Why everyone talks about loyalty?
Loyalty programs have been around for a long time, but they’ve recently gained a lot of attention from companies trying to improve their customer retention rates. Loyalty programs offer incentives and rewards for repeat customers, which is why they are effective at bringing in new business – and keeping it. Some loyalty programs even provide an avenue for customers to share their experiences with other potential buyers before making their purchase decision, which gives them more information about the product or service before making an actual purchase. Loyalty programs can be an effective way to deepen a company's relationships with customers through positive experiences (and positive word-of-mouth).
In this post I share my views on what loyalty means today and where it is going in the future:
The opportunity
A business with loyal customers is a successful business. Companies that do not have strong customer retention will see their revenue plummet in a recession, while those who do have loyalty in the forefront will be able to weather the economic storms better than their competitors. Loyalty programs are one of the most effective ways to increase a company's cash flow in these difficult times.
Why are companies failing on loyalty?
As customers become more sophisticated and demanding, companies are struggling to keep up. With loyalty programs becoming increasingly common, businesses are finding it difficult to provide the value they once did. The solution? Design a loyalty program to be relevant and personalised in order to retain customers' attention and provide them with a better experience.
Typical loyalty program pitfalls:
- It's not easy to use loyalty programs. Many consumers find it hard to create an account, log in and redeem their rewards. It's often not clear how to use certain points or what they can be redeemed for.
- Loyalty programs are neglecting the broader customer relationship by focusing (or better said obsessing) with transactions.
- Loyalty programs aren't personalised enough when compared with other marketing channels such as email or online adverts that can be tailored according to individual preferences and behaviour patterns.'
The one thing that's missing
The real question is, what’s missing? For loyalty programs to be effective, they have to tie into the customer experience—aka the customer journey.
The customer journey goes far beyond just the transaction and shouldn’t be limited to direct marketing efforts. It should encompass everything a customer experiences with a brand, from the interaction with a salesperson in-store all the way through their repeat purchase history with the business. The goal of any loyalty program is to increase engagement and retention by creating ongoing relationships with customers so that they see value in doing business with the business again and again. To achieve this goal, companies need tools that can help them track customer interactions across channels and devices, as well as personalize those interactions based on each individual’s preferences or purchase history—and then drive more sales over time because of it!
The role of technology
Technology has enabled loyalty to become more sophisticated. The rise of mobile means that customers can interact with brands in ways that were previously unthinkable and the adoption of digital channels enables companies to have a much greater understanding of their customer bases. This new level of sophistication within loyalty programs is evident in the way customers interact with brands, as well as their ability to provide us with personalised experiences.
Data is key - but a security risk as well
Data is the new currency. Data is the new oil. Data is the new gold. Data is the new water and air, food and oxygen, blood—for that matter, you could say that data is everything.
Data has now become so important to businesses that it's worth more than any other asset on Earth: over 1 trillion in revenue per year! This means that if you own a company or manage any kind of business where you have access to large amounts of customer data, then you are one of the most influential people in existence right now (and maybe even throughout history).
But with so much power comes great responsibility—especially when it comes to protecting this valuable resource! That's why we need better security protocols for our collected data; otherwise anyone could steal all our digital assets at once by hacking into our servers via an Internet connection point somewhere out there in cyberspace...
Consumers will always choose personalisation over privacy
Consumers want to be rewarded for their loyalty. They will always choose personalisation over privacy and will share personal data if it means a better experience. This is especially true when the choice is between two products or services in the same category, such as petrol stations or coffee shops. When making these decisions, consumers will often trade off privacy for better service or lower prices—and they aren’t alone; many companies are already making this trade-off on behalf of their customers. For example, Amazon offers discounts on Prime membership to customers who allow the company to track their shopping history and recommend new products based on previous purchases (National Law Review).
At the same time that consumers are willing to share personal data voluntarily in exchange for benefits like discounts and free shipping, they also expect businesses not to abuse this trust by selling their information without permission or violating any other terms of use agreements (sourceeMarketer).
Can you 'Fake' customer loyalty?
Fake loyalty is not loyalty. It's a concept that gets thrown around a lot, but it's not necessarily something that everyone understands. Fake loyalty is when you give people the impression they are loyal to your brand while they're really just using it as an excuse to do something else—like buy another product or service from you, or stay in their current relationship with another company.
Fake loyalty can be a good way to get real results in the short term, but it doesn't last forever. You may get some customers who genuinely think they're loyal because of your efforts and then be surprised when they move on—but how could you expect them to know better? They were deceived into believing their actions were those of a loyal customer! This can lead them down some frustrating paths with other companies where they continue trying to find what was lost here: genuine loyalty from companies that actually care about them as individuals instead of just their wallets.
Is blockchain the solution?
Blockchains are a distributed ledger system, meaning they’re a database that is spread across different computers. They record transactions in an encrypted way to ensure that they cannot be tampered with or hacked.
Blockchain has been used for many things, but not all of them are relevant to loyalty programs. For example, it could be used as a method for customers to prove their identity and transact with each other and businesses without revealing their details publicly (which would help prevent fraud). If you envision your rewards program users to keep track of their own points balances in real-time then blockchain may be the perfect solution for this! The information stored on blockchains is secure by design because there isn't one single place where all this data lives - instead every user holds their own copy which makes it hard for someone else's records being changed without them knowing about it (because each user knows exactly what's happening with her/his own assets).
Customer loyalty is becoming more holistic and personalized
Customer loyalty is here to stay, and it’s a crucial part of any growth strategy. But the future of loyalty programs isn't set in stone. Customers are demanding personalization, ecosystem rewards, real-time, instant gratification and data privacy. We think that technology will continue to play a critical role in this evolution, and data security will become more crucial than ever before. If there's one thing we've learned from our research into customer loyalty programs, it's that people feel strongly about their privacy and they don't want brands prying into their personal details without permission or just because they can afford it. However, there are ways around this: by creating personalised experiences based on consumer preferences rather than demographics alone, marketers can still provide what their customers really want: tailored offers based on who they are rather than where they live or work."