As the digital landscape continues to evolve, so too does the concept of customer loyalty. In order to stay ahead of the curve and meet the needs of today’s customers, businesses not only need to stay informed about the latest trends but also respond to them appropriately. In this piece, we summarize the most important loyalty trends for 2023, using primary data from our 2023 Loyalty Trends Report and direct quotes from loyalty experts.

Marketing automation

Marketing automation has become crucial for the loyalty industry, serving multiple functions and offering countless benefits for loyalty program growth. In a nutshell, marketing automation helps companies target and engage customers more effectively through personalized and automated loyalty campaigns, helping to increase retention and sales. More specifically, however, marketing automation helps with:

Personalization

Automation allows businesses to create highly personalized loyalty campaigns that are tailored to individual customers’ behavior, preferences, and purchase history. While it may sound simple, it goes well beyond that and includes segmentation, dynamic content, omnichannel personalization and real-time personalization. 

Analyzing data

Marketing automation helps companies track and analyze customer behaviour across multiple touchpoints and websites. It collects, organizes, and analyzes customer data in real-time and allows for identification of trends and pattens that can inform future loyalty campaigns. 

Automated rewards

Another key function automation plays in the context of loyalty programs relates is rewarding customers. With the benefit of all the collected data, automation can automatically dispense rewards for certain behaviors, e.g. automated points or discounts. 

-

What will make marketing automation so appealing, particularly in 2023, are the cost and time savings. As the global recession rears its head, more and more companies will be looking for ways to generate value for their customers without breaking the bank. This is something that marketing automation can guarantee - and more, as it’s been shown to deliver great ROIs. 

At the same time, it’s no secret that today’s customers come with high expectations of the brands they do business with while things like personalization are fast becoming the norm rather than the exception. As such, it’s vital for businesses to take advantage of tools that will enable them to deliver seamless customer experiences in a way that doesn’t negatively impact company margins.

Experience-based rewards

As customer expectations and user experience standards continue to increase, businesses are also having to experiment with a range of different reward strategies to retain customers. From restaurants and high-street retailers to banks and sporting brands, customers’ expectations now go beyond the purely transactional. What they are after are memorable experiences. 

As found in our Loyalty Trends research, experiential rewards have not only made the top 3 trends that loyalty marketers plan to invest in, but they have also gone up 4 places since last year’s research. This points to an increased urgency with regards to offering consumers a more diversified and personalized set of rewards as opposed to relying on the types of rewards that have dominated loyalty for decades.

This ties in with yet another report finding, namely a lack of originality in the loyalty space, which has seen loyalty program after loyalty program offer virtually the same rewards and benefits as their competitors. It could be argued therefore that the interest in experience-based rewards is both the natural result of and the solution to the problem.

According to David Slavick, the Co-Founder of Ascendent Loyalty, the demand for experiential rewards is only set to grow. Whether it be a meet-and-greet with your favorite sports star, early access to events, or earning NFTs that accrue in value over time, the scope of rewards and benefits is likely to evolve to a more personalized level.

However, Rajasree Cheruvu, a seasoned loyalty marketer, notes that while experience-based rewards will come to play an important role, helping businesses engage customers in more profound ways, even more important is the successful delivery of the promised value. The devil is in the implementation, so to speak.

Given the fact that financial factors are very much at the top of loyalty marketers’ minds, going all out on offering experiential rewards may be a tricky move to reconcile with shrinking budgets. As such, it’s important to approach their implementation with caution and, of course, imagination, in order to ensure customers truly benefit.

Gamification

Gamification is yet another key trend set to make its impact on the loyalty industry in 2023, and one that has been identified as a key area of investment for loyalty marketers this year. 

At a time when competition in the loyalty space is as fierce as now, gamification offers businesses the opportunity to stand out from the pack. 

Having been successfully utilized by the world’s biggest brands across all kinds of verticals, from health and wellness to banking, its value and engagement potential are being increasingly embraced within loyalty.

When done right, the use of game-like mechanics offers a multitude of benefits, such as customer acquisition and retention, increased ROI, and most crucially, customer engagement. 

“Gamification is an engine that stimulates engagement in the most meaningful and relevant way possible” - Steve Bocska, CEO Pug Interactive

According to Steve Bocska, a marketer and gamification expert, gamification is most lucrative when numerous touchpoints are present, e.g. POS, physical check-ins, social media, and partners.

Optimizing this stage of the customer journey with game-like mechanics such as achievements, milestones, progress tracking and badges (among others), helps expose user preferences and needs, and use the knowledge to surprise and delight. 

Expert predictions

David Slavick

Co-Founder and Partner at Ascendent Loyalty

What challenges do you see for loyalty marketing in 2023?

Consumers who are program members will be less loyal in 2023. The challenges present in their daily lives create a re-evaluation of affinity, what is valued and who values their loyalty. Now more than ever it is important to focus on personalized retention strategies/tactics to limit attrition.

How do you see the future of loyalty programs over the next 2-3 years?

Consumers will continue to opt in and give permission for 1:1 dialogue with the brands they love. Mobile engagement will continue to rise as clients invest in personalized interaction through the device and offer savings to drive frequency. Advanced analytics supported by action-based strategic assessment/recommendations will be the highest priority for clients as it drives business performance. Programs heavily reliant on co-brand or proprietary credit tender must step up their value proposition or risk significant defection or inactivity in favor of debit or one card reliance.

Adam Posner

Founder at The Point of Loyalty

What challenges do you see for loyalty marketing in 2023?

Loyalty programs will sink into insignificance if they continue to play in "points for purchase". Transactional offerings need to move on up the emotional connection ladder towards experiences and even further towards social and community connections. Data as a product belonging to a member is also going to be a challenge. Brands need to realise and give their members the opportunity to control their data and see the value it delivers in the exchange.

How do you see the future of loyalty programs over the next 2-3 years?

The future of programs will be impacted by the greater social, economic and sustainability changes. Programs will need to be fluid and flexible to the impact of these issues and challenges on the anxieties and attitudes of their members. Programs that are sensitive to how their members feel and behave will have a positive impact on the performance. In a practical sense, a program can add joy, savings and a little more control to a member’s life. In a world with so much change, this is a good (great) thing!

Mark Ross-Smith

CEO, Co-Founder at StatusMatch.com

What challenges do you see for loyalty marketing in 2023?

I see more companies wanting to copy what is out there. Less appetite to be bold and do something new and interesting.

How do you see the future of loyalty programs over the next 2-3 years?

I want to believe there will be radical change where customers are more rewarded, receive more interesting offers, and the power of which brand to choose will be made or lost by the strength of the loyalty program. In 2-3 years, I hope that loyalty programs will evolve somewhat, so that more customers can find benefit from engaging with brands that have brilliant loyalty propositions.

Alexa Jachowski

Senior Director, CRM at FreshDirect

What challenges do you see for loyalty marketing in 2023?
In 2023, we will be seeing continued high inflationary costs, and thus customers will be wanting to get more value for their dollar. This means that companies will have to offer higher rewards offerings, a more frequent catalog refresh, and greater incentives to join a program in order to keep customers loyal to a brand.

How do you see the future of loyalty programs over the next 2-3 years?

Personalization is going to be key, as customers want to feel like brands know them and are giving them what they want. We are also likely to see an increase in subscription/pay-to-play models, as companies look to smooth out liabilities while offering greater value for joining the program.

Tom Peace

Managing Director at The Loyalty People

What challenges do you see for loyalty marketing in 2023?

Members expect more from their programmes in terms of positive engagements and experiential rewards, especially CSR, charity, sustainability and provenance.

How do you see the future of loyalty programs over the next 2-3 years?

Rational rewards such as airmiles, points and cashback will still be valuable, but members are now looking for emotional connections with their programme. They want to feel that the brand aligns with how they FEEL about today's issues and that it can provide money can't buy experiences.

Emily Ong

Certified Loyalty Marketing Professionalᵀᴹ, Head of Loyalty at Razer Inc.

What challenges do you see for loyalty marketing in 2023?

Exciting & retaining customers with the same product. If the core business product offering is the same, it is hard to sustain continued customers' interest. With competitors quickly picking up and offering the same or better, consumers have plenty of choices and get tempted away with one-off acquisition offers.

Even with the knowledge of a paling business product, some loyalty practitioners may find themselves only as minority stakeholders in the definition of the product. CRM via usual touchpoints like email, SMS and social media is also becoming too common, ultimately ignored.

Therein lies multiple challenges to overcome to drive acquisition, engagement and retention, with every brand fighting for mindshare with similar mechanics, touchpoints and even core product offering.

How do you see the future of loyalty programs over the next 2-3 years?

There will be improvements in areas like seamless customer experience either using Web 2.0 or 3.0 technologies, with data privacy and security as key, yet an obstacle to being seamless. Personalised journeys and customised touchpoints would be easier to implement, again with better and seamless tech integrations, regardless of platform preferences like web, mobile, social, etc.

Also, I believe with brands facing similar challenges mentioned above, loyalty programmes with a rewards catalogue will seek ways to be more localised and personalised. I foresee a change in reward strategies and offerings, including making the customer experience more interactive.

-

For more articles like this one, make sure to follow our LinkedIn channel and stay up to date on all our latest content.

To get some loyalty program inspiration, check out the Top 100 Loyalty Programs report, or peek into the future of the loyalty industry with our Loyalty Trends 2023 research.