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Customer Loyalty

The Future of Customer Loyalty: What Can We Expect?

Written by 
Brad Davis
November 7, 2020

As long as there are businesses and consumers, there will always be customer loyalty in some way, shape or form.

But when we consider the future of customer loyalty, do we see a rising importance placed on value and experience, or is it all going to be driven by who can offer the lowest prices and most convenient delivery? What about sustainability – does this have a role to play?

At Stamp Me Loyalty Solutions, we work hard to keep our finger on the pulse when it comes to these matters. In this article, we outline the key factors that are already determining the future of customer loyalty, based on extensive research. Not only that, but we explain how you can ensure your business stays ahead of the curve.

1. Strategic Loyalty Program Partnerships

unique ways to reward customers with partnerships

Image Source: Lyft

As consumers grow increasingly hungry for a convenient and personalised shopping experience, brand partnerships become increasingly important. No matter how efficiently your business utilizes personalization, it inevitably reaches a point where your rewards platform can’t optimize a customer’s personal brand experience any further.

However, by partnering with businesses that share a large portion of your customer base (airlines, hotel chains and car rental companies, for example), you can create an all-encompassing loyalty program experience that customers simply can’t get enough of…

The partnership between Lyft and Hilton Honors is proof of how powerful a well-devised loyalty partnership scheme can be.

2. Paid VIP Memberships

paid vip memberships future customer loyalty

Image Source: Moosejaw

It might seem a little counterintuitive to charge customers for a loyalty program membership, but not when you consider the higher standard of perks and rewards that these fees allow you to offer your customers.

A 2020 McKinsey survey revealed that more than half of paid loyalty program members are inclined to spend more with the brand once they are a member, versus just 30% of those who join a free loyalty program.

Paid loyalty program members offer:

  • Higher frequency of visit
  • Larger average transaction value
  • Longer customer lifetime value.

Why? Because brands can use the membership fees to fund experiential rewards and VIP perks that are simply not financially feasible otherwise.

Think about it – would you rather join a free loyalty program that offers you a free product or discounted item for your birthday each year, or a paid loyalty program that also gains you access to regular product launches, meet and greets, free trials and other industry events?

3. Rewarding Engagement, Not Just Spend

sephora vibrouge twitter

Image Source: Twitter

These days, the best way for businesses to build hype and generate buzz around their brand is online. And what better way to ensure a constant flow of brand-related content is always circulating online, than to incentivize customers to create their own content around your products and services?

This is called UGC (user-generated content), and it comes in the form of:

  • Written or video product reviews
  • “How to” guides and tutorials (again, these might be blogs or vlogs)
  • Peer referrals
  • Feedback (completion of surveys, quizzes and other questionnaires that help your business improve its products and overall customer experience)
  • Any other content a customer creates that promotes a brand’s products in some way

It might simply be that a customer uploads a selfie to Instagram, in which they are wearing their new Nike sportswear. By including the hashtag #Nike, the renowned sports brand might see this and add 100 loyalty points to the customer’s account… just because.

As customer loyalty continues to evolve, more and more businesses are rewarding customers for engagement, not just for transactions. This approach can do wonders for growing your online audience, social media followers and brand awareness.

It also creates brand ambassadors, which should be every marketer’s end-goal when considering the customer journey.

Brands within the cosmetics industry seem particularly adept at incentivizing customers to share, refer and engage.

4. Omnichannel Marketing

omnichannel marketing

In a nutshell, omnichannel marketing is the art of creating a seamless brand experience for the customer; from ecommerce to social media, to in-store shopping and email marketing.

A digital loyalty program immediately makes this process exponentially easier for a business, given the amount of customer data a rewards platform provides.

More data = better personalization, and this information can be used to ensure customers who browsed for “brown leather jackets” in your online store will see more varieties of your jacket selection on their Instagram feed; or receive an exclusive email offer for free shipping on any jacket purchased in your store before the end of the month.

A recent study by Aspect Software found that businesses implementing omnichannel techniques are experiencing 91% higher customer retention rates than businesses which aren’t.

5. Instant Gratification

instant gratification

This is a much higher priority for millennials and Gen Z than it is for older generations.

We were already seeing a rapid increase in consumer demand for instant gratification in recent years, as these younger generations take over a larger share of global spending power.

However, COVID-19 has accelerated this process, and people stuck at home during lockdowns have been seeking instant gratification for online purchases and brand engagement.

Things like skip-the-queue perks, mobile payment and instant messaging for customer support are desirable attributes. The more “instant” you can make various aspects of your loyalty program and its rewards, the better.

6. Corporate Social Responsibility

future customer loyalty CSR

Image Source: H&M 2018 Sustainability Report

Digital loyalty programs are a fantastic platform for promoting your brand’s dedication to good corporate citizenship. By finding ways to weave CSR initiatives through your loyalty points accruement and rewards redemption process, you can provide customers with an easy avenue for doing their bit.

Designer Shoe Warehouse VIP members can opt to donate shoes and/or rewards points to those in need via the Soles4Souls and Be Strong programs, while other brands reward customers for recycling product packaging and engaging in other sustainable practices.

These sorts of initiatives are crucial to customer loyalty, as nearly 90% of consumers take CSR into consideration when choosing who they shop with.

7. Giving Customers a Say

amazon pilot season

Image Source: Amazon Prime

If converting first-time customers into brand ambassadors is the Holy Grail of loyalty marketing, then you might consider this next strategy to be a highly effective shortcut. By getting customers involved in the business’s decision-making process, you make them feel important, appreciated, and that their input is valued.

Amazon Prime demonstrated how powerful this approach can be, when it invited audiences to help the streaming service decide which TV shows should get a second season.

Amazon uploaded a collection of pilot seasons onto the streaming platform, and after watching these shows, viewers could vote on which ones they wanted to see more of. Not only did this help the Amazon Prime team ensure they continued to cater for their target audience, but it caused a surge in engagement and paid memberships.

Remember – customers love to be heard, and this immersive experience is sure to have a role to play in the future of customer loyalty.

8. E-commerce Loyalty

ecommerce future of customer loyalty

E-commerce isn’t just here to stay; it’s continuing to gain traction as global consumers’ preferred shopping method of choice. Again, COVID-19 was largely responsible for a sharp spike in ecommerce in 2020.

However, now that consumers are more familiar with online shopping than ever before, businesses must ensure their loyalty programs cater for digital customers as well as brick-and-mortar retail shoppers.

With online shopping being a far more competitive market, your ecommerce loyalty program needs to be as enticing as possible.

But fear not – many digital loyalty app providers (including shortly Stamp Me) have, or will be integrating their digital rewards platforms with ecommerce platforms like Shopify, so that online businesses can offer a cohesive ecommerce loyalty experience with ease.

9. Gamification

future of customer loyalty gamification

If you are a digital marketer reading this; you are no doubt already well-versed in gamification.

However, if you are new to the concept, it involves taking an ordinary task (such as a driving test, going for a jog or even employee training) and “spicing it up” with fun and competitive gaming components.

When applied to exercising, it can be remarkably effective for helping people reach their workout goals. In education, it motivates further learning and rewards study.

And of course, when applied to loyalty programs... well, you can imagine the result. McDonald’s and Starbucks have been gamifying their loyalty programs for years, with astonishing success.

It doesn’t have to be complex. Spontaneous surprise and delight components or gamified functions like Scratch & Win can be enough to keep customers engaged and emotionally connected to your brand.

The fact that these features come standard with many digital loyalty app providers these days means that businesses of all shapes and sizes can utilize gamification – not just the huge household name brands.

10. Geofencing & Geoconquesting

geomarketing future of customer loyalty

Geofencing is a relatively new technology which involves sending highly targeted marketing to consumers based on their mobile device’s GPS location.

So for example, a burger shop might use geofencing to send texts or push notifications directly to a loyalty program member’s device whenever he or she passes by the shop.

The same business could also create a geofence around a competitor’s burger shop, so that when a customer comes within close proximity to this rival business, they receive an enticing offer from the first burger shop, straight to their mobile device.

The aim is to persuade the customer to visit your business instead. This is known as geoconquesting, and your competitors might already be using it to poach your customers for themselves.

Of course, geofencing requires access to customers’ mobile devices. Seeing as a digital loyalty app is the best resource at your disposal for retaining customers and boosting brand loyalty, geomarketing is simply another reason why your business should invest in one.

What does the future of customer loyalty hold?

the future of customer loyalty

While the 10 points listed above emphasize various aspects of customer retention and brand loyalty; together they point towards a common trend.

In the eyes of the consumer, the customer experience is becoming far more significant than factors like price, value of discounts, and even the quality of the product.

Therefore, brands which concentrate on providing customers with a convenient and tailored experience are far more likely to retain customers and build brand loyalty.

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