The lives of consumers and the way businesses operate continue to be dramatically altered and impacted by the pandemic, even as we approach the two-year mark. Yet, with all the uncertainty that remains, it seems we are inching closer to “normal."
Companies have redefined their relationships with consumers as they evolve to meet ever-changing expectations accelerated by the pandemic and the continuing digital transformation in the market. While some pandemic trends of the last two years will continue, and new variants will likely present unique challenges, we expect to see brands continue to succeed through agility and forging deep, one-to-one customer relationships.
As we look forward to the year ahead, we are optimistic that amid the lingering disruption of the pandemic we will continue to see brands and agencies respond in innovative and empathetic ways. Heading into 2022, we predict loyalty will continue to be a successful mechanism to achieving positive business outcomes. Keep reading for more predictions from our experts on how the loyalty landscape will continue to evolve in the coming year.
Customer loyalty trend prediction #1:
“Subscriptions to boost the bottom line and incremental program redesign."
—Tom Madden, managing partner, loyalty and CRM
Next year will prove to be a watershed year for loyalty. COVID-19 variants will continue to create hurdles but, as more of the world has access to full vaccines, that will largely not halt business as we now know it.
In 2022, brands will look to incorporate subscription offerings to make up for lost revenue and benefit-extension costs from the pandemic. Monetizing certain products or services will create additional value for members while generating new revenue streams for the brands. With subscription plans, members will continue receiving value despite potential reductions in activity (e.g., status extensions, in-flight meals, movie theatre popcorn, minibar snacks, and beverages). Subscriptions will provide additional revenue for brands that should help offset potential decreases in more traditional revenue streams.
Many brands will look to redesign their loyalty programs to attract new types of customers with a better, data-driven understanding of how customers now prefer to travel, shop, and visit. Brands will no longer wait until new technology investments are complete to take advantage of what we’ve learned over the last year. Rather, they will look to implement “crawl, walk, run” strategies and tactics as needed, to take advantage of the technology they have today—and the technology they’ll be evolving in the future—to secure incremental gains.
Customer loyalty trend prediction #2:
“Brands will re-evaluate their new normal and rising customer expectations."
—Deb Hillstrom, director, customer strategy and loyalty, and Cindy Roseland, senior partner, loyalty, strategy, and CRM
At the onset of COVID-19, companies began offering new services and perks to help consumers navigate through the difficulties brought on by the pandemic. Airlines waived change fees and redeposit fees for award tickets. Hotels offered perks such as on-site COVID-19 tests, heightened cleaning protocols, and processes to minimize waits in the lobby. Retailers introduced benefits like curbside pickup and BOPIS (buy online pickup in store). Loyalty programs paused the expiration of points and miles, extended member levels, and communicated to members with new clarity and honesty—keeping them informed about how they were tackling unique challenges during the crisis.
As we continue to recover from the pandemic, consumers still want these benefits. These practices not only fundamentally changed customer experiences for the better but have become something that customers have grown to expect. With the shift in consumer expectations for the foreseeable future, it is no longer a viable option to simply switch back to pre-pandemic standards. While brands may not find it feasible to keep all new services indefinitely, those who can successfully shift to meet new expectations—keeping those services and perks that are most important to their members—will be best positioned to build emotional loyalty with members and cultivate true brand advocates.
Customer loyalty trend prediction #3:
“Zero party data—better together."
—Mike Sund, partner, VP strategy
Zero-party data (ZPD), or the data consumers share intentionally with a brand, will continue to fill an important void as third-party cookies are slated to disappear by the end of 2022. ZPD is an essential 1-to-1 marketing tool. As it evolves its role will be recognized as a complement to other categories of customer data—especially for existing customers. And loyalty programs will be the most important source for both ZPD and first-party data.
ZPD is great by itself. It’s forward-looking, provides stated intentions and timing to purchase, supports personalization by collecting point-in-time preferences, and engages customers with participative experiences with your brand. But ZPD is even better when it’s combined with other categories of data, in part because sometimes customers state something that contradicts their behaviors. That inconsistency isn't necessarily a problem as people are entitled to change their minds and intentions. However, actual behavior is a good check on what customers are telling you. When your ZPD shows consistent intentions and preferences with your first-party data (or data derived first-party from predictive models and ML/AI), you’ll have something powerful on your hands.
Customer loyalty trend prediction #4:
“Customers (and employees) demand more authenticity and flexibility than ever."
— Katie Berndt, senior director, customer strategy, insights, and research
While 2021 was largely a year of recovery with most industries seeing YOY growth, it will also be known as the year of the great resignation. Employers have felt the impact of employees across their organizations leaving steady jobs for something new. Similarly, brands that had mostly transactional relationships with customers—based primarily on discounts and promos—found there wasn’t much left to build on when habits and needs changed.
The effects of the pandemic are lasting and will continue to play out in 2022. People want to interact with and invest in brands—and employers—that fit their lifestyles and beliefs. They expect the relationship to be reciprocal or they will move on. Like our personal relationships with loved ones, it is important to remember that being authentic does not mean you are perfect and never make mistakes. Customers appreciate transparency and brands and employers who are empathetic, quick to right wrongs, and show appreciation and recognition of employee time and effort.
Don’t guess at the experiences that would make your customers actively participate in your loyalty program or what employees are missing from their experience that would make them want to stay. Ask them what’s important to them and be ready to act on that information in meaningful ways that improve their experience or risk seeming inauthentic and losing their trust.
Customer loyalty trend prediction #5:
“Loyalty programs will tap into NFTs to engage and reward."
—Jim Mattson, senior partner, technology
Non-fungible tokens (NFTs) have been around for a decade, but their popularity has skyrocketed in the past two years. In 2022 the rise of NFTs will see loyalty programs take advantage of these offerings in a variety of ways—from gamifying engagement to new, experiential redemption offerings. For example, a frequent guest at a hotel being rewarded with the opportunity to own a unique digital NFT of that hotel exclusive to them as a top staying guest, or a member redeeming program value (e.g., points or miles) for a piece of digital art that comes along with an NFT as their ownership document. More brands are looking to NFTs as a way to interact with a global audience and engage increasingly tech-savvy consumers. As this currency continues to permeate the market economy, look for NFTs to become increasingly mainstream in loyalty programs.
Customer loyalty trend prediction #6:
“Brands advocates and loyalty members may be interested in claiming stock ownership."
—Lauren Sutherland, customer strategy, insights, and research
Over the past few years, fintech companies have started to thrive. The interest and participation in alternative payment methods like “buy now, pay later” and alternative investment options (e.g., cryptocurrencies and micro-investing) have also grown.
“Compared to 2019, installment payment spending increased by 422%,” according to Adobe research, via Retail Dive. In 2020, the stock market “added a record 10 million accounts, 6 million of which came from Robinhood alone, according to JMP Securities. Stash said it doubled its customer base to a total 5 million accounts” as reported by CNBC.
Outside of loyalty programs, some brands now accept cryptocurrency, and some partner with micro-investing apps like Acorns, Stash, and Robinhood. Within loyalty programs, brands are allowing members to pay with points or convert points into cash and then into cryptocurrencies.
It makes sense that micro-investing offerings could be integrated into loyalty programs as well. I do think there is a market, both among those new to investing as well as long-time investors, to be able to invest in the publicly traded brands they love. Additionally, for brands that announce plans to IPO, perhaps exclusive access could be reserved for top-tier program members.
Customer loyalty trend prediction #7:
“2022 will be the year of ‘buy now, pay later’ in loyalty."
—Ken Seaton, partner, sales and capture
As consumers continue to embrace the idea of “buy now, pay later,” I predict we will see iterations of the payment model in more progressive-thinking loyalty programs. The concept is simple—strategically target program members that meet “get now, earn later” criteria, and offer them the ability to redeem “future earned” points; or top up their earnings for no cost, provided they earn the points for their redemption in a set period.
I don’t see this being targeted towards just any program member. Brands should look to target benefits like these towards elite-level members with a proven track record as high earners and redeemers. Data captured through the loyalty program will enable advanced data analytics models to determine who best qualifies for a promotion like this—as well as who would find it most appealing. From a member standpoint, this should resonate with customers who have a high earning trajectory and want to use miles, points, or other loyalty currency to recognize the benefit of their loyalty to a company sooner rather than later. And loyalty research shows that when a member redeems, they almost instantly become more emotionally connected to the brand and tend to engage and earn more regularly.
For our experts predictions on the broader marketing ecosystem, read here.