Customer Loyalty Trends: Rewriting the Loyalty Marketing Playbook

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Customer loyalty has never been more crucial. With customer acquisition costs skyrocketing by 222% over the past decade, consumer loyalty trends indicate that investing in brand-consumer relationships has become a strategic imperative.

Research indicates that even a slight 5% increase in retention rates can trigger a significant surge in profits, elevating brand loyalty from important to pivotal. Meanwhile, economic uncertainties and the rise of online shopping have led three-quarters of consumers to explore new brands, indicating a profound shift in brand loyalty trends and dynamics and an evolution in consumer behavior and expectations.

In light of these changes, brands must adapt their customer loyalty strategies, especially as consumers increasingly seek value in a climate of rising inflation.

This white paper navigates this evolving landscape of customer loyalty programs, spotlighting consumer loyalty trends and the innovative loyalty marketing strategies brands are using to align with changing consumer demands. As we delve into these strategies, consider this document your playbook for navigating the future of consumer loyalty.

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Assessing the Playing Field: Today's Customer Loyalty Programme Landscape
The Basic Plays: Tapping Into Customer Loyalty Trends
Advanced Plays: Leveraging Trends in Customer Loyalty Programs
Forecasting Plays: Anticipating the Future of Customer Loyalty Programs
Conclusion

In recent years, US and European consumers have faced significant economic challenges. The US has experienced 40-year inflationary highs, compounded by more than ten Federal Reserve rate hikes. Meanwhile, Europe has grappled with persistent high inflation, spurred by supply bottlenecks and a sharp increase in energy prices. Amid this volatility, brands are confronting a 'loyalty calamity,' with consumers showing less allegiance than ever before, underscoring the shifting brand loyalty trends.

In the U.S.:

Over the past six months, inflation has neared the Federal Reserve's target rate of 2%. Despite this, three out of four consumers are still worried about prices.
A striking 65% of US consumers feel genuine affection for fewer than three brands and another 9% do not express loyalty or "love" for any brands at all.
Looking ahead, half of retail executives anticipate that consumer loyalty trends will prioritize price over brand allegiance throughout 2024.

In Europe:

The European Central Bank’s 2025 Consumer Expectations Survey reveals evolving retail loyalty trends, with 69% of Europeans altering their shopping habits due to economic pressures.
The most common adjustments include
- Shopping around - 50%
- Opting for lower-quality goods - 33%
- purchasing smaller quantities - 28%

While 61% of European consumers view loyalty programs as vital to their brand relationships, enthusiasm in the US is more tempered. Loyalty program trends show that many Americans enroll in several branded programs (one to five on average) but actively engage with only a few. This disparity underscores the need to rethink traditional customer loyalty programs to captivate and maintain consumer interest. Modern consumers demand greater control over their rewards, outreach, and redemption processes, and place a high value on personalized experiences and brand ethics. These shifts require your customer loyalty platform to extend beyond the basics, focusing on the following key areas

KEEP THINGS SIMPLE:

In loyalty programs, simplicity is key. Consumers prioritize ease of enrollment and straightforward methods to earn and redeem rewards above other factors. Deloitte research confirms these aspects as not only essential for the last two years but also increasing in importance by 4% and 5%, respectively. Effective loyalty programs remove barriers to participation, making it as easy as possible for consumers to engage.

IHG’s Simplified Milestones: IHG restructured its IHG One Rewards program to make rewards more attainable. Members earn benefits every ten nights stayed, with additional Milestone Rewards after 20 nights, including food and beverage credits, suite upgrades, and annual lounge memberships, simplifying the path to valuable perks.

e.l.f. Cosmetics’ Flexible Earning: e.l.f. Cosmetics allows customers to earn points on purchases made anywhere, not just directly from them. By simply uploading a receipt to their platform, e.l.f. demonstrates its commitment to convenience and inclusivity, catering to the customer's preference for flexibility.

ENGAGE BEYOND TRANSACTIONS:

There's a significant shift from traditional spend-to-get loyalty programs to engagement-based models, which aim to foster emotional–not just transactional–loyalty. Brands are incorporating interactive elements like gamification and experiential rewards into their loyalty programs to deepen customer connections and bring their personalities to life. This approach does more than entertain; it collects valuable data for personalized and automated marketing that truly resonates with consumers. According to Capgemini research, emotionally engaged customers are likely to spend twice as much, keep the brand top of mind, and actively promote it to friends and family.

NASCAR’s Enhanced Fan Engagement: NASCAR has transformed its Fan Rewards platform to include experience-based rewards, like fantasy leagues and race-day challenges, that engage fans beyond attending races. This strategy has led to Fan Rewards members spending 70% more time on NASCAR.com and achieving a click-through rate three times higher than non-members.

Marriott’s March Madness Sweepstakes: As the NCAA's official hotel partner, Marriott offered an experiential sweepstakes during March Madness. Open to Marriott Bonvoy members or those that signed up as part of the sweepstakes, participants could win a comprehensive Women’s Final Four package in Cleveland, including flights, hotel stays, courtside seats, and a "game day rituals session" with coach Sydney Carter.

INVEST IN PERSONALIZATION:

Hyper-personalization, driven by AI and machine learning, is emerging as a key loyalty marketing trend, as consumers increasingly expect brands to recognize and anticipate their needs. Industry leaders are leveraging AI, ML, and customer data analytics to parse large volumes of customer data, identify patterns, and tailor experiences—making interactions more engaging and rewarding. Surveys indicate that 64% of consumers prefer brands that offer personalized experiences, and despite privacy concerns, over half are willing to exchange personal data for better services. However, a notable disconnect exists: 45% of consumers have disengaged with brands that fail to provide tailored experiences, and while 90% value preferred communication methods, only 31% believe brands manage this effectively. This gap underscores the need for integrating personalization into a comprehensive customer experience strategy, focusing not just on what consumers receive, but also on how they are engaged.

Starbucks’ Personalized Approach: Starbucks uses its Deep Brew analytics and AI to customize incentives, turning occasional buyers into regulars and enhancing the Starbucks Rewards experience with personalized communication, expanded ordering options, and a new partnership with Bank of America. With over 30% of its transactions conducted via its mobile order and pay feature, Starbucks is committed to integrating emerging technologies and continuously evolving to meet consumer expectations for personalization.

CREATE DATA-DRIVEN PROGRAM ENHANCEMENTS:

Leveraging AI, receipt validation data and customer feedback, brands are fine-tuning their offerings to cater to their customer base's nuanced interests and characteristics, extending beyond the core group of frequent shoppers. This approach enables businesses to tap into diverse customer segments by analyzing both their own and partner data, unlocking insights that drive targeted improvements and innovations.

Margaritaville’s Strategic Expansion: Margaritaville spotted an opportunity within their customer data, revealing that 60,000 to 100,000 customers owned RVs. Seizing this insight, they expanded their brand into the RV resort industry, creating destinations catering to this unique lifestyle. This strategic move broadened their hospitality offerings and deepened the brand's connection with a significant segment of their customer base by aligning with their specific interests and needs.

Petco Vital Care’s Revamped Loyalty Program: In response to the rising costs of pet care, Petco overhauled its loyalty program in January 2023. They introduced a two-tiered system: Vital Care Core, a free service offering benefits like complimentary grooming and pet food, and Vital Care Premier, which provides additional perks such as unlimited vet exams and boarding discounts. This simplification and enhancement increased store visits and spending among members, demonstrating the power of using customer insights to refine loyalty programs.

EMBRACE INNOVATIVE TECH:

Integrating technologies such as Virtual Reality (VR), Augmented Reality (AR), and Non-Fungible Tokens (NFTs) into loyalty programs can provide brands with a significant competitive edge by creating more interactive and personalized experiences. NFTs, for example, can grant customers special privileges like exclusive event access and VIP experiences, effectively blending digital innovations with tangible rewards.

Hilton in Roblox: Hilton's campaign within Paris Hilton’s Roblox universe is a pioneering example of using digital platforms to bolster real-world loyalty benefits. Users can earn Hilton Honors perks and points through virtual challenges in an immersive Roblox experience, one of the first for loyalty engagement on the platform, demonstrating how virtual achievements can translate into tangible rewards.

Clinique’s NFT Campaign: Clinique's first NFT campaign, exclusive to members of the Clinique Smart Rewards program, offered winners an NFT alongside a decade's supply of Clinique products. This campaign illustrates how brands can link digital exclusivity with substantial real-world value, advancing innovative technologies' integration into loyalty strategies.

ALIGN WITH CONSUMER VALUES:

Aligning with consumer values is crucial for cultivating deep loyalty. Brands that resonate with their customers' ethical and social convictions can forge strong emotional connections, transcending transactional loyalty. This approach is particularly important for engaging younger consumers, such as Millennials and Gen Z, who often prefer brands aligned with their environmental, social, and governance (ESG) principles. A key trend in loyalty programs, therefore, has become the incorporation of ESG principles—such as rewarding actions like recycling, choosing eco-friendly products, or donating points to charitable causes. While not yet widespread, 50.8% of companies are planning to incentivize such responsible behaviors.

Dick's Sporting Goods' Community Impact: In response to the decline in youth sports participation, particularly in underfunded communities, Dick's has committed to providing access to sports for 1 million young athletes by 2024, investing over $7 million in local leagues and schools. Their Sports Matter Giving Truck initiative donates essential sports equipment, reinforcing their mission to promote sports and build loyalty from a young age.

Pampers

Pampers Club’s Holistic Approach: Beyond just offering products, Pampers Club's website and app serve as a resource for parents, providing useful services and information. The brand details its efforts to reduce carbon emissions and introduced the "Diaper Stash" in 2023, an online fund where users can gift diapers and wipes to financially challenged parents. These initiatives, aligning with the values of their consumer base, have significantly boosted app engagement and led to over 560,000 subscribers on their YouTube channel.

CREATE STRATEGIC PARTNERSHIPS:

Strategic partnerships are transforming loyalty programs, by expanding reach and increasing cost-efficiency. Leaders like Hilton and Marriott are now allowing members to use points for everyday purchases on platforms like Amazon, which broadens their appeal beyond frequent travelers. This strategy overcomes a significant loyalty marketing challenge by attracting a broader customer base with more versatile rewards. By moving beyond traditional, single-brand loyalty models, these partnerships offer a variety of benefits that cater to diverse consumer preferences, a crucial feature for 60% of consumers who value the flexibility to earn and redeem points across different brands.

Retail Collaborations: Target's partnerships with Ulta Beauty and Apple exemplify this trend at the retail level. By linking loyalty accounts, customers can access rewards from both Ulta Beauty and Target Circle, as well as free trials of Apple's digital services. Likewise, the collaboration between Sephora and Kohl’s allows shoppers to accumulate points from both loyalty programs for purchases made within Kohl’s Sephora sections, enhancing the shopping experience and loyalty benefits.

OFFER PREMIUM AND SUBSCRIPTION BASED LOYALTY PROGRAMS:

The rise of premium and subscription-based loyalty programs reflects a growing consumer readiness to pay for exclusive benefits, moving beyond traditional free-to-join models. According to a Deloitte survey, the percentage of consumers paying for loyalty programs has surged from 17% in 2021 to 53%. These paid programs are shifting from hard currency rewards like discounts and points to emotionally rewarding benefits such as exclusive product access, personalized experiences, and conveniences such as free shipping or extended returns–which builds a stronger emotional bond without direct financial incentives. For example, Under Armour's loyalty program provides early merchandise access, special events, and exclusive content from athletes. However, these programs require high customer expectations to be met, particularly when a membership fee is involved or a loyalty threshold must be reached.

Target Circle 360: With a $99 annual fee, Target competes with Amazon Prime and Walmart+ by offering perks like unlimited free same-day delivery for orders over $35, free two-day shipping, and more. This comes as Target plans to expand by opening 300 new stores over the next decade, aiming to enhance customer value and convenience.

Sweetgreen Sweetpass+: For $10 a month, Sweetgreen offers $3 off daily orders, free delivery, and exclusive perks, leading to a 15% increase in visit frequency and encouraging more frequent orders.

Restoration Hardware: The RH Members Program, costing $200/year, offers 25% off all full-priced items and an additional 20% off sale items, plus complimentary design services. Though more a discount program than a traditional loyalty program, it effectively encourages repeat business.

Learn how Snipp can help boost your customer loyalty strategy and help you engage your consumers. Click here to contact our experts!

À LA CARTE LOYALTY PROGRAMS:

Looking ahead, loyalty programs may evolve from exclusive brand commitments to flexible and unbundled à la carte selections, where consumers choose the perks that best suit their needs. This shift mirrors trends in streaming services, where subscribers can tailor their packages with preferred features. Airlines have already been adopting this approach: American Airlines and Delta allow loyalty members to customize perks, enhancing the travel experience based on individual preferences. This trend towards personalized loyalty benefits is poised for growth as consumers increasingly demand more control and flexibility over how they earn and redeem their rewards, pushing more brands across various industries to adopt a more modular, consumer-centric approach to loyalty programs.

LOYALTY PLATFORMS EVOLVE INTO ECOSYSTEMS:

The future of loyalty programs is trending towards decentralized ecosystems, enhanced by blockchain and AI, which simplify the processes of earning and spending points. At the core of this shift is "composable loyalty," which uses modular components to build flexible and personalized programs. This trend aligns with broader composable business practices that prioritize agility and rapid adaptation.

Looking ahead to 2024 and beyond, we expect loyalty platforms to integrate seamlessly with various tools from e-commerce and social commerce to customer service, significantly improving user experience and engagement. A notable development is the adoption of loyalty points as a form of payment, exemplified by Valuedynamx Ltd.'s "Pay with Points" solution, which offers versatile reward options. Platforms like Singapore Airlines' Kris+ are leading examples, allowing members to use points across a vast merchant network. Blockchain's role in facilitating these transactions promises a more efficient and cost-effective system. As these technologies advance, they will revolutionize loyalty programs by offering diverse rewards and increasing consumer control, marking a new era in customer-brand relationships.

Valuedynamx and Emirates Skywards Collaboration: Enhancing the Emirates Skywards program, Valuedynamx introduced its "pay with points/miles" feature through the Skywards Miles Mall's 'Spend Online' section. This allows members to use their miles for a wide array of everyday items, from digital gift cards spanning over 500 brands in key global markets. By expanding redemption opportunities in fashion, fitness, technology, and more, this initiative not only diversifies how members can use their rewards but also deepens consumer loyalty by aligning with globally recognized brands.

Play The Long Game For Consumer Loyalty

As brands navigate the complex terrain of consumer loyalty, the path forward requires a capacity for adaptation, personalization, and continual innovation. Loyalty is not a destination but a journey—a process of perpetually earning consumer trust that leads to more frequent and significant purchases. It’s a game of ongoing optimization where loyalty is not achieved overnight but cultivated over time. Brands must constantly evaluate how they can improve their offerings, enhance value, and provide compelling reasons for consumers to keep coming back. In an era where consumer loyalty must be earned rather than expected, success depends on understanding shifts in consumer behavior, leveraging emerging trends, and committing to building deeper, trust-based relationships.

To boost your loyalty strategy and engage your consumers, talk to our experts!

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Customer Loyalty Trends

Rewriting the Loyalty Marketing Playbook for 2024 and Beyond

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INTRODUCTION

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ASSESSING THE PLAYING FIELD: TODAY'S CUSTOMER LOYALTY LANDSCAPE

In the U.S.:

In Europe:

ADVANCED PLAYS: LEVERAGING TRENDS IN CUSTOMER LOYALTY PROGRAMS

KEEP THINGS SIMPLE:

ENGAGE BEYOND TRANSACTIONS:

INVEST IN PERSONALIZATION:

CREATE DATA-DRIVEN PROGRAM ENHANCEMENTS:

EMBRACE INNOVATIVE TECH:

ALIGN WITH CONSUMER VALUES:

CREATE STRATEGIC PARTNERSHIPS:

OFFER PREMIUM AND SUBSCRIPTION BASED LOYALTY PROGRAMS:

FORECASTING PLAYS: ANTICIPATING THE FUTURE OF CUSTOMER LOYALTY PROGRAMS

À LA CARTE LOYALTY PROGRAMS:

LOYALTY PLATFORMS EVOLVE INTO ECOSYSTEMS:

CONCLUSION

Play The Long Game For Consumer Loyalty

Let’s Work Together

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