helping customers maximise their memberships effectively.
Using a proven technology loyalty rewards platform provider also helps retailers that lack in-house resources to connect with and leverage data collection systems, letting them deliver more relevant offers and opportunities to customers for future transactions. With frictionless, payment-linked loyalty programs, customers no longer need to scan codes or present membership cards during transactions, simplifying the process and ensuring that they can easily accrue their well-earned rewards.
2. Drive increased customer stickiness through greater rewards opportunities
Digital innovations have made it easier for merchants to offer more to customers beyond a seamless purchasing experience. Online platforms that provide a connected ecosystem of program partners let merchants and customers access a diverse range of options, including charitable donations, cashback rewards, or even superannuation contributions. This gives customers the chance to save on their everyday expenses and plan.
As traditional and legacy loyalty programs transform to align with customer preferences, forward-thinking merchants must leverage technology to cultivate loyalty through a combination of value, serving customer’s unique needs, and innovation.
By adopting a platform that is bank- and payment network-agnostic, production-ready, and requires minimal technological integration, merchants can make a future-ready and resilient business decision. And, by offering a frictionless, streamlined loyalty program that saves time and costs at the point of sale (POS), merchants can empower customers to maximise their benefits while enjoying a seamless shopping experience that is likely to cultivate stronger loyalty in 2024.
Anurag Vasith is co-chair and group CEO of Loyalty Now.