Consumer behaviours are constantly changing, and many shoppers now favour online shopping and digital platforms for convenience. Australian consumers are also moving online to chase lower prices and discounts (1) as costs of living continue to increase and put pressure on shoppers’ wallet (2).

More than 9.5 million Australian households made online purchases in 2023, spending $63.3 billion on an average online shopping basket size of $98.10 (3). 

Australian businesses must continuously innovate and adapt to keep pace with consumers’ changing behaviours. Many retailers are embracing digital loyalty programs to meet these evolving customer expectations, influence customer retention, and enhance brand loyalty, particularly as traditional physical loyalty cards and paper-based coupons cause unnecessary friction and are not conducive to seamless customer experience.  

As consumers increasingly embrace and become accustomed to  seamless digital experiences, particularly using their sophisticated handheld devices, their expectations for seamless digital engagement expands to their shopping experiences, both in-store and online.

They increasingly want less friction and more than just transactional benefits while engaging with a brand; they desire experiences that are engaging, intuitive, and seamlessly integrated into their daily lives. Loyalty programs that fail to innovate, risk becoming obsolete as consumers are likely to gravitate towards brands that offer more relevant, engaging, and convenient experiences. 

The changing competitive retail landscape is also intensifying, with new entrants often using cutting-edge technology to capture market share. Established brands must continually update and reinvent their loyalty programs to retain their customer base and attract new customers.

This might include using artificial intelligence (AI) to predict consumer behaviour, offering dynamic personalisation, or integrating loyalty rewards across a wider ecosystem of services and products. Keeping loyalty programs aligned with the latest consumer trends and technological advancements ensures that brands remain relevant and top of mind for consumers.

Hyper personalisation is one of the biggest attractions for retailers shifting from traditional loyalty programs to digital solutions, as it lets businesses deliver tailored experiences and offers to customers based on their purchasing history and preferences. Customers expect brands to understand their needs and preferences and to reflect this understanding in every interaction.

Traditional loyalty methods, which tend to be generic and broad, are rapidly being outpaced by digital solutions that leverage data analytics to offer a personalised shopping experience. This approach makes customers feel understood and valued, driving their engagement and loyalty because they are more likely to remain with brands that recognise their unique needs and preferences. 

The integration of mobile technology in everyday life also influences consumer expectations, as most modern consumers use smartphones and expect to manage their lives through these devices. Digital loyalty programs can be integrated into mobile applications, providing a seamless way for customers to track loyalty points, receive updates, and redeem offers from the convenience of a mobile device.

Businesses that invest in digital loyalty programs can offer customers instant rewards and recognitions, unlike traditional programs that often require long periods to accrue benefits. This immediacy aligns with the expectations of modern consumers who are accustomed to fast services and quick responses in other facets of daily life. 

At the same time, frictionless experiences are vital as they ensure that interacting with a loyalty program is straightforward and seamless. From signing up to the program to viewing and redeeming accrued rewards, every touchpoint should be hassle-free. Overall satisfaction increases when customers encounter minimal obstacles, making them more likely to engage consistently with the brand, as ease of use enhances the customer experience and supports the formation of long-term relationships. 

Cybersecurity is, of course, another critical aspect for loyalty programs amid an increase in data breaches and cyber threats. Protecting customer data has become a non-negotiable requirement for any digital loyalty program, and robust security measures are essential to build trust with customers.

Without the promise of comprehensive security and data protection, customers are hesitant to share the personal information necessary for effective personalisation. Businesses that offer digital loyalty programs based on PCI-DSS Level 1-certified solutions can provide greater peace of mind to their customers by ensuring robust cybersecurity measures have been taken to ensure that data protection. 

Digital loyalty programs offer significant value in the current economic climate, where many consumers face financial pressures. These programs provide opportunities for savings at the point of sale, which can alleviate some of the burden customers feel due to rising costs of living. These programs help in developing sticky customer relationships by offering tangible benefits, as customers are more likely to frequent businesses where they feel their dollar goes further. 

As the Australian marketplace evolves, so must the strategies businesses use to retain customers. Innovation in digital loyalty programs through hyper personalisation, strengthened cybersecurity, and frictionless experiences plays a crucial role in nurturing durable customer relationships. These elements help businesses stay competitive and relevant in a dynamic economic landscape where consumers value both personalisation and security.





Anurag Vasisth is co-chair and group CEO of Loyalty Now.