The future of customer loyalty is undeniably digital. As technology continues to evolve, so too do consumer expectations. Brands must embrace digital tools and platforms to create personalized, engaging experiences that resonate with customers. These trends can create a new challenge for well-established legacy brands with legacy platforms or program vision.
How do you undertake a digital transformation while maintaining the loyalty of your long-time customers?
As consumer expectations shift and new competitors emerge, these brands must find ways to evolve their loyalty programs without compromising their core values. One example of this is the transformation of Cracker Barrel restaurants.
During the recent Loyalty360 Lunch and Learn, with Amy Barnett, Vice President of Loyalty and Digital Experience at Cracker Barrel, she shared with our members some key tactics for successfully navigating this dilemma. Cracker Barrel realized the need to balance the established emotional loyalty of their current customers with the need to “refresh” parts of their offering to appeal to new growth segments. By proactively engaging in conversations with internal and external stakeholders, Barnett gathered the feedback and insights needed to appeal to and engage all their audience segments. This customer-centric approach to digital transformation has created rapid results for the brand and provided the ability evolve with changing tastes.
“As we saw in our 2024 Loyalty360 Brand Marketer Research: Next Generation Customer Loyalty Report, brand interest in customer loyalty continues to rise; however, traditional customer loyalty programs no longer wield the influence they once did,” Carly Stemmer Ivory, VP, Research Analyst, Loyalty360. “Brands are shifting their focus to the ‘next’ generation of customer loyalty, focusing on non-transactional rewards, gamification, partnerships, personalization, and emerging technologies to better engage their customers.”
A well-designed digital loyalty ecosystem can be the key to unlocking this challenge. By leveraging technology and data-driven insights, brands can create personalized experiences that attract new customers, foster lasting relationships, and enhance brand affinity among existing loyalty members.
Loyalty360 members from our supplier partner group are on the front lines tackling these challenges for the brands they serve. We gathered insight from several of our expert members to guide legacy brands on the process of successful digital transformation.
Understanding the Customer and the Changing Landscape
Today's empowered consumers have unprecedented choices and unlimited information when making buying decisions. To stay relevant, brands must understand and adapt to these evolving expectations.
"Customers expect enhanced personalization," said Tim Glomb, VP of Digital, Content, and AI at Wunderkind. "This doesn't always mean an offer to buy something or redeem value; sometimes it can simply be recognition."
Understanding customer behavior across various channels allows brands to trigger personalized messages, such as a simple thank-you note for visiting a new product page. "Triggered messaging is incredibly effective because it only fires and engages the member in the moment where they took a relevant action." Glomb continued. "Triggering based on an action someone took is more personalized and relevant in the moment for the loyalty member." Targeted interactions like these create an emotional response that enhances a brand's relationship with the recipient.
Balancing modernization with tradition when updating a loyalty program is a delicate act. "It's important for legacy brands to understand how their program is performing and understand the needs of their members as they're considering innovation," according to Cassie Preston, Director of Strategy at Baesman. By measuring and collecting feedback, brands can ensure that their innovations align with customer preferences and expectations.
"New technologies can bring many benefits, but it's important not to take away existing options. Let your customers determine how they want to interact with your loyalty program," added Peter Vogel, CRO of vPromos. "It's vital to meet your members where they are."
Kunwar Keshav, SVP Sales, Americas at Capillary, explained it this way: "Take, for example, a family-owned bakery with a loyal customer base that spans generations. Customers treasure their physical stamp cards, which symbolize tradition and connection. When the bakery introduces a digital app, they don't replace the cards but offer a feature that lets customers upload photos of them, creating a digital scrapbook of their loyalty journey. In addition, after completing a loyalty card, customers receive a heartfelt video message from their favorite staff member or a personal note from the owner thanking them for their support. This hybrid approach blends tradition with innovation, enhancing emotional bonds without alienating loyal customers. It's not just about convenience; it's about deepening the sense of community and appreciation that keeps customers coming back."
Building a Modern Loyalty Ecosystem
As brands seek ways to enhance and differentiate their loyalty strategies, vetting technology partners and integrating new platforms into existing technology stacks remain significant challenges for marketers. Nevertheless, brands recognize that upgrading their technology ecosystems to incorporate new and emerging technologies is essential for staying relevant and positioned for future growth.
A key differentiator many brands are exploring is the incorporation of innovative rewards and experiences to drive engagement. "Dunkin' recently launched badging and challenges as part of their new Dunkin' Rewards program," Tamara Oliverio, VP of Strategic Consulting & CLMP at Epsilon, shared. "They did a great job of incorporating a guest favorite – seasonal pumpkin-flavored menu items – into this exciting experience with a "Fall for Pumpkin" challenge." This gamification element has been well-received by customers, adding excitement and motivation to the loyalty program.
Furthermore, as personalization continues to rank as a top priority for brands, gathering and managing key data points is essential for engaging customers on a one-to-one level. "Using an intelligence platform like an identity solution can understand behavior from your customers across your websites and apps," Glomb explained. "Integrating the signal layers into your email service provider (ESP) or text platform to send simple thank you messages recognizing their interaction with your brand is a subtle and small way to keep you top of mind."
Data-driven insights are essential for creating these personalized experiences. "By tracking and understanding your members' behavior across your digital property, you can trigger a feedback loop collecting information from common actions consumers take with your brand," Glomb advised. This feedback allows brands to continually refine their loyalty programs, ensuring they remain relevant and responsive to customer needs.
As brands work to incorporate modern, digital, and data-driven technologies into their loyalty offerings, many wonder where to begin. Navigating these options and identifying the best starting point can be a significant challenge for today’s marketers. Loyalty360 noted, “Our upcoming Customer Loyalty Landscape Report, set to release in January, is designed to help brands overcome the challenges of evaluating and partnering with technology suppliers. By offering an unbiased, comprehensive view of the customer loyalty industry, this report will empower brands with the insights needed to make informed choices, optimize their loyalty strategies, and drive long-term engagement.
Effective Communication and Feedback Loops
Effective communication is crucial to ensure that program updates and transformations are well received by customers. "The idea of sending mass communications via email or text to promote a given area or function of your loyalty program can sometimes be off-putting," Glomb warned. Instead, brands should focus on triggered messaging, delivering relevant information at the right time.
Gathering and incorporating customer feedback is essential for continuous improvement. "The qualitative data collected from surveys, focus groups, and other market research tactics supplements behavioral data analysis, helping to paint a full picture of what a brand's customers may be looking for out of the loyalty program," Preston explained.
"There are various ways to gather feedback, but the important piece is figuring out how to find the actionable insights with implications tied to specific touchpoints or products and services," added Lauren Sutherland, Associate Director of Strategy at Phaedon. "Once feedback is incorporated, check back in to ensure changes hit the mark and are perceived as improvements by both new and loyal customers."
The Future of Loyalty
The future of loyalty is bright, with emerging technologies like AI providing new insights and ways of engaging end users. "When evolving a loyalty program, marketers should put customers at the center. Leverage AI to personalize communications and tailor rewards or challenges at scale, all based on individual user preferences, behaviors, activity, and customer feedback," said Emily Merkle, Senior VP of Analytics & Data Science at Phaedon. These new tools allow brands to analyze vast customer data to deliver highly tailored experiences and personalized recommendations that add value for end users. By embracing these innovations and prioritizing customer experience, brands can build lasting relationships and thrive in the digital age.
Kelly Hlavinka, VP of Strategic Consulting & CLMP at Epsilon, concluded, "The key is to develop a loyalty strategy roadmap upfront. While a brand may launch with an MVP (minimal viable product) value proposition, defining the ultimate 'north star' vision for what the program will become over time balances the focus on the core rewards and perks—while allowing a brand to add innovative perks, privileges, and engagement methods over time."
Contributors to this Article:
Carly Stemmer Ivory, VP, Research Analyst, Loyalty360.
Tim Glomb, VP of Digital, Content, and AI at Wunderkind.
Cassie Preston, Director of Strategy at Baesman.
Peter Vogel, CRO of vPromos.
Kunwar Keshav, SVP Sales, Americas at Capillary.
Tamara Oliverio, VP of Strategic Consulting & CLMP at Epsilon.
Lauren Sutherland, Associate Director of Strategy at Phaedon.
Emily Merkle, Senior VP of Analytics & Data Science at Phaedon.
Kelly Hlavinka, VP of Strategic Consulting & CLMP at Epsilon.