“2011 may well be called the year of customer loyalty,” says Mark Johnson, CEO of Loyalty 360 – The Loyalty Marketer’s Association. “In today’s crowded marketplace, creating loyal, engaged customers is more important —- and more challenging — than ever. That is why we are going to see a number of key trends unfold over the next year.”
Johnson predicts these key trends will dominate the Loyalty Marketing Industry in 2011:
1. Marketers will increasingly understand that loyalty is not a program — it is a journey and a strategic business goal. While points programs have been around for a while, from a strategic marketing perspective building true loyalty based on a total customer experience is still relatively new and a burgeoning area most brands. Loyalty initiatives will focus on engagement and building long-term relationships
2. Loyalty will focus more on emotions than on rational, incentive-based initiatives. Behavioral economists tell us that economic decision-making is 70% emotional and 30% rational. Which is why incentive-based loyalty programs that tend to be rational do not work well. It’s the emotional side of the decision making process that creates connected, passionate, engaged customers.
3. Companies will increasingly look at how customer engagement and employee engagement work together to drive bottom line results. A 2009 Gallup quantified the impact of customer and employee engagement. They found that those in the upper half on customer engagement and the lower half on employee engagement, or vice versa, get a 70% boost in bottom-line results; those in the upper half on both customer and employee engagement get a 240% boost.
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4. Voice of the customer programs are an important strategy for brands and we expect to see greater focus on them in 2011. A recent IBM study with over 1,500 CEOs from across 60 countries and 33 industries discovered that “getting closer to the customer” is a top business strategy and area of focus for these CEOs over the next 5 years. In fact, 88% of the CEOs surveyed said this was a key area of focus, followed by 76% saying that “insight and intelligence” is also a key area.
5. Relevancy will be a key driving force of customer loyalty, engagement. Today’s customers want loyalty programs to be “about me” — individual, relevant, meaningful, etc. Personally relevant deals are the second most frequently chosen reason for spending more with a company, mentioned by 48% of people, according to new research by Ipsos Mori and The Logic Group. Data collection and usage is extremely important in building relevancy. Brands need to use the information they collect strategically to show customers they’re listening and give them what they’re asking for.
6. Marketers will take a more strategic look at in-the-moment marketing, looking at how best to use all the customer touchpoints including mobile. ABI Research reports that businesses are poised to spend $1.8 billion on location-based advertising in 2015 as part of their overall mobile marketing budgets. However, with Congress looking to regulate net neutrality and cell phone marketing, marketers are going to have to take a more strategic, generational look at how they can most effectively use moment marketing including mobile. This is certainly not a one-size-fits-all communication channel. The most successful loyalty initiatives will be those that are relevant in terms of both messaging and communication.
7. Goal of customer loyalty initiatives will be to engage customers. Marketers now realize that although spend and number of transactions are important, customer engagement is the holy grail for loyalty initiatives. Because with engagement comes loyalty, advocacy, trust, passion —- the soft side of the customer relationships that directly impacts the bottom line.
8. Cause-related marketing/corporate social responsibility programs that are aligned with strategic corporate goals will effectively drive loyalty — especially with Millennials. According to a recent survey by Cone, while interest in cause-related marketing grew among the general population between 2008 and 2010, social and environmental causes had a significantly greater influence on the purchase decisions of millennials than other generations. If marketers are looking for 18- to 34-year-olds’ receptiveness to branding, social and green issues are a good place to start, with 85% saying they would switch brands because of such marketing and 73% saying they would try a new brand.
9. The Restaurant industry will be investing more in loyalty initiatives. Just-released research conducted by the National Restaurant Association in partnership with Loyalty 360 and rDialgue found that 84% of respondents plan to invest more in their loyalty initiatives because of their proven ability to drive business growth.
10. The future of debit rewards is going to change. The demise of the debit card loyalty program has been greatly exaggerated and the entire loyalty model is going to be dynamic and changing rapidly over the next few years. Expect to see growth in partnership programs and a greater focus on the coalition model. The key to making any of these programs successful is creating a currency that works.
11. Marketers will integrate social gaming into their loyalty initiatives. Social gaming has become a widespread activity across practically all demographics, with AllFacebook.com reporting that there are now 200 million people playing games on Facebook every month, and 24 games have more than 10 million users per month. Traditional incentive-based marketing does not drive the level of consumer participation that can be achieved via gaming —- and it’s this sought-after participation that builds lasting relationships, engagement, brand affinity, and brand loyalty.