Challenges facing the loyalty business in 2018


Deloitte’s 2017 Consumer Review – ‘Customer loyalty: a relationship, not just a scheme’ – highlighted that the traditional loyalty scheme has become a “tired” concept that “needs to be reinvented”. Consumers no longer consider traditional loyalty schemes (the process of collecting points over time to earn rewards) as a differentiator, but as the norm.

This is evidenced starkly by the following findings in the report: “While 54% of people claim to like points-based loyalty schemes, a similar share of consumers do not always redeem their points (53%). When asked about their attitude to loyalty schemes, 42% indicated they needed more than points to shop with a brand.”

With changing customer expectations in an era of heightened competition, loyalty schemes must start providing more value to consumers if they want to stand out.

Let’s look at the main challenges facing the loyalty business in 2018 and how we can help.

A new digital era presents fresh challenges

When people think about loyalty schemes, they most commonly think of programmes like Sainsbury’s Nectar Card or Tesco’s Clubcard. This idea of a loyalty scheme originated almost 30 years ago in the 1990s. But the world has evolved since then – and the digital age offers new challenges for businesses using loyalty schemes.

No longer a differentiator

You only need look in physical high street stores or online websites to see there’s a lot of competition in the loyalty space. Every company seems to have their own variation of a loyalty programme.

If every coffee chain on the high street offers the same ‘buy ten coffees get one free’ scheme, then it loses its value as a differentiator.

Customer expectations are changing: mobile experiences

According to new research, up to 66% of individuals across 52 key countries, will own a smartphone. With predictions that this number will continue to increase 7% year on year, more people than ever before have instant access to music, tv shows, maps, train times, their friends – and loyalty schemes. Getting online experiences right is essential to winning over the modern-day consumer – and if you don’t do this, the consequences are huge. Research from IBM found that 51% of people have simply stopped using a brand because the company’s online experience has ‘failed them’.

The top performing brands are aware of the importance of customer experience (CX) across all digital platforms, which is why many have now moved (or at least modified) their loyalty schemes from card-based, to loyalty apps.

Customer expectations are changing: personalisation

As we move further into the 21st century, it’s clear that customers expect more from their favourite brands. Consumers are used to highly personalised online experiences from businesses like Amazon and Netflix, which provide recommendations based on their own recent activity.

Consumers not only expect to be treated as individuals but they want a unique experience that’s specificallyonly relevant to them. The same can be said for loyalty. The Deloitte report states: “Consumers want to be recognised and rewarded as individuals, not as nameless, faceless point collectors.” Research from IBM also backs this up, with only 37% of consumers believe that their favourite brands understand them.

Attracting millennials

Millennials and the so-called ‘Generation Z’ (AKA digital natives) make up an ever-larger proportion of the consumer-base that loyalty schemes are targeting. In the Deloitte report, there are fascinating insights into the differing attitudes to loyalty schemes based on age. It compares the responses of 18-24-year-olds to the rest/total. It’s interesting to see where the differences lie.

Loyalty schemes are seen more favourably by 18-24-year-olds (60%) than the total (54%). 18-24-year-olds were more in favour of personalised rewards (54% vs 44%), recommendations (48% vs 41%) and the idea that loyalty schemes should reflect their individual lifestyle (47% vs 32%).

Loyalty re-invented with Pixoneye

Technology can be held partly responsible for the growing number of challenges facing organisations in the loyalty business. But it’s also creating solutions and opportunities for differentiation in a saturated market.

At Pixoneye we specialise in helpingdeals companies and businesses with loyalty apps loyalty and deals businesses create more personalised experiences for their members. Pixoneye harnesses the power of on-device photo analysis to understand each of your individual customers, including their needs and their future desires. It works by analysing the photo galleries of customers on their mobiles and using cutting-edge machine learning to condense all this data and then pick out relevant insights.

This can help your business:

  •       Understand your customers better
  •       Sell more deals & offers that your members want
  •       Improve the quality of your dataset
  •       On-board more retailers with more relevant experiences for your members

Above all, Pixoneye – named in the ‘100 Disruptive Brands 2017 list – can help you meet your members’ expectations and give your loyalty scheme an edge that elevates it over your competition.

To find out more about the challenges facing the loyalty business and how we can help, get in touch with us today.

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