While navigating the constantly evolving field of customer engagement, businesses face multifaceted challenges that hinder their potential growth. From outdated technological platforms to a lack of data analytics, the need for innovative loyalty solutions is more pressing than ever. This article explores how well-executed loyalty programs contribute to customer engagement while increasing revenue. Moreover, it delves into how having the right partner could help businesses create a necessary loyalty engagement solution.
The new frontier of loyalty programs
While we are used to hearing about loyalty programs for airlines, hospitality, leisure, and retail industries, today, in the quest to build customer loyalty, many organizations in other sectors, from sports and automotive to finance and life sciences, are willing to spend millions of dollars developing and implementing loyalty strategies. According to Gartner®, “One in three businesses without a loyalty program today will establish one by 2027 to shore up first-party data collection and retain high-priority customers.” Furthermore, Forrester states, “55% of global B2C marketing decision-makers indicated that they are increasing their spending on relationship and loyalty marketing, while 33% are maintaining spending.”
Today, no one doubts that loyalty programs are essential for business: from neighborhood merchants to big global companies, loyalty and awards programs successfully foster customer retention and implement cost-effective marketing strategies. Acquiring a new customer can cost five times more than retaining an existing customer. A well-executed loyalty program can transform a customer into a brand ambassador.
Bridging the gap between expectations and reality
In practice, however, it is not a bed of roses: consumers are bombarded by messages to sign up for loyalty programs that don’t propose anything new (lack of differentiation) or valuable (the rewards or experiences they offer are irrelevant to them). According to Forrester, “65% of US online consumers who belong to loyalty programs say that members-only offers are vital to them. But brands often push promotions indiscriminately — to members and non-members alike — undermining the perception of exclusivity.” Often, companies fail to provide an experience that connects what happens in the physical world with the online world. These frictions during the customer journey leave customers disengaged. “According to a Forrester Survey, B2C marketers cite process inconsistency due to tech redundancy and poor integration as a top challenge to achieving their objectives among their most frequent top challenges.”
Companies looking for a new loyalty solution should start by remaining flexible to adapt to market changes and customer preferences.
A digital-first strategy for revenue growth
A recent survey shows people’s preferences and expectations for loyalty programs are transforming. While financial benefits remain essential, consumers emphasize services and experiences that genuinely reflect their evolving relationship and journey with a brand. The importance of “experience” is evident, “with 39% of respondents considering experience-based rewards as their primary investment area”. How can this growth be explained? It involves changing consumer expectations and the availability of cutting-edge technologies enabling unique loyalty engagement experiences.
Emerging loyalty solutions can and should enhance personalization and more engaging features, ensuring a seamless and superior customer experience. Furthermore, leveraging the potential of AI is crucial for gaining deeper insights into customer preferences and behaviors. Finally, a shift towards a data-driven strategy is imperative for effectively navigating the digital ecosystem, marking a departure from traditional marketing methods and embracing a synthesis of technology and creativity.
In summary, loyalty programs help businesses increase revenue, improve profitability, and be cost-efficient with customer acquisition. Those organizations embracing a digital-first approach and moving away from generic rewards and discounts tailored for everyone will thrive and transform into profitable centers for their companies.
At Globant, we are committed to driving sustainable business outcomes. As a proven loyalty partner, we focus on delivering synergy-based core practices leveraged by our cross-industry expertise to unlock unique loyalty engagement solutions and programs.
We invite you to discover our Loyalty Studio, which focuses on helping businesses engage with their customers long-term, boosting customer satisfaction, and driving revenue growth. Learn more here.
Source: Gartner, Over 100 Data and Analytics Predictions Through 2028 , Sarah James, Alan D. Duncan , 24 April 2023
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
Source: Forrester, The Loyalty Services Providers Landscape, Q3 2023, August 2023
Forester, The State Of Customer Loyalty And Marketing Technology, September 2022
