As loyalty strategies and programs are becoming a standard amongst brands, there is a need to stand out among the crowd, and an even greater need to keep the loyalty programs fresh. Customers tire of the same gimmick. Brands need to address changes in their programs and look toward future opportunities and potential challenges.
Loyalty360 spoke with supplier members to discuss the topic of reward offerings, innovations and emerging trends in technology.
Updating reward offerings is imperative to stand out from the competition.
There is a growing trend in offering more experiential rewards over simply monetary savings. Re-tooling basic offerings more around the customer experience seems to be the next step in rewarding customer loyalty.
Deloitte has seen a trend toward simplicity and choice. Jeff Casullo, Senior Manager, Monitor Deloitte says, “As data continually becomes harder for brands to access and leverage, the importance of first-party data will increase and thus should be a focus of program design. A clear focus on communicating about how, when, and why data will be used helps increase customers’ willingness to share.”
Mike Sund, Partner, Customer Strategy and Loyalty, at ICF Next, explains, “We emphasize the emotional loyalty aspects of the relationship a customer has with a business. We keep the program fresh for members through continual innovation and relevant offerings that are tested and optimized—emphasizing trust, appreciation, shared values and empathy.”
Michelle Wildenauer, The Lacek Group, adds, “Another current trend is currency choice, giving members the ability to choose which rewards provide the greatest level of value and satisfaction.”
“Companies need a unique selling point,” says Attila Kecsmar, CEO and Co-founder, of Antavo, “or a reward type that is not used very often within the industry. Companies should choose a technology that is sustainable, easy to use, flexible, and modular.”
Sund adds, “Our proprietary research shows that consumers are looking for their values to be shared by the brands they chose to engage with, and they want to have the opportunity to help—using the value they're receiving from the program to give back to the causes they care about.”
The right type of reward is crucial to a successful customer loyalty program
Brands are quick to agree there is no one formula for a successful loyalty program.
“We find it’s best to focus on the brand’s value proposition and then be creative with how a loyalty program can support it,” Sund says. “When we dive into a loyalty plan design, the first phase is to immerse ourselves in the brand, the business goals, and the environment in which it operates.”
At Antavo, the company stresses the importance of looking at the competition to see what rewards are expected in the industry, and then creating their own unique spin to stand out.
Brands are encouraged to first understand their loyalty aspiration and the desired outcomes. “There is no one-size fits all answer to this question,” says Casullo. “The answer requires thoughtful, intentional, integrated choices in order to optimize the design of a program.”
Sund adds, “We find that getting stakeholders from across the organization to weigh in with their ideas encourages a feeling of ownership in the outcome.”
The Lacek Group encourages clients to conduct customer research and apply a test and learn approach. Equally important is staying connected with the external trends that influence customer behavior and incorporating that into the rewards offerings.
How should brands approach new or untested reward offerings, such as crypto, fractional stock, etc.?
When it comes to new and potentially untested reward offerings, brands agree it is best to test in small increments.
Eric Thiegs, Head of Partnerships, of Flexa says, “It's incredibly important for their consumer engagement and long-term customer loyalty strategy to provide a crypto-payment option for the current (and coming) Gen Z consumers entering the market. With one out of six U.S. adults now holding crypto (and most of them under the age of 30), providing a way to unlock the stored value of those digital currencies while also building loyalty for your brand is paramount.”
Says Sund, “Brands do need to watch these emerging ideas to keep their programs on the cutting edge and continually bring value to their members. At the same time, marketers need to be careful that these new technologies aren’t just shiny objects.”
Thiegs adds, “The brands that take advantage of the crypto-payments space first will capture the loyalty and admiration of a vastly expanding young digital payment audience who see cryptocurrency as more than just an investment, but rather as a new way of life...and one that provides transactions with the utmost security. Brands should not be ignoring this audience.”
Kecsmar suggests testing new options as a seasonal reward, explaining, “Offering crypto or NFT can be tested during Black Friday or the Christmas season. This way, companies will see how customers react. In case they don’t like it, the reward can be withdrawn at the end of the period.”
Says Casullo, “Our general approach to anything new is to start small, fail fast and scale quickly.”
Testing a new offering is a helpful tool. Sund adds, “If the new option makes sense, we suggest a measured approach before going all-in - setting up a test with a control group or running a pilot in a few markets, if possible. Once we see positive results, we’ll recommend scaling it up and/or optimizing.”
Wildenauer notes, “It is essential to do your due diligence to understand this space to ensure it fits your audience and program objectives. Working with your loyalty agency to provide guidance is a great place to start. Experimenting to hone future strategies in this new space is a good idea.”
The loyalty incentives are as varied as the customers.
It is imperative for brands to present the right type of reward for their unique customer base. Some prefer gamification to make the program more fun, letting members redeem points for participation in games and sweepstakes. Others prefer instant rewards. Brands agree, building customer engagement is the first step toward building the coveted emotional connection.
Says Thiegs, “There are a lot of partnerships and coin-funded reward promotions for brands to take advantage of to generate buzz and new sales within a specific coin crypto community.”
Early access, VIP experiences and gamification such as a prize wheel work well for Antavo. Kecsmar says, “Using badges in the loyalty program also engages customers in a fun and interactive way, and encourages them to interact regularly with the brand.”
Says Casullo, “Personalized offerings have become key in today’s crowded environment. Successful offerings are closely connected to the brand/experience. An increasing number of programs are also focused on engagement outside of the moment of purchase, such as allowing customer early access to testing new products.”
Wildenauer notes a marketplace shift in focus from value in the product or service to value in the experience. “We believe this presents a really interesting opportunity for program engagement and rewards. These reward offerings are aspirational and personalized to member interests.”
Brands that have been successful in incorporating emerging technology into their loyalty strategy are paving the way.
Kecsmar has witnessed successful NFT strategies by retailers Clinique, Hugo Boss and Jimmy Choo. Burbury and The Home Depot are successfully incorporating AR/VR (Augmented Reality/Virtual Reality). “Nike also opened a digitally-focused concept store which relies on the Nike mobile app,” Kecsmar adds. “Diesel created Hyperoom, a 360-degree selling platform and virtual showroom. And the list will only keep getting longer.
These solutions are often very costly, therefore companies tend to apply them only once in a while and not offer them permanently.”
Deloitte cites Shake Shack and Venmo for including cryptocurrency in their core loyalty program. IKEA is another company utilizing the augmented reality approach, allowing users to see what a piece of furniture would look like in their home. “Although we’ve yet to see someone who has solved the puzzle,” says Casullo, “these examples demonstrate how brands can benefit from evolving their approach to loyalty with emerging tech. “
“A recent AR campaign from Chewy is a perfect example,” says Wildenauer. “This campaign allowed pet owners to virtually dress up their pets in Halloween costume. These captured images helped fuel one of Chewy's CRM campaigns, where customers are mailed a painted picture of their pet as a token of appreciation for their business. This AR campaign not only engaged customers in a new way, but it helped to create customer emotional loyalty.”
Emerging technologies make a big impact on customer loyalty efforts.
Sund explains how crypto will become increasingly important to the digital wallet, saying, “As people start to understand more about how crypto works, the idea will become increasingly important. More people, especially younger generations like Gen Z and Millennials, are starting to use digital wallets more frequently.
Some of our clients have already integrated our loyalty platform, Tally®, with digital wallets so their loyalty members can earn and redeem across a network of different partners.”
Wildenauer says, “Virtual experiences and events will have lasting power as a high appeal and low-cost reward option. While most people are fatigued with virtual social interactions, this on-demand capability can continue to unlock new engagement and reward possibilities.”
Kecsmar stresses the importance of personalization, tiers and early access, as well as meaningful awards like service upgrades, adding, “Augmented reality will soar, mainly due to more and more people ordering online since the eCommerce boom.”
Adds Sund, “We are exploring the value of incorporating digital wallet capabilities into certain loyalty programs—as well as NFTs and fractional stock.”
Digital touchpoints, AR/VR/Metaverse and the emerging Gen Z market are especially impactful. Casullo explains, “This generation is blending work and life in meaningful ways, is focusing on purpose offerings, and is putting mental health into the spotlight.”