Will 2014 Be the Year of Loyalty Programs?
Business Solutions The sudden proliferation of loyalty programs this past year is an interesting indicator of what consumers can expect to see more of in the future.
The confluence of forces shaping the current ‘loyalty economy’ means changes for consumers with their loyalty program memberships. The continued fragmentation of markets, capabilities for personalization and evolving customer expectations are contributing factors to potentially dramatic shifts in loyalty programs.
We sat down with COLLOQUY Research Director Jeff Berry to find out what’s in store for the near future.
What trends will consumers see reflected in their loyalty memberships in 2014?
First and foremost, consumers will have a world of choices at their fingertips – literally. More businesseswill have loyalty programs featuring mobile-enabled offerings to make transactions — and engagement – as easy as possible. That convenience is more important than ever because, thanks to global connectivity,customers can increasingly access choices from around the world.To further enhance customer relationships, businesses are providing more consistent experiences across every touchpoint: in-store, online and through mobile devices.
"Discounts can only be taken so far. Therefore, ‘soft benefits’ – exclusive, personalized experiences apart from transactions – will become far more prevalent."
In addition to helping businesses, it seems like technology is allowing consumers to find and share solutions with one another.
It’s true. Peer-to-peer (P2P) marketplaces like eBay and Craigslist have moved beyond mere transactions into a world of transitory collaboration. Thanks to the options provided by technology, consumers can easily find personalized or highly relevant items that meet their specific needs. This gives consumers yet another advantage over traditional businesses as they have more channels for meeting their needs.
Consumers will see companies striving to become a go-to resource or forum in the P2P arena in order to remain relevant in this emerging form of commerce.
Data security and privacy issues have been in the news for months. What impact does that have on loyalty programs?
Consumers are becoming all too aware of the personal data that is collected both online and offline and are expecting more in return for providing that information. The average consumer is reluctant to share more information because he or she isn’t currently experiencing the benefits of doing so. According to the 2013 LoyaltyOne Privacy and Relevance Study, 77 percent of consumer respondents agreed with the statement: “I do not feel as if I am receiving a benefit for sharing my personal information.”
However, 63 percent say they would be “willing to give more personal information if companies sent me relevant information based on what I have provided.” Loyalty programs will prioritize finding the ‘sweet spot’ where relevant engagement meets the need for personal details.
How will loyalty programs change to keep their members coming back?
Loyalty programs used to ‘surprise and delight’ members by delivering unexpectedperks, discounts and rewards. Nowadays, customer expectations have grown and those benefits are perceived as a “given” by consumers.
Discounts can only be taken so far. Therefore, ‘soft benefits’ — exclusive, personalized experiences apart from transactions – will become far more prevalent. For example, these benefits may include an invitation-only entertainment event for members or a special expedited check-in line,as seen in thehotel or airline industries, extended into retail.
The bottom line is good news for consumers: everyone with a phone or a connection to the Internet will increasingly have the power to become an ‘Economy of One’ — and companies are changing their programs to address that.