From chatbots and cryptocurrencies to algorithms and ad fraud, there’s a lot to keep up with in the digital marketing world.
It’s no secret that technology advancements and consumer expectations are changing at rapid rates, but what does this mean for your customer loyalty strategy?
With March already upon us, we’ve had a few months to survey the digital loyalty landscape and determine the 6 biggest trends shaping the loyalty game in 2019.
Whether you’re implementing your first loyalty program or revamping an existing one, understanding and acting on the industry’s relevant trends will help set you apart from the competition.
1 – “Loyalty” as a strategy to engage customers at every point in their lifecycle
The most important shift comes as a broader, more inclusive way to define “loyalty marketing” and apply it to your business with a holistic point of view.
Customer loyalty strategies are proving to be much more than a quick way to win over new clients. It’s not enough to focus all marketing efforts on closing the sale and ignore initiatives that build long-term brand loyalty.
Customers expect to be appreciated at every stage of their journey, and marketers need to establish a strategy that engages users throughout their entire lifecycle – even when they’re believed to have churned.
This calls for multiple loyalty programs running at the same time to tackle acquisition, revenue, and retention challenges.
For example, an introductory offer program can be leveraged to acquire customers, while a VIP program helps turn them into lifelong customers. A win back program acts as a failsafe to reactivate them if they’ve gone quiet.
What does this mean? Loyalty as a comprehensive strategy in the digital economy not only helps you find new customers, but helps you keep them, make them more valuable, and prevent them from leaving.
Modern software lets you define multiple rulesets and touchpoints to reward and incentivize customers as they mature.
2 – Alternative currencies beyond discounts and points as the new normal
Digital loyalty program rewards are traditionally based around cost savings such as cash, discounts, and gift cards.
While these incentives still remain excellent motivators, customers are proving receptive to alternative currencies that play more to their emotions than their wallets.
Recent reports indicate that alternative currencies are “highly valuable” to 85% of consumers. Examples include free shipping, access to exclusive content, a complimentary training session with a product expert, free swag, or early access to a new feature.
More brands are turning to experiential rewards that address needs like convenience, time, ease and confidence to foster positive emotional connections with customers.
Alternative currencies can also help financially sustain your program if the reward requires little to no material investment.
Cryptocurrencies (ie. Bitcoin) may join the mainstream reward mix in the coming years, though this will likely be on hold until it’s better understood by the average consumer. A recent consumer survey in the US indicated that the majority (53%) said they wouldn’t use a program to earn cryptocurrencies like Bitcoin.
What does this mean? Instead of offering cash-based incentives to every single customer, think about what your target market actually values. They may be more receptive to education, experiences, or recognition.
To learn more about how to leverage alternative currencies, check out this article.
3 – Personalization expected as a result of increased data collection
It’s no secret to customers that companies collect and store data about what they buy, when they buy it, and what they might buy next.
In addition to trusting that their personal information won’t be abused, customers naturally expect that companies are able to make good use of it to offer personalized incentives.
Last year’s Bond Loyalty Report indicates that an increasing number of members (87%) are open to having various details of their activity and behavior watched, monitored, and tracked in exchange for access to personalized rewards or engagements.
Historical purchasing and loyalty data you collect about customers helps you tailor rewards that are more likely to drive action.
As technology becomes smarter, and artificial intelligence becomes a standard tool, the same static reward for every customer won’t be enough of a differentiator for your brand in 2019.
What does this mean? Ensure you’re (legally) collecting and monitoring sufficient data about your customers and prospects in order to delight them with rewards unique to their preferences.
This could mean tracking a user’s birthdate to send a yearly gift, or knowing how much time has passed since a user’s last purchase to properly incentivize them with a reactivation offer.
Choose loyalty software equipped with insights and analytics to help you continuously adjust and improve your reward strategies.
4 – Fraud as an increasing risk to digital loyalty revenue
Companies in the digital economy continue to face challenges with online fraud.
The incentives offered in your loyalty programs can be the target of fraudulent activity like fake referrals, reward exploitation, unauthorized broadcasting, and account cycling.
Reports indicate that fraud against a single member of your loyalty program can cost your company up to $17,000 in direct and indirect costs.
Fraudsters are becoming smarter, and their strategies are getting more complex.
Without preventative measures in place, campaign fraud can cannibalize company revenue and negatively impact the performance of your marketing programs.
What does this mean? Keep security and fraud prevention top-of-mind when evaluating different loyalty software solutions. You want to be confident that the money you make from your loyalty efforts actually ends up in your bank account.
5 – Affiliate programs shifting towards micro-influencers and away from celebrities
An influencer program can be a powerful component of your loyalty marketing strategy.
This typically involves reaching out to social media celebrities, podcasters or other people with an established following who promote your product or service to their audience in exchange for a commission or other reward.
It’s predicted that the influencer market on Instagram alone will reach $1.7 billion by the end of 2019, and $2.3 billion by 2020 (source).
To maximize their return on investment, companies are partnering up with micro-influencers: accounts with 30,000 or fewer followers.
When compared to celebrities or users with millions of followers, micro-influencers offer 60% higher engagement and are 6.7x more cost-effective. Plus, they drive 22.2x more weekly conversations than the average, non-affiliated consumer (source).
Only 1 in 5 consumers are likely to buy a product when someone with more than a million followers recommends it, while 78% of consumers will buy products based on the recommendation of someone they can easily relate to.
What does this mean? When searching for influencers to strengthen your affiliate marketing campaigns, look for those who are already fans of your brand and who have a following of less than 30,000 people. For the best results, focus on influencer relatability and fit rather than reach.
For more tips on running an influencer program, check out this article.
6 – Increasing customer acquisition costs highlighting the importance of retention strategies
Customer acquisition costs for both B2B and B2C companies have increased by nearly 50% over the past five years, making loyalty programs more important than ever to create a financially sustainable business model.
Many digital businesses fail because their costs to acquire a new customer (ie. sales and advertising expenses) end up outweighing a customer’s lifetime value.
Finding new customers is increasingly difficult and costly as modern consumers become more independent and impatient. Plus, getting found on the internet means beating out sponsored content on almost every webpage.
With access to reviews and comparisons online, consumers consistently report that salespeople are their least trusted source of information when making purchase decisions. Meanwhile, the least trustworthy advertising mediums are online and social media (source).
People place more trust in the opinions of friends, family, and colleagues, making customer referral programs more influential than traditional marketing tactics.
Despite these challenges, only 18% of companies claim to focus more on retention than acquisition.
However, working to retain an existing customer can be 5 – 25 times more cost-effective than acquiring a new one, highlighting the importance of loyalty as a retention tool.
What does this mean? As customer acquisition costs rise, businesses in the digital economy need a proven way to increase the lifetime value of every customer.
By offering the right loyalty rewards at the right times (ie. VIP Rewards, Flash Sales), you extract the most value from each customer to boost spending amounts, encourage repeat purchases, and drive customer engagement.
2019 is proving to be all about better reward personalization to incentivize customers at every stage in their journey, with an increased focus on relevance rather than mass reach.
However, 78% of consumers report they are retracting loyalty at a faster pace than they were three years ago, making it crucial to stay on top of shifting expectations.
Now is a great time to internally re-evaluate your organization’s loyalty strategy and ensure it’s prepared for what 2019 has in store.