2020 didn’t go as planned. The COVID-19 pandemic has fundamentally impacted our lives, and in varied and sometimes surprising ways the pandemic has also impacted every business. While many were shuttered and have experienced significant revenue declines, others have thrived as consumers adjusted to a new way of living. But beyond the dollars and cents impact, the pandemic has challenged businesses to further embrace digital transformation, accelerated long-running trends towards convenience, automation, data-informed decisioning, CX improvement, and contactless commerce.
While 2020 has been a difficult year, many of us have also come to understand just how resilient we are. In the most trying of circumstances, marketers and agency folks alike have delivered high stakes, high impact, quick turn work that helped their businesses and clients pivot at critical junctures. It’s been a hard and exhausting year, but perhaps it is one that many of us will look back at with pride.
As we head into 2021, our team has assembled our annual predictions for the year ahead. While some pre-pandemic trends will continue, in many ways COVID-19 has set us on a new path, accelerating change and precipitating a number of unexpected changes to the business and loyalty landscape. With the increasingly positive news on the COVID-19 vaccine front, one umbrella prediction underlies most of our thinking—while it may be a rocky journey getting there, at some point in 2021 we will return to something much closer to “normal” life. Here’s to looking forward to it, and the changes ahead.
“Buy now, pay later” will play a central role in building and maintaining customer loyalty
Katie Berndt, Director, Strategy
Over the past few years, the retail industry has experienced mass adoption of digital installment loans, more commonly known as buy now, pay later (BNPL) services. BNPL allows customers to split their purchases into equal, interest-free installments and seamlessly link to a bank account, making it easier to automatically pay off the balance and avoid late fees. By offering BNPL, brands can modernize the shopping experience and meet the needs of younger customers who tend to be more credit averse. In doing so, brands demonstrate empathy by providing flexibility for customers to choose how and when to pay for purchases big and small.
Savvy retailers are recognizing this growing trend and incorporating it in unique ways. For example, earlier this year, H&M launched its first loyalty program centered on a variety of BNPL options exclusively available to its members. In October, Macy’s became the first major department store to offer BNPL, proving that store credit cards and BNPL can coexist. In 2021, new BNPL users will grow faster than new store credit cardmember acquisitions as customers prioritize affordability, flexibility, convenience, and control over managing their finances and shopping habits. Brands who make room for BNPL on their payment platforms will be rewarded with larger share of wallet, an increase in basket size, and more repeat customers.
Supporting personal growth will earn brands trust
Elisabeth Groening-Wall, Managing Consultant, London
The pandemic has made many reflect, reassess, and reset their lifestyle choices. The Edelman Trust Barometer 2020 points out consumers expect brands to no longer just sell, but rather to solve and particularly address personal goals. Brands should think about how they create value that’s not tied to a product or service benefit, but supports customers in achieving their pursuits, passions, and hobbies.
Pre-pandemic, every solution pointed towards reaching “peak performance” and doing more in less time. However, greater self-awareness has shifted people’s attitudes towards growth defined by themselves, rather than norms or others. This presents an opportunity to create experiences that aren’t just about promoting the product. Instead, brands should design engagement that connects with customers’ attitudes and values:
- Learn: Expand knowledge about how to make sustainability an everyday action.
- Connect: Create local connections to support strengthening communities.
- Create: Increase creativity and risk-taking.
- Build: Design experiences to give confidence and drive personal growth.
- Pause: Reconnect and create positivity through wellness.
As customers cement their lifestyle changes based on realizations and factors that matter more now than ever, brands will evolve to play the role of “change partners.” This means helping customers manifest their ambitions, reinforcing their positive behaviors, and aiding them as they try to keep to those habits. 2021 will continue to be about brands that customers trust. Brands that succeed will earn loyalty and advocacy by proving their business has more to offer than products.
Creating contactless experiences for leisure and business travelers
Guy Cierzan, Managing Partner
A shared vision for the travel and hospitality space over the last few years has been centered on creating a frictionless experience for today’s traveler. This worthy goal has been anchored on the belief that simplicity and usability triumph over clicks and complexity—and will ultimately drive business. A U.S. Travel Association survey found that over 50% of frequent business and leisure travelers would take at least three more trips annually if airport “frictions” could be reduced or eliminated. Less friction makes for a happier, more frequent, and friendlier journey.
In 2021, the industry will double down on the experience desired by today’s traveler. That experience has been considerably reshaped by COVID-19 impacts and the new focus in 2021 will be on happier, more frequent, and healthier journeys. While the physical nature of travel is made most memorable by human-to-human experiences, the imperative for travelers in 2021 will be to stay healthy. This focus on health will drive rapid adoption of digital and virtual capabilities that airports, airlines, hotels, and cruises have launched to minimize human-to-human contact throughout the travel journey. With an eye toward healthy travel and capturing pent-up demand from 2021 travelers, brands will prioritize contactless technology investments that reimagine the travel journey, without the need for frontline employees to deliver the experience. From gate agents to TSA, and front desk to concierge, all aspects of the travel journey will see more technology and less reliance on people.
Work-life integration is here to stay
Kristie O’Shea, Partner, Product Management
As work from home became the new normal in 2020 and pre-pandemic boundaries fell away, the concept of “work-life balance” went out the window and “work-life integration” took a firm hold. The fact of the matter is that work-life balance evokes a sense of competition between the two parts of our lives. Work-life integration is about creating synergy between all areas of life including work, home, family, community, recreation, and well-being. While this may sound like a simple language change, the implications for how, when, and where people choose to work, live, and play are huge.
The resulting shift in consumer needs, expectations, and behaviors will be long-lasting. People have become accustomed to the intermingling work and life demands. Once we’re able to travel again (yes that will happen), this will unleash a different kind of travel and recreation boom. We will see entire families taking extended trips that combine work, learning, and recreation. And consumers will gravitate toward multi-purpose products and services that transition seamlessly from work to play, and back to work again. Just think, how will we ever go back to wearing business attire when we’ve grown accustomed to yoga pants and hoodies? The most successful brands will focus on convenience, consumers’ integrated needs, and strategic partnerships to elevate customer experience. The work-life integration movement is an opportunity for brands to help their customers create their best life.
Reconnecting with leisure travelers and repurposing travel spaces
Denise Holt, Partner, Strategy
When business travel halted in early 2020, we quickly became familiar with conferencing technology like Zoom and interactive collaboration tools like Mural. This newfound virtual efficiency will lead to the shrinking of corporate office space, an increased percent of staff working from home, and reduced or nonexistent travel budgets. A study by IdeaWorks predicts that 19% to 36% of airlines’ business traffic base will not return to the skies.
As a result, airports and airlines will refocus marketing efforts and service offerings to appeal to leisure travelers, including converting former business travelers to leisure trips. Airports will offer leisure travelers special access and discounts to otherwise cost-prohibitive services, like premium airport parking, thus filling vacancies and generating revenue. With pressure on airlines to keep leisure fares affordable as higher business fares don’t fully rebound, success will be found in packaging new loyalty benefits (both in-air and through partnerships) to attract higher fare leisure travelers to fill empty seats.
Hotels will get creative to find alternative uses for not only guest rooms but also meeting and event spaces. Over the course of 2020, we saw hotels temporarily converted to everything from quarantine space for healthcare workers, triage areas for COVID-19 patients, and expanded student housing options for universities. Watch for hotels to step into new territory by providing flexible workspace alternatives to companies with scaled back office footprints who occasionally need space for collaboration.
Brands will monetize their loyalty programs through subscriptions
Tom Madden, Senior Partner, Client Success
During the pandemic, customer transactions have disappeared in industries like travel, hospitality, entertainment, in-person dining, and other sectors. But the need to maintain customer loyalty in these industries has never been more important.
Until vaccinations have been distributed at a level that enables the full opening up of currently closed venues, empty tables, vacant rooms, and overall travel, loyalty programs will continue to rely on their most loyalty members. However, those same members are not able to transact at normal levels (if at all) with those brands to keep business going. While the extension of status and point expirations are common for 2020 and well into 2021, this will not continue past the current extensions.
In 2021, brands will look to subscriptions make up for lost revenue and benefit-extension costs. They will monetize loyalty program elements that have previously been given for free. This will create additional value for members while generating new revenue streams for the brands. With subscription plans, members will be able to extend status despite little to no activity and will be able to extend point expirations and other certificate expirations through 2022. This will also apply to some things which are currently available à la carte (e.g., movie theatre popcorn, airplane sandwiches, minibar drinks, etc.). Subscriptions will provide much needed revenue streams to struggling brands, while giving value to attract and retain customers as we venture back outside our bubbles in 2021.
Investment will increase for MarTech and digitization alternatives
Jim Mattson, Senior Partner, Technology
One upside to the significant decline in business travel has been the significant controllable expense savings for companies. As we have learned that some portion of business travel was unnecessary, companies will continue to shift their budgets in 2021 to elevating their marketing technology (MarTech) and digital transformation initiatives. This prioritization will continue to accelerate the consolidation of data across channels leveraging customer data platforms. These platforms are essential in implementing user identity resolution and graphs, adding connectors for new data sources, streamlining data preparation and cleansing flows, and unifying customer 360 views of data. With foundational data consolidation completed, companies will continue to operationalize, streamline, and deliver real-time data ingestion for use in analytics, personalization, and segmentation capabilities.
Further adoption of cloud and SaaS-based solutions will continue to advance as companies look to leverage best-in-class and pre-built MarTech capabilities, with diminished technology teams looking to keep core business platforms operational through the pandemic. McKinsey found that 85% of technology executives expect the COVID-19 crisis to generate big opportunities for growth. Prioritizing this investment in innovation around cloud and SaaS-based MarTech solutions will be essential in realizing post pandemic growth in marketing and technology.
Loyalty programs exceptions will continue through 2021
Cindy Roseland, Partner, Client Success
Despite inching closer to a vaccinated population every day, consumers have clearly developed pandemic fatigue. This means customers are starting to venture out and there is a resurgence in people willing to travel, albeit in different ways than before the pandemic—largely focused on drive-to destinations closer to home. While we wait for the vaccine rollout to begin in earnest, we find ourselves in a situation where the number of COVID-19 cases is again on the rise. Stay at home orders are once again being put in place around the globe, resulting in further impacts to brands that had started to see an uptick in activity.
From a loyalty standpoint, companies are in a very different position than they were in the spring and are well positioned today to take swift actions to ensure customer loyalty remains. Loyalty programs have already taken actions to appease their best customers, and companies will continue to ensure their top tier members maintain status by extending status, lowering tier thresholds, or gifting status. Point expiration dates will also be extended for most, if not all, members. Brands will continue to tout the steps they are taking to ensure customer safety when customers begin to choose to travel again, highlighting key partnerships that support cleanliness, promoting contactless interactions, or changing their business model to support customer needs like remote work areas.
Shrinking consumer attention spans require reduced points of friction
Ken Seaton, Partner, Client Success
This year, it’s likely you haven’t waited in many lines at a retail outlet. As online shopping dominates the landscape during the pandemic, the migration to digital channels will shape future consumer behaviors well past what we have experienced this year.
Older consumers have been forced to become proficient in online interactions, while customers across the board have become more adept at scouring the internet for high-demand items. As their overall savviness continues to evolve, their expectations will become more demanding. This is motivating companies to reimagine how they deliver digital experiences. Customers decide their online shopping destinations based on how well the digital experience is delivered, and they will forgo online shopping experiences that contain friction and redundancies. Customers will expect more robust search functionality and increased automation, AI, and predictive analytics to deliver to them what they want. Multiple-click experiences will be viewed as a waste of time or, at the very least, a turnoff.
Companies will revisit their customer experience maps to identify points of friction—and to prioritize the elimination of interactions that provide little consumer value yet cost consumers time and hassle. Companies will also revisit their loyalty program experience journeys to identify similar friction points to ensure the loyalty experience is increasingly streamlined. As consumers re-engage, programs run the risk of losing members if other programs create a more friction-free experience. The pandemic has increased our desire to simplify, and marketers will increase efforts to deliver experiences that are efficient, streamlined, and quick.
In brick-and-mortar retail, employee loyalty will power customer loyalty
Mike Sund, Partner, Strategy
This year, most customers have sequestered themselves in their homes—away from stores, restaurants, and anywhere else they would normally congregate to enjoy the company of others. When the pandemic fades, as it will, those same customers will likely rush back to brick-and-mortar spaces, requiring brands to reengage with their employees to staff up and prepare. Peter Drucker wrote that employee engagement is “one of the last true sources of competitive advantage.” Businesses that invest in employees now will hold an advantage when customers return to stores.
In 2021, look for brands working hard to ignite employee engagement by making investments in employee retention that create a culture of autonomy, and a philosophy to promote from within. Leaders will help employees understand their purpose and how to share their values, whether that’s green initiatives, giving back to their communities, demonstrating empathy, or by helping people in their community. Employees who see themselves as working on their career, not just a job, are better able to represent a brand’s values while demonstrating genuine connections with customers.
Brands spend a lot of time and money focusing on technology to deliver a better customer experience. What can get lost in that effort is the essential role of frontline employees. Too often, we forget that the most essential part of a customer experience can be the person-to-person connection. This will be amplified in 2021.