What a time to be in loyalty! With so many tools at our fingertips and such focus on delivering meaningful and relevant customer experiences, there has never been a better time to be a loyalty marketer. But 2018 looks like a year of immense change. With new-found prominence, loyalty marketers will also face increased pressure and attention from CMOs, CFOs, CISOs and regulators. But we’re excited for what 2018 will bring, and we hope you are too.
Each year, we look ahead to where we see change, evolution, fissures and transformation in the loyalty marketing landscape. And each year we are proud to publish our predictions with much enthusiasm and excitement, with this year being no exception. We tapped a wide range of SMEs and practitioners with distinct POVs once again from across our agency to bring together a diverse array of perspectives and expertise on all things loyalty and CRM. Read on for what we see in store:
A major national brand will jettison their traditional program
Jay Peters, Director – Strategy
As QSRs and Fast Casual dining brands have improved their martech (and overall tech) stacks, brands are increasingly turning away from traditional points-based approaches to a richer assortment of enabled experiences and interactions. This shift has been driven by both better data collection and an improved application of personalization and relevancy. For marketers, this means more and different types of interactions can be tracked and incentivized. For guests, it simply means better and happier experiences.
In 2018, we expect that QSRs and Fast Casuals will continue to move away from points by recognizing and rewarding actions such as follows, reviews, uploads and more. But in addition, it seems likely that a major national brand in the QSR or Fast Casual space will jettison their traditional points-based program in favor of a new, experience-based platform. This platform will include a better ordering process, better in-store experience and interesting and innovative ways to connect with the brand during non-dining times.
While this move will initially cause a bit of a stir with customers and analysts, brands will see the balance sheet benefits of not carrying program liability and customers will come to enjoy the enhanced customer experience—with potential implications for other brands in the space to follow suit.
Consumers demand data transparency and security
Kristie O’Shea, Director – Product Management
While not a new trend, we expect to see an increase in customer concern and demand that brands prove their investment in data security, are transparent about how their data is being used, and ultimately keep their data secure. There is a natural tension between consumers allowing brands to collect more of their data and the uncertainty of knowing who has access to it. Consumers are often left wondering how much they trust a brand to keep their data safe from hackers, trolls, and identity thieves. At the same time, of course, growth in the amount of data being collected continues at an exponentially increasing pace. Even without a security incident, brands that give the impression of being lax on security run the risk of having a dark cloud cast on their customer loyalty efforts. In 2018, we expect to see brands double down on balancing the responsibility of holding more customer data with the increased cost and risk associated with securely managing this data. Brands that invest in data security and protect and promote their trustworthiness will be the winners in 2018.
“Regulators, mount up…”
Ned Shugrue, Business Development Manager
With the current administration in the United States “cutting the red tape of regulation” (or abdicating responsibility to protect consumers, depending on your political persuasion), we expect to see increased regulation of loyalty programs and customer data from the various governments that are taking the lead on consumer protection regulations, namely the EU and Canada. Already, GDPR is beginning to go into effect and a new Canadian law prohibits the expiration of loyalty currencies. We expect to see more laws like these be considered and potentially enacted in 2018.
Customers often think of loyalty currency as just that, a currency with real value. They make plans around it and hope to have the ability to use it freely. As more brands overhaul their programs to minimize negative financial impact, expect governments to take notice and put regulations in place to protect consumers.
Loyalty, for a cause
Brian Paul Reid, Senior Strategist
While cause marketing and charity point donations are tried-and-true tactics in the loyalty marketing arsenal, in 2018 we expect to see renewed interest in integrating cause-based initiatives and rewards with loyalty programs. Why? As more brands leverage loyalty programs to enhance their overall consumer value proposition and drive increased engagement, sales, and advocacy, the truly differentiated programs will seek to drive transactional and emotional loyalty with their customers. This is particularly relevant with some portions of the Millennial and Generation Z segments, who have proven to be particularly altruistic and have shown proclivities for unique social causes. In fact, we’ve already started to see this trend take hold in 2017. While numerous brands are using their platforms to drive change, one of our favorites is a start-up retail brand called BoxLunch, that is donating a meal to a homeless shelter for every $10 customers spend with them.
Hospitality gets hospitable again
Andrew Kelly, VP – Sales & Marketing
Hotels, large and small, will sharpen their focus on what OTAs and Airbnb can’t deliver—hospitality—and high-touch, high-value services, replete with connected experiences and personalized delights, while lodging companies will double down on catered and authentic, local experiences. As we enter into 2018, look for hotels to extend their hospitality amenities and move into the lifestyle space, delivering wholly separate but innovative experiences through partnerships and new, standalone brands, challenging the traditional notions of what they offer, while OTAs and Airbnb battle out the niche and novelty travel sector at scale. Look for the emergence of new disruptors rising quickly in the space and going mainstream, catapulted by the sharing economy, health and wellness, and democracy of travel. Lastly, 2018 will be a seminal year in the arms race for the biggest battle of them all: customer loyalty.
Retail hyper-personalization finally arrives
Mike Sund, VP – Strategy & Analytics
The day after last year’s Cyber Monday, the Wall Street Journal’s headline said it all: “Retailers Misfire in Email Offers.” The reason? Too many of them sent one-size-fits-all messages to their entire customer email list. Sure, some use segmentation (even really advanced segmentation) to improve their results, but even that is still too broad. Consumers today expect personalization. If they don’t get a relevant message, they won’t open, or worse, they’ll unsubscribe.
In 2018, the best-in-class standard of personalized messages based on observed behaviors online and in store will begin to trickle down to the rest-in-class retailers as they begin to leverage their first-party data. The result will be improved email performance for those retailers who are willing to invest in customer data and technology that delivers true 1:1 communications.
Relationship status: It’s complicated
Denise Holt – VP, Strategy & Insights
Business is no longer just business—it’s personal. People will apply the same criteria to choosing which companies are worthy of their loyalty as they do to their long-term, personal relationships. And it must be a two-way, reciprocal relationship—companies will “fire” customers who aren’t living up to their expectations. The moment that one party is no longer benefiting from the connection, they will end it and move on.
From a company’s perspective, they will apply a much more critical eye to evaluating which customers to keep and which to let go. They will focus their limited resources on continuing to strengthen the bond with their best, most profitable customers and finding more like them—while giving unprofitable customers a final ultimatum or simply the boot.
From a customer’s perspective, cognitive fatigue has set in and “infobesity” will soon be widespread. Information overload in our always-connected world will cause people to seek simplicity by weeding out companies who do not make their lives easier and deliver can’t-live-without products/services/experiences. Customers will expect trust, reliability, appreciation and empathy in their relationships with companies—to be treated as human.
Brick-and-mortar: the “comeback kid”
Bob Morris, SVP – Integration
If at first you don’t succeed… Yes, Amazon and various online retailers have laid siege to the retail world, but brick-and-mortar locations will again prove their value in 2018. In fact, brick-and-mortars have a chance to carve out a unique place in the market as specialized experience hubs where an online retailer at a scale like Amazon will not be able to compete. For example, Bonobos’ “Guide Shops” and Warby Parker’s try-on shops provide a template for how brands can deliver convenience and an elevated experience, while maintaining many of the efficiencies generated by being a digital native retail brand. But for those retailers who are far behind in digital transformation or deep discounters whose inventory can become an unwieldy challenge, finding ways to improve the customer experience will be the challenge and goal of 2018, because ultimately the customer experience defines the relationship.