Article

Brad Davis
Brad Davis 30 January 2020

6 Hot Customer Loyalty Trends Emerging in 2020

As someone whose job it is to keep a watchful eye on what’s happening in customer loyalty, I’ve compiled this list of essential trends to keep in mind this year. Ignore these trends, and you risk losing your customers to competitors that are staying on top of where the industry is going!

Trying to keep up with customer loyalty trends can be overwhelming.

Not only is customer loyalty constantly evolving, but the rate of which it’s evolving speeds up every year, as things like mobile loyalty apps, chatbots, gamified marketing techniques and more efficient personalisation come into play.

As someone whose job it is to keep a watchful eye on what’s happening in customer loyalty, I’ve compiled this list of essential trends to keep in mind this year. Ignore these trends, and you risk losing your customers to competitors that are staying on top of where the industry is going!

1. Instant Gratification

2020 is a new decade, and we already live in an era where consumers don’t expect to wait for anything. It’s all available right at our fingertips, be it food delivery, customer support services …and loyalty programs.

Instant gratification is an increasingly important function of any loyalty program, and this is where a mobile loyalty app becomes your best friend. In restaurants, for example, we’re seeing a rapid rise in “skip the queue” benefits and exclusive table service for VIP members – these perks are only accessible through an app on your phone.

While McDonald’s has always been at the forefront of finding new, innovative ways to make fast food more convenient and accessible, the mymaccas app demonstrates a whole new level of fast food on the go.

Customers can now order their food through the app before they’ve even arrived at the restaurant, pay for it through the app, and simply swing by to pick up their food without breaking pace. In fact, I wrote a whole case study on why McDonald’s is leading the way in digital marketing.

If you feel like dining in, but don’t like the length of the queue, many restaurant chains are offering table service when you order and pay through the app – stroll in, take a seat, eat some food and walk out without ever even coming close to the POS or taking your wallet out of your pocket.

As for developments in artificial intelligence, Invesp found that a staggering two-thirds of consumers worldwide interacted with chatbots for their customer support needs last year.

Chatbots remove the need for customers to sit on hold with a phone to their ear for 20 minutes, enabling instant messaging to discuss and resolve any issues customers might need help with.

2. Enhanced Omnichannel & Touchpoint Strategies

A touchpoint is every instance that a consumer can choose to interact with a business. The more touchpoints a brand offers its customers, the better, as it facilitates a good business-customer relationship.

Omnichannel marketing is an approach that provides customers with a completely seamless and integrated shopping experience from the first touchpoint to the last.

In regards to loyalty programs, an omnichannel approach would mean that a customer could be browsing products on their desktop computer, perhaps in the office during their break at work, and then open up that brand’s digital rewards app on the train ride home and find that the recommended products reflect what they were searching for on their work computer earlier.

Omnichannel strategies are an intelligent technology creating a seamless customer experience across all forms of your brand’s communication.

Aspect Software claims that businesses adopting omnichannel strategies are seeing 91% higher customer retention rates than businesses that fail to adopt these techniques…

You don’t want to fall into the other 9%, do you?

3. Strategic Loyalty Program Partnerships

There are numerous benefits to partnering up with other brands and sharing their customer base in order to offer a deeper customer experience, and this certainly applies to loyalty programs.

When partnering up to offer both brands’ shared customers a more sophisticated loyalty program experience, businesses can go about it one of two ways:

1. Choose a partner that offers a service intrinsically linked to the services you provide; such as a car hire company and a hotel chain, or airline, for example.

2. Choose a partner with a shared demographic of customers. A gaming developer might partner up with a business that sells home entertainment furniture and sound systems, for example.

The travel and tourism sector was arguably one of the first industries to adopt this approach, to phenomenal results.

J.D. Power System’s 2017 Hotel Loyalty Program Satisfaction Study found that third-party partnerships were one of the average hotel guest’s highest valued factors in a hotel chain’s loyalty program.

J.D. Power System Global Practice Lead, Rick Garlick, said that reward points which can only be redeemed for hotel stays, aren’t going to provide as much customer satisfaction as experiences like spa treatments, adventure sports, and other products and services travellers generally enjoy while on holiday.

4. Corporate Social Responsibility

Good corporate citizenship has never been more important in the eyes of the consumer.

A 2015 study by public relations and societal impact influencer Cone Communications revealed that 91% of millennials would switch to a brand that is dedicated to a cause.

A similar study from data and measurement firm Nielsen indicated that people are putting their money where their mouth is, too – findings showed that a third of global consumers are willing to pay more for sustainable brands, and the figures were higher among millennials.

A customer is more likely to continue shopping with you over your competitors if they feel that their purchases are helping to make a difference.

Chipotle Mexican Grill proved this in 2015 when it refused to sell pork (something of a staple at Chipotle) for six months due to inhumane practises in the meat industry. The food chain noticed a spike in customer retention over this period.

5. Tiered Programs & Paid Memberships

Consider these statistics from a recent Loyalty360 study:

- If a customer already belongs to a company’s free loyalty program, there’s a 73% chance they’ll be willing to invest in that brand’s paid loyalty program.

- While 9% of consumers claim that absolutely nothing would motivate them to join a paid loyalty program, the vast majority of respondents (84%) would actually refer friends and family to a brand if they are noticing valuable benefits from their paid loyalty program membership.

The take-away here is that businesses shouldn’t be afraid to charge a premium for a higher-tier loyalty program, as long as the rewards reflect the investment, of course.

Find a balance between an enticing, free loyalty program (so as to not alienate your existing loyal customers), and an even more enticing rewards program that offers extra perks for a small fee.

What kind of perks? Some benefits which have proven to be effective for brands like Sephora and Lululemon are:

  • Free shipping
  • Exclusive access to special events
  • Early access to sales and new products/services

Notice how these perks don’t technically cost the brand anything at all, and yet they are extremely effective in motivating various levels of customer loyalty.

Members of both the free and the paid loyalty program are still enjoying the same discounts and rewards, and they are still using the same system for accumulating points. The VIP members simply get a few extra perks.

6. Increased Personalisation

The algorithms for capturing customer data and using it to its greatest potential are becoming more advanced every year.

Companies are investing heavily in using customer data to determine what each individual customer wants, what they like, what they might consider buying as an addition to their original purchase, and so on.

This no longer stems purely from a customer’s previous transactions (although that is a huge part of it; and loyalty programs are indispensable for a brand in that regard). A brand will now recommend products to you based on what items you’ve been browsing online.

The closer the engagement between a brand and customer via rewards programs, the more personalised each customer’s experience becomes – and as it turns out, consumers crave a unique customer experience.

Bond Brand Loyalty revealed that when a brand executes personalisation properly, customer satisfaction with the program increases a staggering 640%. And yet, only a fifth of consumers are satisfied with the current level of personalisation they’re getting from the loyalty programs they’re engaged in… so make yours count!

In this day and age, it’s crucial for loyalty programs to be digital, intuitive, straightforward and convenient.

While big names like Starbucks and Dominos were among the first to secure themselves a cosy spot in the “Food & Beverage” folder of people’s smartphones, any business of any shape and size has access to mobile loyalty app solutions these days.

There is no shortage of ‘pay-as-you-go’ subscriptions to digital loyalty app providers, where merchants can easily set up and manage a digital stamp card loyalty program. This means that small businesses don’t need to have a large budget in order to operate a digital loyalty program like they used to.

So, has your brand got a mobile loyalty app?

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