The Next Generation of Loyalty: Key Technologies and Trends

The Next Generation of Loyalty: Key Technologies and Trends

Most loyalty programs were conceived decades ago and still largely follow traditional “earn and burn,” transactional, points-based program structures. However, new technologies (e.g. mobile, the Internet of Things, social etc.) have given us the ability to conceive of entirely new paradigms in loyalty, moving well beyond what we see in the marketplace today. Marketers are beginning to catch up to the possibilities opened up by these technologies, incorporating them into programs.

Technology is not just changing what is feasible in the context of loyalty program design for brands, it is also driving changes in consumer expectations for such programs (e.g. around personalization and immediacy). More fundamentally, technology is changing the very nature of the relationship between consumers and brands, moving away from the one-way, transactional structures of yore to a more holistic, always-on dialog between equals. 

These technologies (and the changing behaviors they inspire) are dramatically impacting the very notion of “loyalty” itself. Below are some of the key technologies that are shaping the next generation of loyalty. Over the course of this year I will be examining each of these technology enabled trends and their implications in greater detail.

Smartphones Are The New Loyalty Platform

Like many other industries and sectors, smartphones and high-speed data networks are dramatically impacting loyalty program design, behavior and usage. Virtually every program worth its salt has a companion app today, enabling members to view, manage and personalize their accounts easily. Further, the wide assortment of functionality on today’s smartphones are opening up endless possibilities for loyalty programs: location-based services to reward browsing and create highly targeted offers; mobile wallet integrations for seamless payment and points accumulation; camera integrations for coupon scanning and receipt-based purchase validation; gamification and social to increase the effectiveness and reach of programs. Smartphones are the platform on which new loyalty programs are going to be built.

Big Data Personalizes Loyalty for Me

Today’s democratization of computing power, storage and analytics has allowed even the smallest of companies to crunch through Big Data, and has therefore transformed customer expectations around program personalization. The use of machine learning, neural networks and other increasingly sophisticated analytics is further enabling real-time personalization of such programs. We are already seeing examples of programs that dynamically generate offers and adjust points based on individual patterns of behavior; expect to see a lot more in the future.

The Internet of Things = Loyalty for Everything

The Internet of Things dramatically expands the reach and transforms the nature of loyalty programs, transforming them from transactional, purchase-driven programs to more holistic, interaction-based relationships. As a greater amount of “things” become connected, programs get access to more – and more varied – data, that can be used to reward not just transactions but behaviors. Examples include insurance companies can reward people who log 10,000 steps daily on their Fitbits and utility companies can reward those who set their Nest thermostats to be one degree lower than their daily average.

New Programs for the New Economy

The sharing and social economy is further engendering new types of loyalty programs. In the sharing economy, it is not just consumers who can get rewarded for their loyalty, but also a company’s supplier partners – a new twist to traditional channel loyalty programs. Further, technology is also making it easier to string together sets of brands to create coalition programs around common themes – e.g. a “green” loyalty coalition, or a “Tea Party” coalition.

Gamification Makes Driving Consumer Behavior Fun

The rise of gamification has also had a profound impact on the design and implementation of loyalty programs. Accepted wisdoms around the ways in which consumer behavior can be shaped or what motivates employees and other stakeholders or the kinds of rewards required to incentivize consumers to participate have been upended by the rise of gamification. Coupled with big data and the rise of mobile, gamification can be a powerful tool when used effectively in loyalty programs. 

Universal POS Systems

The fundamental heart of all programs though will remain purchase transactions. All the loyalty in the world isn’t helpful if it isn’t eventually translating into future purchases. One of the fundamental issues with the implementation of loyalty programs has been the need to integrate with existing POS and other systems. Loyalty has been, for much of its existing, an IT implementation primarily because of such integration issues. Thankfully, there are a host of technologies and companies that are providing solutions to solve this thorny problem – either by integrating directly into POS solutions ahead of time, or circumventing the integration work altogether (e.g. by integrating into the bar code scanner, by leveraging receipt-based scanning, by integrating with the credit card vendor). These solutions make it considerably easier to implement and experiment with loyalty solutions – as well as create flexible partnerships and loyalty coalitions as needed. 

Ritesh Bhavnani, President & CTO – Snipp Interactive
This article first appeared in Loyalty 360. March 15, 2016.