Navigating Customer Loyalty Trends in 2023: ICF Next’s Focus on Data-Driven Insight

In the latest State of Customer Loyalty Report, Loyalty360 highlights several trends in customer loyalty going into 2023. As brands seek to navigate trends in customer loyalty in the new year, companies like ICF Next — a customer loyalty technology and consulting partner — help clients plan their loyalty strategies with data-driven insights.

Mark Johnson, CEO of Loyalty360, had the opportunity to speak with Tom Madden, Managing Partner of Loyalty and CRM, and Bindu Gupta, Senior Director of Customer Strategy, Insights, and Research with ICF Next about trends in customer loyalty they expect brands to focus on throughout 2023.

Revamping loyalty programs in 2023
The State of Customer Loyalty Report revealed that many brands are focused on redoing their program, adding functionality, or making some other positive change in 2023. Many of ICF’s clients look to them for guidance in making these changes. ICF found most brands fall into one of two categories when it comes to redesigning their programs:

  1. Some brands don’t know what they want.
They know they need something, and they set goals based on what they think they need. In those instances, they are looking for guidance on where to start so they can meet those goals.
  1. Some brands don’t know what goals to set.
According to ICF, the changes to customer loyalty during the three years after the onset of the pandemic are roughly the equivalent to the changes between 2005-2019. Companies have massive amounts of data, but don’t know what to do with it. These brands are looking for partners to help them figure out what their goals should be.

The big difference between the two is how they come at the problem. Either way, both groups are looking at the trends and trying to do something new to engage their customers.

“All the brands we talk with are really excited to do some new things,” says Madden. “But mostly for the right reasons. Not new just for the sake of shiny, but new because enough has changed in our member databases.”
How should brands navigate the “Sea of Sameness?”
It’s not easy for brands to stand out. There may be elements in any rewards/loyalty program that consumers expect to see such as tiers and points. Brands need to meet customer expectations, but also need to find the areas where they can stand out from their competition.

To do this, brands need to create an emotional connection with their customers using experiences beyond just the loyalty program.

“At ICF, we always say ‘loyalty is the outcome,’” says Gupta. “So, how can we create that outcome through wholistic approach?”

Many brands seeking to become customer-centric will go through a lot of organizational change. However, this change is necessary to keep the customer relationship. ICF’s research shows that creating the emotional connection is key to maintaining and developing those customer relationships.

Understanding the emotional connection is key for navigating the Sea of Sameness. Because loyalty/reward programs rely on similar structures, it’s not the structure itself that keeps brands from standing out; it’s what the brand does with their program.

“One brand may have a similar program structure to another but completely handle the engagement experience in a different, more effective way. In that case, sameness is awesome,” says Madden. “But if you just have the same format as some other program and you’re not doing anything unique with it, sameness isn’t a good thing.”

Understanding how new technologies relate to customer interest
Looking forward to which technologies will be highly relevant for customer loyalty and which will just be novelties, ICF focuses on technology that helps brands use data to drive decision-making. According to Madden, data lakes were the biggest idea in loyalty technology five years ago. However, these massive data sets had barriers to entry and even then, the data was difficult to decipher. Customer Data Platforms (CDPs) provided a bridge between these data lakes and brand loyalty programs.

“CDPs have certainly become very prominent right now, and I think for legitimate reasons,” says Madden. “Because it takes all the data from various sources and makes it actionable; you can do something with it.”

Other new technology, like NFTs, seems to be a short-term novelty in the grand scheme of loyalty programs. They present a “shiny object” that brands can use in the immediate to encourage engagement. Tech like NFTs and other cryptocurrency offerings are only appealing to a segment of audiences. ICF recommends looking into the offerings, but only investing as much as your audience will return.

“It’s important to identify the size of that segment,” says Madden. “Don’t put any more resource or effort, to the NFT for example, than you will get any sort of return on for that segment.”

ICF Next has worked with brands who used NFTs for growth in a short term, but even those brands are still figuring out how/if the technology fits within their marketing and loyalty strategies in the long term. ICF recommends focusing on tech like CDPs, which have a clear, long-term value for loyalty programs.
Effectively integrating new technologies into a loyalty strategy
Brands need to differentiate between the shiny object and what they need to invest in. They need to assess their individual situation and identify what they already have available to them, what goals they must add more to, and then determine what they need to achieve their goals. If it’s about creating the one-to-one experiences or understanding their customer in a contextual way, then the brand should invest in the technology.

“When brands are on a budget, they should have a crawl/walk/run road map,” says Gupta. “Brands need to understand what they can do today, versus in the mid-term and in the long-term.”

Developing this road map allows brands to recenter around their main goals and why they would want/need to integrate new technologies. If a brand has a long-term plan they can continually reference, then even technologies like NFTs are worth the investment. The focus, however, must remain on the customer, what will work for them and what will work for the business.
Follow privacy and security regulations
Consumers want more control over their data. ICF Next expects the brands who enable customers this control in a true and honest way to see positive results for a long time to come, while those who wait will ultimately play catch-up for many years.

Brands should establish their privacy and security standards toward whoever has the strictest expectations of the governing bodies they function within. Privacy and security regulations will only continue to get stricter.

“Brands who focus on stricter rules will be more successful and less reactionary by focus on the stronger standards,” says Madden.
How to use real-time customer experiences effectively
Real-time experiences are currently in-demand for customer loyalty strategies. However, these kinds of experiences demand a balance with other strategies.

“Do you really want to be in [your customers’] faces all the time?” says Gupta.

Real-time experiences require brands to focus on personalization for their customer loyalty efforts. Brands must use the data they have to determine how often, and in which ways, customers feel comfortable interacting with the brand.

While one-to-one personalization is a major buzzword in the loyalty industry right now, the value it provides relies heavily on the brand’s ability to assess the needs and desires of its customers. Understanding the balance of communication and interaction with their unique audience is key for a brand’s ability to create real-time experiences.

From a technology standpoint, real-time transactions are vital for customer loyalty. Customers want to see their points populate immediately after a purchase. They want to be able to check their reward tier and know it represents their real-time status.

So, while real-time customer experiences need to remain balanced, real-time transactions and updates need to be constant. If a transaction takes days to show up in the customer’s balance, then ICF Next recommends upgrading the technology, allowing brands to offer a faster and more consistent customer experience.

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