The loyalty landscape is evolving. Constant digital innovations are making customers ready for digital-first, virtual and remote experiences. 95% of customers want to interact with loyalty programs using technology like chatbots, AI, VR, and smart devices.
Rising competition and the evolving market make it challenging to sustain growth. Brands rely heavily on loyalty programs to distinguish themselves from competitors. But a successful loyalty program must be backed with proper technology.
92% of customers can quickly shift from one brand to another if their expectations are unmet. Surprisingly, brands still run on discounts and monetary rewards. Modern customers demand a holistic experience that spans multiple dimensions of loyalty.
A martech ecosystem consisting of AI/ML, data science, and headless CMS into loyalty platform allows brands to effectively automate the program, collect valuable insights, and enhance customer experience.
Let’s see how the latest technological advancements are enhancing loyalty programs.
Latest technology trends in loyalty programs
1. Digital wallets and cards
Customers are increasingly leveraging digital payment options for shopping. In 2020, there were 2.6 billion global digital wallet users, which is set to reach 4.4 billion by 2025.
Digital wallets and cards allow customers to make risk-free transactions instantly. As a result, brands are integrating digital wallets and cards in loyalty programs to reward customers’ loyalty with convenience and time.
What do digital wallets and cards bring to loyalty programs?
- Frictionless payment experiences with features like QR-code and NFC transactions.
- Personalized deals and rewards on transactions to loyalty program members.
- Members can monitor and track balance and transaction history.
7-Eleven, Inc.’s digital wallet offers members a contactless, convenient way to pay at participating U.S. stores. Members can securely add funds in the form of cash, debit and credit cards, Apple Pay, Google Pay, and prepaid 7-Eleven gift cards in the 7-Eleven wallet.
2. Artificial Intelligence (AI) & Machine Learning (ML)
The conventional model of —spend more, earn more — is long gone. Customers value experiences over transactional rewards. AI and ML can deliver the advanced capabilities and predictive insights needed to enhance customer experience through loyalty programs. 45% of brands agree that artificial intelligence (AI) solutions can reshape customer experience in the next five years.
Artificial Intelligence helps brands create a data-driven marketing plan and hyper-personalize each stage of the buyer’s journey. As a result, 43% of millennials are ready to pay a premium for a loyalty program run by AI. In addition, focusing on value over transactions builds a community of brand-loyal customers.
Impact of AI and ML to loyalty programs
- Automated customer support with chatbots and automation of rewards redemption.
- AI can track customer activity across every touchpoint and establish behavioral patterns.
- AI enables hyper-personalization and segmentation for finely targeted loyalty campaigns.
Sephora uses AI and ML to segment customers based on age, skin type, and personal preferences to design customized rewards and profile-aligned gifts. Delivering personalization makes customers feel special and produces brand affinity.
3. Headless architecture
Over the years, customer interactions with brands have changed drastically. Customers are now interacting with brands through multiple touchpoints. 85% of customers go through at least 2-3 channels before making a purchase decision.
A headless approach allows brands to deliver a seamless experience across all touchpoints. The term ‘headless’ signifies that the loyalty solution operates much smarter than the traditional models. Commitment to an omnichannel loyalty experience requires integration at all touchpoints, including POS and CRM, to scan QR codes and barcodes to let customers earn and redeem points in-store.
What headless architecture brings to loyalty programs?
- Power of flexibility for marketers to test different campaigns without affecting customer-end interfaces.
- Customers stay engaged when your brand extends more freedom to earn and use their loyalty rewards in ways they see fit.
- The headless architecture allows brands to collect data from multiple channels and unify captured data.
- A headless loyalty solution allows brands to adapt the desired loyalty workflow to any customer experience.
4. Internet of Things (IoT)
The diverse ecosystem of IoT has a profound impact on loyalty programs. With approximately 14 billion connected devices, expected to surpass 71 billion by 2025, incorporating IoT in loyalty solutions enables more flexible payment options, customized rewards, and data collection across various touchpoints. Customers can pay with their bracelets instantly and continue shopping without any payment delay.
IoT uses wearables, wireless sensors, and beacons that transmit data to loyalty solutions. Since IoT devices communicate with each other, rewards redemption becomes instant, leading to a better purchase experience.
What IoT brings to loyalty programs?
- Wearables, such as smartwatches and fitness bands, enable brands to track and reward ideal behaviors (for example, going for a run or walking 10k steps).
- IoT encourages store visits and enhances the in-store shopping experience through personalized communication.
- Geo-location apps allow brands to send location-specific offers to customers.
- Brands can deliver rewards automatically to the loyalty app on completion of specific actions or milestones.
Nike has a loyalty app, ‘Nike Run App,’ through which it collects customer data. The brand then rewards members for completing milestones, participating in marathons, and completing challenges.
5. Web3 technologies
New technology is appealing to new-generation customers. Brands can offer decentralized tokens, crypto, or NFTs as rewards through these loyalty technologies.
Blockchain and Web3 technologies allow brands to forge deeper customer relationships, lower costs, and curb security concerns. In addition, with many popular retailers accepting cryptocurrency, brands can offer more value to customers with loyalty partnerships.
What Web3 brings to loyalty programs?
- Brands can enable secure and encrypted transactions blockchain.
- Web3 offers more flexibility and security to loyalty program members.
- Gen-Z and Millenials prefer interactions with hot technologies and are inclined towards brands using them.
Example: American Express
American Express recently launched a blockchain-based loyalty program in partnership with Boxed. Whenever members purchase products from Boxed, transaction data is stored in the blockchain as a smart contract which then creates and adds the points to a loyalty system run in the backend.
Innovation in technology is happening faster than ever. As a result, brands need to adopt customer-centric experiences strategically. In myriad trends in the market, strategic consultation has the key to finding the perfect tech stack for loyalty programs. Enabling automation, analyzing data, and personalization are essentials for any loyalty program.
A future-ready loyalty program needs a platform that uses data analytics, a robust technology platform, and strategic consultation simultaneously.