Listening to a broad range of consumers on their habits and preferences for loyalty programs is key to future success. Marketers know that consumer preferences have been changing – and expectations have been on the rise for the past few years – and will continue to do so. So, what do today’s consumers value?
With years of customer loyalty experience, the team at Marigold (formerly Cheetah Digital) has a strong pulse on the current customer loyalty landscape. In 2022, Marigold surveyed 1500+ U.S. consumers to better understand their sentiment toward brand loyalty and what they expect from their favorite brands. In an era of economic uncertainty, quickly evolving technologies, but a consistent interest in customer loyalty strategies, where are the most valuable areas for brands to focus their resources?
Loyalty360 sat down with Roger Williams, Head of Loyalty Center of Excellence at Marigold to dive into the state of customer loyalty, talk about changes in the loyalty industry, the importance of personalization, and the future of customer loyalty programs.
Retail & Restaurant Loyalty
Marigold serves a broad portfolio of clients, offering digital marketing, messaging, and loyalty solutions to mid-size and enterprise brands. When it comes to supporting loyalty strategies for its clients in various industries, such as retail and QSR/restaurant brands, it is not a one-size-fits-all endeavor. Williams describes Marigold’s approach as relationship marketing.
“Creating personalized experiences for your customers in the moments they value is crucial. We can deliver that personalization at scale because we're not just a loyalty engine that measures several different signals and analyzes them. We can also deliver that data,” says Williams.
Marigold prides itself on supporting large-scale messaging and digital engagement operations for brands that consumers love and trust. As marketers work to enhance their brand’s personalization efforts, delivering relevant messaging in the right channel at the right time has become a critical part of driving brand and customer loyalty.
Key Findings in Today’s Loyalty Industry
Continuously striving to understand the ever-changing customer loyalty industry, Marigold recently published its latest research report on The State of Brand Loyalty in the U.S. for 2023, analyzing how customer preferences regarding loyalty programs have shifted in recent years.
“Loyalty program usage has increased this year by over half, with 52% of consumers engaging in loyalty programs,” says Williams. “We’ve found that more consumers are craving personalized experiences and unique brand experiences, with the data pointing to around 4% more this year.”
Williams notes that while consumer interest in loyalty programs is high, consumers expect more from brands in terms of personalized content, rewards, and offers. Marigold supports its clients’ loyalty efforts to deliver on these expectations, giving marketers the tools and capabilities to effectively leverage customer data, feedback, and insights.
“One of the things that we discovered from surveying these folks is that about 72% of consumers say they're prepared to pay a higher amount to purchase from their favorite brand. As long as brands are giving customers a relevant and personalized experience, they will reward brands by spending more per transaction and more overall.”
With an increased focus on personalization, brands can make major strides toward their ultimate goal of emotional loyalty and brand advocacy. However, getting to this stage requires getting the basics right and consistently proving value to consumers. Based on Marigold’s research, Williams shared that consumers are actively making decisions based on loyalty program benefits or lack thereof.
“We found that 70% of consumers don't feel particularly loyal to the brands that they purchase from because they're not delivering on those experiences. And 33% of them are actually taking their business elsewhere, so a third of those consumers are walking right out the door because brands are not delivering what they need. The report indicates 25% of consumers have said the lack of a loyalty program was the main reason for them defecting to a competitor.”
Enhancing Consumer Behavior with Loyalty
“One of the things we tend to forget is that loyalty programs work,” says Williams. “As loyalty managers, sometimes we don't necessarily experience our own programs, but I joined all our clients' programs. I like to remind myself how powerful that psychological impact is and what it is like to interact with a habitual pattern-building loyalty program.”
A strong loyalty strategy incorporates elements that enhance the customer journey and provide a seamless customer experience. With price sensitivity top of mind for many consumers, brands are shying away from a discount-heavy program structures, incorporating elements such as gamification, engaging content, and unique experiences can help keep brands stand out for reasons other than a low price.
"We invest in so many other factors that make up a
loyalty program besides the transactional, and we try to listen to the customers and help our marketers,” he says. “In a recent report, we found that 13% versus 8% of consumers wanted personalized recommendations over discounts. There’s a gap between members who simply want a rebate program and a coupon program. There are programs out there that would send you a coupon on a schedule, but perhaps you're not ready for it and the coupon expires in 30 days. These things create a lot of frustration, and they've been building up for a long time. The marketer-centric, finance-centric, liability-management-centric approach in loyalty programs are not appealing to customers.”
Major Focuses in the Loyalty Industry
Loyalty managers may have access to an abundance of customer feedback, but determining what feedback to act on and what improvements to incorporate into a program’s roadmap can be overwhelming. Williams says there are two major focuses that he sees loyalty managers taking head on.
“There’s a really big push in acquisition, and we see the debate between alliance and acquisition all the time. With our customers, we are very strategic, and we partner with them to show that we’re right in the trenches with them, almost like a backup loyalty manager,” explains Williams. “When the big errors happen within the program, it's not coming from the loyalty managers. Pressure on the loyalty program tends to come from certain departments that may not understand the intricacies of the loyalty program. Brands should really be focusing on activation.”
Signing up for a loyalty program is the first step of a loyalty member’s journey, but for brands, maintaining that relationship and providing value for the customer is key to long-term success. Many leaders within the company may not understand and this can put undue pressure on loyalty managers.
“You can sign up people all day long, and they may have that one transaction in which you can actually sign them up, but from the reports that I've seen, the interaction falls right off,” says Williams. “Understanding why customers don’t stay is a huge focus in the loyalty industry today. Brands need to look at the second ‘activity activation,’ the number of journeys and touches we make available to our partners. Our strategy department does a great job of driving engagement and provides solutions to realigning the priorities for loyalty managers.”
Finding Inspiration from Loyalty Leaders
Looking at top performers can help burgeoning loyalty programs to see how they can emulate those programs while also finding inspiration to create a loyalty program that is unique to the brand and its audience.
Making a loyalty program more personalized and useful for customers is key to keeping them interested in remaining loyal to the brand. Providing customers with additional information on how to use brand products or services can also be helpful to build a greater bond between users and the brand. Williams has worked with airline companies to see how booking a flight can be made easier for loyalty members.
Williams recalls, “We created an algorithm that generated 5 different personalized recommendations based on American Airlines’ route map, and it was one of the most successful promotions ever. We simply asked customers what they wanted, and we were able to provide that at scale to offer proper communication and information to meet and exceed customer needs.”
Leveraging Technology to Drive Customer Loyalty
Keeping up with emerging and innovative technologies can be a challenge for any marketer, especially while trying to focus on day-to-day responsibilities. However, embracing new platforms or enhanced capabilities can make a significant difference in the experience brands provide through their loyalty efforts.
“For several, the technology wasn't necessarily there to support the desires of the brands and their loyalty marketers. One of the things that we see is how restaurant loyalty programs take a deeper look at revenue. They really evaluate where the member is in their life cycle and determine if discounting is warranted because depending on where you are in the life cycle, you may or may not be open to a discount,” explains Williams. “That varies all the time, and there are different personas. For instance, if you're a commuter and you're going to your favorite restaurant, that’s a different experience, but then if you're going to take your family to the same restaurant on the weekends, then you're in a completely different loyalty experience.”
The adaptability necessary to track these life cycle changes can quickly become resource-intensive, however, having the right technology platform and strategic partner in place can greatly reduce the workload placed on loyalty program managers.
"There are systems out there that struggle to support this life cycle strategy, and we're able to do it,” explains Williams. “You want to be able to then look at your members. How do you reach all these people when they're all in different stages of their life cycle? We try to help our partners to synthesize soft benefits. Soft benefits are going to really make a comeback. A lot of these programs have fashioned themselves on the frequent flyer model, but in the environment of restaurants and retail, there are other clever ways that we can come up with a number of soft benefits while we're helping our partners.”
Looking to the Future — What Marigold Plans
What’s next for Marigold after an already busy year? Williams went on to share that Marigold is significantly leaning into strategy.
“For a very long time, we've had a professional services organization with a very talented team, and I’m part of that organization as far as strategy. For the first time, our leadership has really put us front and center,” he adds.
Marigold plans to double down on creating a seamless experience for its end users: marketers. When marketers are happy, ultimately, so are customers. Marigold’s focus on strategy leads to the successful interfacing of client success professionals and technical and support resources.
Additionally, Marigold is investing in certifications focusing on strategy for all client-facing staff to ensure that no matter the role, even technical or support, staff will understand where a client’s business is going from a strategic perspective. This was a priority for leadership.
Williams shares one last piece of wisdom. “I would advise marketers to begin by always looking at strategy first and then try and figure out what it is that you’re solving for. Those objectives, key results, and goals are tremendously important.”