Loyalty trends for 2023
Loyalty trends for 2023
By Ko de Ruyter, Debbie Keeling and David Cox, The Loyalty Doctors
Like everything else in life, the notion of business-as-usual has come under severe pressure from a series of parallel crises that have emerged since the world was rocked by the COVID-19 pandemic. From the War in Ukraine to an energy crisis, from climate change to a cost-of-living crisis, and perhaps most recently, a social media crisis with Elon Musk featuring as the main headline act. In the face of these pressures, customers have fundamentally changed the way in which they work, buy, travel, experience, interact, and develop and sustain relationships. This makes it more than ever pertinent to understand what all of the above means for the current loyalty landscape. As per usual, at the junction of each calendar year, we at Motivforce reflect on the trends that we think will impact or even drive your loyalty programme. The past year has made it very clear that there is a need for programmes that are resilient enough to perform for your business in an upcoming year that is likely to serve up more changes at break-neck speed. That is why we have gone the extra mile and are proud to present you with 10 loyalty trend predictions for 2023.
1. Brands will keep plotting a loyalty-with-purpose course
A recent study carried out by Accenture concludes that the large majority of customers (a whopping 83% to be exact) think that it is of the utmost importance that brands offer products and services that are environmentally sustainable as we go forward into 2023 and beyond. Another survey by the University of Southern California’s Annenberg Institute concludes that 75% of participants surveyed in a large market study indicated that a firm’s engagement with society’s grand challenges is influencing their purchase decisions. Our own research across the majority of our clients sends another unequivocal message; your business partners expect you to be proactive in working with them to develop and maintain a strategy that enables them to help their clients to execute their business with purpose. As purpose links loyalty strategies across the value chain, programmes will develop a laser-sharp focus on purposeful initiatives, such as, end-of-life-cycle programmes, responsible selling, incentivization of carbon offset schemes, reward donations to NGOs, speaking out for gender equality and LGBTQ+ rights, etc. That is quite a daunting prospect. We know. Therefore, we recommend that in the coming year you start, if you have not already, identifying ESG (Environment, Social, Governance)-related goals and objectives and in dialogue with programme members make them an integral part of your loyalty programme’s sense of direction. Onboarding them as co-creators of your ‘purpose roadmap’ makes sure that you stay on course with your loyalty-with-purpose strategy and keep driving connections with your members on issues that they care about.
2. Programmes will compete on authentic membership
In the wake of a broad-stroke loyalty-with-purpose strategy, and as member bases are becoming increasingly diversified, such as in terms of ethnicity, sexual orientation, or differences in ability, programme membership should authentically reflect this to build effective relationships with members. Various recent market surveys demonstrate that customers are more loyal to brands that commit to addressing social inequities in their comms. Like with anything, actions will speak louder than verbal commitments. Programmes who offer authentic membership will develop performance metrics around diversity of programme team acquisition and retention, programme messaging, and giving back to relevant member communities. Furthermore, if your programme teams reflect the member base then this serves to reduce the cultural and socio-demographic distance and reflect an authentic membership experience. This does not only apply to internal programme teams but also to agencies, content creators and member experience suppliers. Programmes will need to make sure that they orchestrate the various member voices to the programme, especially when these are from traditionally underrepresented market niches or communities. Let them know that their stories resonate with your programme. Such an inclusive approach will start to pay off big in the year that lies ahead.
3. Only emphatic voices will be heard
It is pivotal that programmes remember that they are not the only ones who are feeling the pressure these days. All stakeholders in the loyalty eco-system are trying to navigate the choppy economic waters of today. So, it is important that in your interactions with members you engage with empathy and be thoughtful in relation to all touch points of your members’ journey. In these encounters, your member-facing programme staff need to be aware of the difficulties that members are currently experiencing by being responsive, providing assurance and instilling trust. Offering a personable conversation contributes to building rapport. Even when programmes use AI-propelled conversational digital agents, our research shows that these can both be designed and programmed using relational and emphatic conversation styles to build rapport. Additionally, programmes are advised to allow their member-facing staff enough levers to effectively address member problems, to develop a protocol for recommending programme improvements upstream, to offer your staff the latitude to exercise their emphatic judgment, and to manage on effectiveness (e.g., problems solved) as opposed to efficiency (e.g., call time). Programmes that compete on empowered empathy will do better on increasing member confidence, creating a positive customer experience of support and understanding and higher satisfaction ratings.
4. Programmes will move the dial on hybrid
Not so very long ago our lives pivoted to digital experiences overnight. Most loyalty programmes have captured the benefits of digital member experiences. At the same time, many have re-introduced face to face member events, as programmes re-discovered the value of physical experiences. The challenge for the year to come is to deliver the best of both experiences by following a hybrid member experience strategy. According to a recent survey, hybrid is well-placed to deliver on customization, innovation, connection, and inclusion. When it comes to blending the best of both worlds, we advise you to use a member-centred design approach. Choose a number of lead programme members as co-creators of a hybrid programme experience, analyse member behavioural data and follow up with rapid implementation of innovations, no matter whether they are big or small. Enable choice through member preference (‘do you prefer to talk to a digital service agent with a 24h availability?’). This will strongly help building a personalised member experience. It will also help in offering a more inclusive experience, for example, by introducing voice-based virtual assistance to those members who are visually impaired. Then zoom out and develop a line of sight across the complete member journey. This is what it will take to move the dial on your member experiences as hybrid ones.
5. Manage the personalisation-privacy paradox
Programme members will face the challenge of overcoming the paradox that arises from being expected to deliver on a personalised experience that members want and finding ways of protecting their privacy, which is also what they want. Members expect convenience across all touch points of your programme, in fact they tell us that the member experience is just as important as a programme’s rewards and ways in which to earn points. While many members are happy to share personal information for a more tailored member experience, they also often feel that more data is collected than necessary and that programmes are not always transparent about the ways they collect, use, and store their data. Hence, as we move forward, you will be expected to have a focused strategy on the personalisation-privacy paradox that is emerging. Here are a few pointers to remember. Every time any given company violates even one customer’s privacy, this mess-up will make your members reflect on your programme’s trustworthiness too. So, make sure you start to consistently earn your members’ trust in the face of hypothetically losing it. Also, continuously consider the privacy red line to avoid creating an impression of member stalking. In addition to being sensitive to a member’s unique behaviour, trust is built on perceptions of transparency. We recommend that you are clear on what data you collect and for what programme purposes it is used.
6. Programmes will transform into loyalty ecosystems
To build programs that are as dynamic as their members’ needs, companies are developing loyalty strategies that have a partnership of products, services, and experiences at their core. We expect that pursuing these partnerships are the way forward for programmes to compete and drive member engagement in a way no stand-alone programme can. It is part of a more general trend that sees brands partner up with other brands to improve the customer experience. Pursuing the transformation of programmes into wider ecosystems will bring programmes the benefit of having access to richer member data to compete at a scale that will be hard to copy by competitors and one that will open up ample cross-marketing opportunities. In addition, a wider-range set of brands offers the opportunity of crafting a coherent set of benefits that can be more personally relevant to members. As the number of loyalty ecosystems is increasing, there are 3 important lessons to be learned from first mover coalition initiatives: (1) ecosystems should be designed with shared members in mind and should provide a seamless experience through, for instance, single sign-on and intuitive and flexible point redemption protocols; (2) coalition partners should each add value to the partnership through diverse complementary value propositions and equitable marketing spend; (3) the information infrastructure should be based on alignment of sharing member data, assuring privacy a focus on connectivity and interoperability as well as managing risk.
7. Paid loyalty will develop as a viable strategy
Recently, a somewhat surprising finding emerged from a McKinsey survey; it showed that paid loyalty programmes are starting to attract members who are willing to spend twice as much on programme rewards (as opposed to ‘freemium’ point programmes). So, what are we dealing with here? Paid loyalty programs typically require a joining as well as a participation fee (i.e., using a subscription-based model). We have been doing a deeper dive into this trend-setting experiment. In talking to members of paid programmes, we found that members perceive their value proposition to be higher as it based on a sense of belonging and a sense of exclusivity. If you are considering jumping on this trend’s bandwagon, here is what you should consider. You have to ask yourself whether there is a potential of attracting a premium member segment that generates the value to justify the return-on-investment. Often the answer will rely on the specific characteristics of your competitive environment. If you operate in a fragmented market in which your members’ strategic and operational needs (e.g., response times and support availability) may outweigh their brand preference, then there may be an opportunity to cater to a segment specific paid offering.
8. Be prepared to renew to redeem
Future trends may not always reflect sweepingly broad strategies or industry-defining innovations. It is important not to lose sight of those elements of your loyalty that remain critical pieces of the loyalty programme puzzle but need a little dusting off to engage your members. Many programmes are extending their reward structure in an attempt to meet evolving member needs and to stay competitive. Examples include point earning opportunities for purchasing environmentally friendly product/service offerings, accelerated reward are redemption possibilities for pre-paying for offerings and extra points for engaging with products and service offered by a coalition partner. Moreover, incentives are increasingly offered for engagement beyond transactions, such as attending a business partner event, providing after-sales support to peers in virtual spaces, downloading a new programme app, completing a learning module of a certification programme, participating in a customer feedback survey, and referring another business partner to the programme. Going forward, it is important that programmes realise that extended earning mechanisms are accompanied by more flexible redemption policies. So, for the upcoming year, we would invite you to reflect on how you can empower your members to take control of their programme experience.
9. What’s that Siri? Voice navigation is here to stay
As we mentioned, equal accessibility will be an important criterion by which your member base will judge your programme. For a number of years now, the ability to search by voice has been an emerging attribute of the member experience. You will increasingly find loyalty programmes that allow their members the facility of searching for things through voice commands. What has remained nascent is the next level step where members can follow up their search commend with execution through a seamless experience. For instance, by offering the possibility to redeem their points for one of the rewards through voice. As voice technology and machine learning of natural language processing have made impressive strides, delivery of an entire voice-based member experience is now realistically on the cards for the year to come. In parallel, digital, yet humanoid, voice-enabled assistants will provide assistance across all stages of members’ journeys. Your audience is ready, it is time for your programme to perform on voice navigation delivery.
10. Programmes will be leveraging the power of NFTs
Many of the trends that we have identified have an undertone of keeping up with times that are a-changing (in the words of Bob Dylan), staying relevant and boosting member engagement. Non-fungible Tokens (NFTs) will be an important step in capturing and sustaining the loyalty of B2B business partners. Top B2C brands, such as Estee Lauder, Jimmy Choo, Burberry, and Starbucks have paved the way. We are not saying that good old tangible rewards will disappear, but NFTs will be an interesting addition to the list of intangibles (i.e., soft) benefits that have already taken centre stage to build unique relational bonds in so many programmes. In terms of programme rewards, NFTs can relate to art, to music, and member experiences. Non-fungible in this context refers to the fact that as rewards these are unique and cannot be replicated. NFTs also allow shared ownership by members. A group of members can decide to redeem points for joined ownership of a piece of digitized art together. Recently, Andy Warhol's 1985 portrait series Reigning Queens, valued at €350,000 and signed “HC 3/3 Andy Warhol” as this is one of only three unique pieces, was made available for shared ownership (3500 Pieces at €114.24 per piece). Adding such exclusive and unique collectibles to your reward structure could add significantly to your programme’s X factor that will extend even beyond your current member base. Maybe even Simon Cowell will pay attention.
Conclusion
So there you have it. Our Top 10 Trends for 2023. Many of the trends that we have identified have an undertone of keeping up with times that are a-changing (in the words of Bob Dylan), staying relevant and boosting member engagement. We hope that these will prepare you for both the head- and tail- winds that lie ahead, that they will help you to further build, evolve, and transform your loyalty program’s strategy and operations, while maintaining an inquisitive mindset during the systemic changes that will continue to unfold in our industry. So, please brace for impact as there are a lot of challenges and opportunities that are bound to come your way.
