Just as there are trends in consumer spending, at the other end of things, on the business end, there are also trends in loyalty programs. These can be fascinating to take note of, from both a consumer and business perspective.
Elevate Loyalty has recently developed and rolled out one of the world’s leading tech loyalty solutions, OneTap Loyalty, that enables shoppers to use their payment card as a loyalty card while shopping in-store or online. OneTap Loyalty ensures shoppers receive their loyalty benefits every time they shop regardless of whether they use their loyalty card or not.
Now that we are already well and truly into 2024 and cost of living challenges are influencing consumer spending and technology is transforming the way retailers engage with customers, we are seeing some interesting trends evolve in the area of loyalty programs. These trends are so significant, they are going to change the way consumers shop in Australia.
The underlying driver for rapid innovation in the loyalty sector is being driven by the removal of cookies in 2024. From 2024, Chrome and Google will ramp up third party cookie restrictions to their users. Cookies will become a tool of the past.
This will significantly improve privacy protections for consumers but also reduce the ability of businesses to track and engage with consumers through cookies.
Loyalty programs are now providing the new frontier for businesses to connect and stay connected with consumers in the absence of cookies. To do this, businesses need to quickly bring as many people into their loyalty program ecosystems as possible hence the extraordinary offers and incentives being wheeled out across retail to encourage consumers to sign up.
Premium loyalty programs
There are millions of loyalty programs around the world and businesses are struggling to compete in this sector given the level of crowding and market saturation. As a result, we are seeing innovative segmentation across the loyalty program market.
One of the key segments to emerge is the premium loyalty program sector. This sector involves premium loyalty programs for luxury and exclusive experience brands. These programs are designed to offer brand and experience conscious consumers a bit more luxe for their life and the spend.
Many require a fee to join. Not only does this tactic set them apart, but it also ups their luxe appeal. Some companies might only choose to offer a completely premium program. Others might offer a paid component of a free loyalty program, like a higher tier that gives better rewards.
For customers, the benefit is that if they are paying to join a premium service, then they can expect that the benefits will be worth the premium they are paying for.
It was one of the biggest moves in retail last year when Kmart and Target merged in Australia. You can now find Kmart brand products in Target. This is a prime example of brand partnerships happening and I think we’ll be seeing more of these crossovers, limited editions and partnerships because they pull from two sets of customers rather than one.
This is definitely a trend that keen shoppers can look forward to. It can be fun and exciting when brands do a collab. Many parent brands of multiple brands area also allowing loyalty program members to benefit from their full suite of brand offerings to entice more members into their eco system.
Choice and flexibility
Australian shoppers are smart and savvy at nosing through deals to bag themselves a good discount. Companies know this and they know that it’s not enough to keep them ahead of their competitors, they need to be going the extra mile to get customers in their stores. So they’re giving their customers better choices and flexibility in their loyalty programs.
Customers want to choose how they’re rewarded and they want to be able to opt in or opt out with whatever they feel comfortable with. It’s a fragmented market so businesses are now working harder to win over their customers with more flexibility and options in terms of how customers can utilise their reward benefits. This is a key area of innovation and change for many loyalty programs.
Spend with other brands is captured
This is a big area of change for many loyalty programs. Traditionally loyalty program members had to shop with the program’s store to generate rewards, now this has changed.
Brands are recognising the power of ‘catch all’ spend and are building complex relationships with other like-minded business and brands that offer non-competing but complementary products and services in the market that their customers may wish to buy.
Brands are now building ecosystems of loyalty programs that enable consumers to be rewarded by their loyalty program if they spend money with another brand. Qantas has really pioneered this concept in the market and now it is being adopted and revolutionised across the retail sector.
Under the bonnet, it is another means of rapidly expanding the loyalty program’s database of customer information which is shared among its ecosystem of business members.
Engaging with customers
Companies and brands are acutely aware that customers are highly sophisticated and expect more from them. In particular, they want a shopping experience not a straightforward exchange of money for a product.
Brands are now going all out to develop deeper connections with their customers because this sort of engagement with their customers also feeds them with first party data about their customer base. It’s how Netflix seems to always know what to recommend for you to watch next.
A simple example of the importance of engaging with customers to build their loyalty is where you go for your coffee in the morning. If you’ve been going to the same café and speaking to the same barista for 15 years, that barista knows not just your latte order, but also your dog’s name, what your grandmother is allergic to, and how your son failed his driving test again.
And you’re going to keep going back to that store for the next 15 years because of that connection. Obviously not every company is going to be able to connect with each customer at such a personal level, but they’ll be trying to personalise and customise experiences for them as much as possible.
2024 trends favour customers
Most notably among all five trends, the customer is at the centre of it all. Whether it’s a free to join or premium loyalty scheme, each company is trying their hardest to win your dollar. It places a lot of power in the consumers’ hands and shoppers can leverage this power and enjoy the benefits from these loyalty programs.
Despite all the trends in loyalty programs, the high rate of shoppers still forgetting to use their card at the checkout is concerning. This is where OneTap Loyalty comes to the rescue. It enables a shopper’s payment card to become a loyalty card. All a shopper has to do is log into their loyalty program online and give the loyalty program permission to recognise their payment card at the checkout.
This means that when a customer shops and uses their payment card, they will automatically receive their loyalty benefits regardless of whether they use their loyalty card or not. This is critical for consumers wanting to ensure that every dollar they spend is put to good use and it is also essential for retailers to be able to offer customers the best deals and more reasons to keep coming back.
Carly Neubauer is co-founder and director of Elevate Loyalty.