In Loyalty360’s Brand Marketer Research: 2024 State of Customer Loyalty report, almost three out of four marketers (72%) believe there is a “sea of sameness” regarding customer loyalty programs, a slight increase over 2022’s 71%. This underscores the consistent, competitive pressure brands face to continually innovate.
The report also revealed that 57% of brand marketers showed interest in brand-to-brand partnerships. Because of the “sea of sameness” permeating the customer loyalty landscape, many brands are looking to form strategic partnerships that can increase member engagement. These partnerships can add significant value, providing different customer experiences through creative collaborations—again helping the interconnected loyalty programs gain more favorability through their perceived “uniqueness.”
Loyalty360 spoke with supplier members and loyalty strategy experts about adding value to loyalty programs through distinctive customer experiences, taking a more creative approach to program structuring, and how brands are leveraging technology to achieve relevant personalization.
Article contributors:
• Cassie Preston, Director Strategy, Baesman
• Ellen Green, VP Loyalty Strategy, Bounteous x Accolite
• Kristen Schrenkeisen, Lead Loyalty Strategy, Bounteous x Accolite
• Wojciech Kempny, Director - Consulting - GCC/Africa/APAC, Comarch
Key Factors in “Sea of Sameness” Perception
According to Bounteous x Accolite’s Green, the loyalty space has become inundated with similar programs and strategies, which have limited differentiation and aren’t motivating share shift.
“Many brands look to their competitors to inspire their loyalty strategy rather than understanding what their customers value most about their brand,” says Green. “While it’s important to understand what competitors are doing, the key is to find where your brand can set itself apart.”
Green believes that brands that harness inspiration from other industries, innovate, and activate based on what customers value most will stand out—and win share. She reports Bounteous x Accolite’s research revealed that 90% of customers are more likely to visit more often if a brand’s customer loyalty program is unique to them.
Comarch’s Kempny believes the perception of a “sea of sameness” in loyalty programs is largely due to three areas:
• Limited Differentiation: For various reasons (e.g., budget, lack of support, lack of resources, “fear”), programs
tend to fall into the trap of going for well-known structures and templates without incorporating unique,
personalized, or differentiating elements.
• Inadequate Use of Customer Data: Programs that do not leverage advanced data analytics to tailor rewards
and experiences to individual preferences can appear generic and uninspired.
• Conservative Innovation: A reluctance to innovate and adopt new technologies or the inability of existing
tech to deploy new functionalities can lead to stagnant loyalty programs.
Baesman’s Preston believes that a loyalty program is one of the best levers for brands to pull when they’re looking for personalized retention tactics. Over the years, proven points-based reward program models have become mainstream, and consumers recognize points and rewards as a form of currency in shopping the brands they love.
“Brands know and love the points-based model because it creates that flywheel effect of bringing members back to the brand faster and more frequently,” explains Preston, noting that because these program structures are so easily known and recognized, today’s consumers belong to 14+ different programs and rarely can remember the thoughtfully-planned earning structures and benefits brands work so hard to design, create, and get approved by their business leaders.
Unique Customer Experiences Add Value
Loyalty360 asked its supplier-member experts to share examples of brands that have successfully differentiated their loyalty programs through unique customer experiences.
Kempny cites Al-Shaya’s Aura Mobile project in Kuwait. Customers can earn Aura points on the Aura Mobile pre-paid plans and enjoy exclusive benefits, like tier upgrades, exclusive promotions, and discounts at Alshaya brands.
“Alshaya (multi-brand retailer) and Ooredoo Kuwait (telco) came together to create a telecom subscription called Aura Mobile with exclusive retail and loyalty benefits,” says Kempny. “It’s a first-of-its-kind partnership between a retail company and a telco operator in the MENA region to co-create a completely new product.”
He also nods to Globe Rewards in the Philippines. On G Day—an annual event—Globe Rewards stands out by organizing exclusive concerts where tickets can only be bought with G points, offering a unique way to engage loyal customers. Globe also creates a month-long celebration around G Day by running raffles with exclusive rewards and experiences, weekly flash deals, and allowing members to donate G points to charity, making the day—and month—a unique blend of entertainment and social good.
“The initiative is expanded with gaming events and creator and business fairs, as well as cosplay fun,” adds Kempny.
Panda Express, Total Wine, and Amazon Prime examples are other examples.
“Panda Express found that the concept of Good Fortune resonated with its guests,” says Green. “The Panda Rewards experience excites them with digital fortunes after a visit that can be saved to their profile, animations that celebrate milestones, and a Good Fortune gift that invites guests to return. These go beyond transactions to build an emotional connection that lasts.”
Bounteous x Accolite’s Schrenkeisen goes on to explain that Total Wine delivers differentiation through exclusive access. The brand identified that its high-value members were hunting to procure rare releases and hard-to-find bourbon brands. Through its loyalty program, Grand Reserve tier members receive priority access to purchase rare and special release bottles each quarter.
Amazon Prime excels at convenience and found that partnerships are a great way to deliver additional value and differentiation. The brand quickly identified that members wanted more delivery services and added benefits that expanded its supply chain to provide fast, free delivery of anything Prime members might need.
“Through partnerships with GrubHub+, Audibly, Whole Foods, Kohl’s, and Twitch, Amazon Prime has made it so that customers never need to leave their homes—providing them with fast access to virtually anything,” says Schrenkeisen.
The team at Baesman believes differentiation starts by taking the fundamentals of a loyalty program to the next level. Like Schrenkeisen, Preston lists Amazon Prime as an example, noting that the paid program allows members to get other benefits that align with their personal lifestyle.
“Convenience and service is an area that, through the pandemic, significantly changed consumer expectations on a foundational level,” says Preston. “Today’s consumers want their products and services faster and cheaper, and they want their buying experience to be smooth. It’s all about being everywhere the customer is. Amazon does an excellent job sourcing benefits and membership options that Prime members keep returning to again and again. Because of this, brand programs are aspiring for that ‘Amazon Effect.’”
Baseman has also seen other brands like Foot Locker relaunch their programs with more focus on customer choice and lifestyle recognition. Foot Locker provides a significant reward catalog that not only offers products but also cash rewards that can be redeemed for points across multiple tiers and levels. The footwear-focused brand also offers exclusive access to new shoe launches—a key gamification aspect to engage its core audience of footwear lovers.
“Brands in the beauty industry offer personalized samples and product recommendations, too, as a way to resonate with their members’ favorite products and beauty items,” adds Preston.
Technology Can Help Loyalty Programs Stand Out
New and emerging technologies like artificial intelligence (AI), machine learning (ML), and gamification can help brands differentiate their loyalty offerings. In Loyalty360’s 2024 State of Customer Loyalty report, when asked, “Is there an internal interest within your brand to redo, enhance, or update your customer loyalty offering?” 79% of the respondents indicated they were interested in changing their customer loyalty offering, and a marked 65% indicated an interest in gamification as a top program enhancement.
Schrenkeisen notes that emerging technologies are best leveraged when they enhance the human experience to connect the customer across all touchpoints with the brand or with each other.
“United customer data is the foundation for providing the right offer or incentive, making it more convenient to transact or deliver personalized moments that create lasting memories,” says Schrenkeisen.
She provides a few examples of how brands are leveraging technology:
• The beauty industry is leveraging AI to make personalized ‘color match’ recommendations based on scanning and analyzing the member’s facial features.
• Brands are using AI to scale creative, better target the right customers with marketing, and optimize conversions.
• Gamification plays into human psychology and enables fun ways to interact with the brand and win.
Preston asserts that personalization is a key use case for AI and machine learning tools, while gamification helps create an omnichannel experience that makes engaging with the brand even more fun. She reports that the retail industry has an especially high interest in AI and machine learning for personalization, but most brands aren’t sure how to use it or where to start.
“We find in talking with brand partners that data is all over the place, in disparate systems, and unavailable to marketing leaders designing loyalty programs, making it difficult to truly know customers and personalize the loyalty program value proposition,” explains Preston. “No matter where you are in your data journey, it’s a great idea to consider new and emerging tools like AI. But even more so, it’s critical to use the data you have to identify customer segments and outline a marketing plan for your program that speaks to the unique value on a 1:1 level with customers.”
Getting siloed data all in one place is the starting point for loyalty differentiation. Preston emphasizes that the more a brand knows about its customers and can tie that into brand values and shared purpose with customers, the more it’ll stand out in the crowd, regardless of leveraging expensive AI tools.
Kempny advises brands to start with what is not new but crucial and to leverage a healthy mix of configuration and automation in their programs. AI and ML enable advanced personalization by analyzing customer behavior and preferences to offer tailored rewards and recommendations. Kempny points out that AI-driven insights can help predict future buying patterns and personalize offers in real time.
“AI can also help raise your gamified engagement to a higher level—automating the personalization of challenges and quests that meet your business goals but are also achievable by the customer,” says Kempny.
Taking a Creative Approach
Top brands tap into their creative resources to reimagine reward structures that could help them differentiate their loyalty programs.
“There are so many structures in the loyalty world today that differentiate from the standard earn and burn approach,” says Preston. “We’re seeing a lot of brands move toward paid and premium programs, allowing members to ‘skip the line’ and get the best benefits available to them.”
Other brands are adopting reward catalog-style options that encourage members to earn points that they can cash in for preferred products, experiences, and even contest entries. Preston also acknowledges emotional loyalty has been a key area of focus in the industry as brands work hard to develop a deeper connection with their members. Indeed, customer choice has become a big focus, as consumers demand like-minded purposes from the brands they engage with.
“Partnerships have exploded in the last several years, as specialty brands try to offer their customers lifestyle-focused loyalty benefits that they can’t always offer with their core products or services,” adds Preston.
Creative partnerships are giving loyalty and rewards program members many ways to benefit. For example, in August 2024, Bilt Rewards announced a collaboration with Walgreens. The partnership introduced an “Automatic Healthcare Savings” program designed to simplify access to Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) for all Bilt Rewards customers.
Kempny has also seen brands leveraging the power of integrated partnerships, noting that collaborating with complementary brands or services to offer a broader range of rewards can enhance program appeal. It is a potential win-win-win situation for the program, partners, and customers. Dynamic reward tiers are another approach a brand can take.
“Implementing dynamic or gamified reward tiers where customers can earn badges or unlock levels based on their engagement and achievements can increase motivation and participation,” explains Kempny. He also believes selectable benefits will motivate customers to advance across tiers. “Give them a choice of selectable benefits for when they reach a higher level.”
Choice is vital. The Mediterranean fast-casual restaurant chain Cava plans to launch an upgraded loyalty program across the United States in October 2024. Cava’s CEO, Brett Schulman, stated that the new loyalty program will offer multiple reward options customers can choose from its menu. He anticipates the new program will “significantly grow first-party data and help us create more frequent, relevant experiences that drive traffic, mix, and check.”
The team at Bounteous x Accolite understands that rewards don’t always have to be transactional to be meaningful. Providing a “delighting experience” does more to create an emotional connection with members than discounting ever could.
“The strategy will vary based on what members value, but some ways brands achieve this are by solving common member pain points with your brand, recognizing important personal milestones for the member that are amplified by your brand, and giving them unique experiences they can’t find elsewhere,” says Green.
Final Advice for Brands
Loyalty360 asked its supplier-member experts how brands can work toward differentiating their loyalty programs and stand out in the market.
Kempny recommends that brands engage in periodical loyalty program health checks to minimize the risk of a stagnant and irrelevant program (from the customer’s perspective). Continuously gathering and acting on customer feedback to refine and enhance the program is another piece of advice.
“But never ask for information that you will not use,” warns Kempny.
He also instructs brands to leverage data in support of personalization. Data analytics can be utilized to better understand customer preferences and behaviors—then rewards and experiences can be tailored accordingly. This type of approach ensures that programs will resonate on an individual level.
Lastly, Kempny reminds brands to make sure the loyalty software is configurable so that they can react to any action that a customer does or doesn’t do. This offers the possibility of constantly tweaking engagement tactics across time.
Green sees leaning into brand differentiators as the key. “When looking at evolving a brand’s loyalty strategy, we explore elements that set them apart, things that their brand can offer that others can’t.”
By amplifying brand elements, products, and services that customers already love, Green sees the brand-customer relationship strengthened in a way that’s authentic and builds an emotional connection with the customer beyond the transaction.
Preston advises brands to look to the data.
“Understand where you are in your data journey—personalizing your program to your customers and standing out from the crowd requires you to really understand at their core who your customers are and what they want from your brand,” finishes Preston. “Get all your disparate data integrated and in one place so you can truly identify a data-driven, unique loyalty program structure that drives brand loyalists.”
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