What are the Customer Loyalty Trends to Know for 2022? 8 Experts Weigh In
If 2021 was the year of brand-switching, 2022 is the year when companies in every industry put in place the technologies and strategies they need to maintain long-term loyalty.
The shift to digital channels is making it easier than ever for customers to find new brands. In fact, 40% of consumers have switched brands and 84% intend to stick with the new brand, according to McKinsey. Now, it’s up to companies to rethink their loyalty strategy to keep customers engaged.
There’s business value to doing this in every industry. Beyond retail, travel, and hospitality, a Salesforce Customer Sentiment Survey of more than 12,000 consumers found that over half would be more likely to do business with a financial services company, subscription streaming service, or communications service provider if they offered a loyalty program. Customers want more from their healthcare providers, mobile carriers, and insurance companies, too.
However, loyalty programs themselves are not as impactful as they used to be. Customers take part in many of them (on average 4.3 loyalty programs in retail alone) and most are neither differentiated nor engaging enough. As a result, 54% of loyalty program memberships are inactive.
What does this mean for the future of loyalty? Eight experts share their predictions on what companies will do to take loyalty to the next level in 2022.
1. Without cookies, brands are hungry for loyalty programs to capture data
“Loyalty programs are going to be the first line of defense in the cookie apocalypse and a way to unify your data foundation. You are future-proofing your data strategy with loyalty by replacing data from third-party cookies with activities and engagement.”
1. Without cookies, brands are hungry for loyalty programs to capture data
Learn more about loyalty as a source of first-party data.
New privacy laws and regulations are giving customers more control over their data and how they are tracked online. And although Google delayed the “death of the cookie” on Chrome until 2023 (with other browsers already following suit), many marketers are preparing for the inevitable.
Loyalty programs are a great way to collect valuable first-party data in order to deliver the personalized experiences customers have come to expect. They serve as an opt-in mechanism that gives companies permission to collect and use data — including purchase behaviors, member preferences, and interests — in exchange for more relevant brand experiences.
Loyalty programs also help companies source zero-party data — information a customer will share directly with a business when prompted — through the members’ completed profiles. And companies can further reward customers for providing more information or filling out surveys.
2. Changing expectations drive B2B companies to give their loyalty programs some B2C flair
“Consumers have rich experiences online, where personalization is not only expected, it is demanded. B2B buyers have the same expectations. While the B2B customer has different objectives, hyper-personalized consumer loyalty has triggered material shifts in B2B customer behaviors.”
Learn more about how B2B and B2C program expectations are converging.
3. Loyalty programs become central to hyper-personalized experiences
“As consumers become more savvy about when and how their data is used, delivering the right experiences at moments that matter has never been more important. And this can change throughout their journey, so having a real-time feed of data is absolutely necessary.”
The loyalty program will evolve from an “add-on” marketing initiative and become the common thread that stitches together a hyper-personalized experience, regardless of where or who the customer interacts with — whether it’s with marketing, service, or at a store.
This is particularly important as Gen Zers and millennials take a larger share of the market. A Salesforce Consumer Sentiment Survey found that younger generations place more value on a broader array of loyalty benefits, including:
- Early access
- Personalized attention
- Exclusive events
Let’s consider a mass retailer with multiple customer segments across geographies. Some customers might prefer to receive their promotions by text or redeem them on your app. Others might want first dibs on the next available personal shopping appointment. And for those who love to feel like they are a part of an exclusive community, perks such as a sneak peek at a new collection followed by a special event will build brand love.
All of these perks take more than simply knowing your customer’s loyalty activity. Companies must create an integrated ecosystem that connects loyalty data with a customer relationship management (CRM) platform, marketing automation tools, customer service platforms, ecommerce sites, and a customer data platform (CDP). This 360-degree view enables companies to anticipate needs, tailor incentives, and diversify rewards to deliver those hyper-personalized experiences.
4. Gamification gives instant gratification a competitive edge
“Keeping customers engaged consistently is a challenge, but gamification can keep them coming back, prompt new behaviors, and, ultimately, serve as a great relationship-building tool that taps right into the powerful emotions of excitement and joy.”
Knowing your customer’s preferences and presenting both short- and long-term rewards improves engagement. Gamification is a great way to do this because it gives customers a reason to come back to your website, physical location, or mobile app. It also makes it possible for members to earn rewards much faster than they normally would.
What does gamification look like in practice? It’s more than “spin the wheel” games. Other examples include the ability for customers to earn badges for doing activities like posting on social media to “level up” their status. For the business, this encourages new behaviors by rewarding a customer with an extra spin or game piece for purchasing a product they've never tried before or for spending more on a particular transaction.
5. Cross-industry partnerships flourish to drive engagement
“The traditional notion of your loyalty program living just within your brand is gone. We’re going to see a lot more businesses leverage partners and create ecosystems of relevance to strengthen their programs, which is what consumers want. It’s a win-win for your brand and for the customer experience.”
Some of the world’s most popular rewards programs include cross-industry partnerships that drive customer engagement. Think about the airline that partners with a ride-sharing service or the credit card company that gives customers additional cashback for getting a cup of coffee or ordering from a national partner retailer.
In 2022, companies across every sector will build more cross-industry partnerships so they can deliver on individual customer preferences and increase program stickiness.
These partnerships don’t just drive revenue. They get loyalty liability off the books. When businesses assign a monetary value for points and carry the balance on their financial records, the unredeemed rewards become a liability. Consider that 31% of Americans with credit card rewards balances didn’t redeem any of them. Airlines are facing an even bigger challenge with program liability from the top five companies ballooning to $27.5 billion in 2021. Cross-industry partnerships encourage customers to redeem points in other ways, which reduces liability.
How do partnerships play out in industries that traditionally are not associated with loyalty programs? Consider your provider’s wellness program that rewards you for exercise equipment purchases and logging your workouts or the ability to earn and redeem points with a partner streaming service through your mobile service provider.
6. Companies do well by doing good
“We’ve seen shared values take center stage, especially with younger generations. Bringing your company values into your program through point-to-donation conversions and rewarding customers for giving back to their communities elevates your brand from a utility to being part of their lifestyle.”
The public is paying attention to the business sector and its role in driving change in this multi-crisis environment. Most customers (86%) say the societal role of companies is changing, and many (62%) have already stopped buying from companies whose values don’t align with theirs.
As customers take a fresh look at the ways companies support causes and communities, values-based loyalty programs are poised to grow in 2022.
Empowering your most valuable customers with the opportunity to convert points into monetary donations to causes that are important to them creates an emotional connection. At Sephora, for example, customers can transfer points to the National Black Justice Coalition. And at American Express, customers can give to an organization of their choosing through JustGiving.
7. Cross-channel unity powers loyalty experiences everywhere
“Businesses have gotten really good at engaging customers and making them feel special online. That needs to find its way into the in-person experience. Your front-line staff plays a critical role in getting customers engaged with your program — give them the data they need to be successful.”
Most businesses have succeeded at using online behaviors to inform their personalization strategy, but it’s harder to do at a physical location. Yet physical interactions still play an important role in the customer journey.
That’s why in 2022, the physical experience will get a digital makeover in order to meet customer expectations for consistent brand interactions. This brings brands closer to delivering true unified customer experiences.
Consider the case of the customer who visits their local outpost of a national clothing retailer. The sales associate needs the same information as the marketing team so they can provide a personalized shopping experience. In order to do that, companies need to make customer and loyalty data readily available across the organization. By doing that, customers get a 360-degree view where they see loyalty points, balance and redemption history, past purchases, and favorite products to provide a white-glove service and deepen the emotional connection to the brand.
8. Companies take a more proactive approach to loyalty
“Consumers expect businesses to understand their needs now and anticipate their needs in the future. We’re going to see a big investment in predictive analytics to help brands become more proactive with their loyalty approach.”
Customer behavior has been difficult to predict over the last two years, but they still expect companies to meet their needs anytime, anywhere.
This paradigm has left companies in a reactive state. But it’s not enough to simply respond — with many customers switching brands, companies need to see the warning signs before that switch ever happens.
That’s why we expect companies to increase their investments in predictive capabilities in 2022. These capabilities move companies from reactive to proactive because they take data such as past behaviors, purchases, and propensity to buy, and turn them into insights to make better decisions about the loyalty program. For example, companies can predict which customer segments would be more responsive to specific promotions. Or, they can evaluate a member’s past purchases and send a follow-up email with a personalized offer, like an invitation to an exclusive event. In this way, companies can accurately forecast how well a promotion will perform before it launches and optimize it in real-time.