If you regularly use fintech software solutions for customer attraction and retention, you must have heard this before: traditional loyalty programs are in decline.
Customers jump from provider to provider, stockpile membership cards they never use, and rupture long-standing relationships with brands seemingly on a whim. Studies show that just a couple of subpar experiences with a brand can be enough to make a person change preferences and turn their attention to a competing company. These worrying tendencies are especially active among younger consumers, but the purchasing habits of millennials and zoomers are rubbing off on their elders as well. No consumer segment can be taken for granted anymore.
So why do businesses find themselves out of touch with consumers? Where exactly do their engagement strategies fall short? And what should they do to win back the loyalty of their customers?
Digital transformation is inevitable
Digital technology has changed the way people experience the world — and with it the way consumers experience products and services. Bombarded with hundreds of offerings via several channels at the same time, customers have developed a much shorter attention span and a high degree of impatience: they are much less inclined to spend time researching your product’s benefits.
Overcomplicated systems of loyalty points bring in confusion and become a source of annoyance. Customers lose interest in rewards if they are asked to constantly keep in mind various conditions and modify their purchasing behavior in contradicting ways. Why keep coming back if just a couple of taps on their smartphone gives them access to your competitors?
As discouraging as this sounds, the digital revolution opens new doors just as it closes some old ones. First of all, consumers are now more reachable than ever through a variety of screens that they switch between throughout the day. And second, businesses can finally harness the huge amounts of valuable data — often consumers-generated — to evaluate the true needs and expectations of consumers and factor them in next-generation loyalty programs.
Just as accessible tech has rendered generic messages ineffective, it is now empowering brands to connect with their clients through personalized experiences rather than simple financial stimuli.
Mobile wallets
Convenience and simplicity are the main drivers behind the proliferation of digital wallets — apps that store credit card information to help users make payments with a smartphone, a tablet, or a smartwatch. Giving your customers the ability to use major mobile wallets like Apple Pay, Samsung Pay, or Google Pay to purchase your products is a great way to get a leg up on your competition.
Mobile wallets are constantly updated with new features that will also expand your marketing options. Besides credit card information, these apps can already store and manage loyalty cards, cashback programs, discount coupons, boarding passes, concert tickets, and more. Underpinned by robust security, mobile wallets enhance any customer experience and inspire loyalty in tech-savvy customers.
Importantly, the detailed data about every purchase that mobile wallets generate is useful for segmenting customers and tweaking engagement campaigns for better targeting.
Loyalty apps
A branded loyalty app with a system of reward points is a popular strategy for some of the largest companies in the world like Starbucks, ASOS or Red Bull. And for a good reason: one needs a sizeable customer base and a generous set of incentives to persuade the smartphone users of today to download another app and use it consistently.
Once that condition is met, a loyalty app becomes a powerful engagement tool and a source of crucial customer data. Which products are bought together? By what age groups? What is their income level? How likely are your customers to share their experiences online and how do they rate them?
Loyalty apps are incredibly flexible in the features they can offer, so it’s possible to experiment and adjust your policies as you go to capture the zeitgeist. Implement loyalty card management, use push notifications to encourage buyers who are passing by the store, let users share rewards points with their friends, offer personalized coupons based on purchasing history, separate app users into loyalty tiers with exclusive discounts for each, run gamified campaigns — the list is virtually endless.
Artificial intelligence
AI-driven fintech solutions are distinguished by their ability to process unstructured data and reveal hidden patterns of behavior that can be leveraged to tailor engagement activities. And not just for customer segments — for every single loyalty program member, all the time.
The benefits of AI for customer retention go beyond crunching numbers in purchasing history. AI gives marketers access to next-generation capabilities like emotion recognition, natural language processing, and sentiment analysis. Used in-store or via online channels, these techs allow gaining a 360° view of loyal customers and what drives their decision-making.
With this information at their fingertips, brands can reliably predict which customers are about to jump ship and respond with personalized incentives to preserve their loyalty.
Blockchain
Loyalty programs do not come cheap. Besides the funds and resources needed to get a program up and running, there are marketing and maintenance costs to consider. This is why, even for programs that show good retention results, cost reduction is essential. Decentralized public ledgers give marketers an opportunity to cut costs by using smart contracts to store and exchange information about reward points and transactions with them. This is especially handy for large-scale customer loyalty programs that include various branches of a brand or several brands working together.
Blockchain streamlines financial operations while keeping them completely traceable and secure. For customers, it means a hassle-free experience whenever they choose to redeem loyalty points — or transfer them into cryptocurrency wallets. For businesses, blockchain enables lightning-fast coordination and elimination of loyalty program fraud.
Internet of Things
IoT technology can turn regular objects into providers of real-time customer data, as well as deliver benefits to your loyal customers on the go. One example is the use of beacons to connect with your customers’ smartphones via Bluetooth and guide their in-store journey on the basis of preferences and loyalty program data saved in the phone’s memory. Beacons can alert managers about the arrival of a VIP customer to any location of the brand, and be ready to greet them by name and offer them exactly what they’re looking for. Alternatively, a loyalty program participant can be alerted about attractive deals as they’re passing your store or restaurant.
IoT effectively creates another channel of interaction with the client, bringing with it new opportunities for targeted engagement. Fitness trackers are especially notable here as devices that are deeply integrated within their owner’s lifestyles 24/7. From rewarding certain physical activities with insurance discounts to providing personalized car deals based on fitness habits, these tiny pieces of technology deliver big benefits to loyalty managers who are not afraid to think outside the box.
Key takeaways
As it’s easy to get overwhelmed by all the know-hows on offer, here are a couple things to keep in mind when you start modernizing your underperforming loyalty program.
Experimenting with cutting-edge technology is good, but don’t attempt to try everything at once.
Invest in solutions that combine innovation with reliability and accessibility: you’re in this to nurture a long-standing community of satisfied clients rather than showcase a gimmick.
The most effective loyalty programs are those that leverage digital transformation in tandem with solid customer research. According to CBS Insights, the role of loyalty programs in a customer’s life is changing together with their expectations. The new generation of customers appreciates such objectives as contributions to social good, achieving personal goals, and building deep emotional connection with brands.
Digital technology is uniquely positioned to deliver on these expectations — but only for the brands that are ready to move beyond the conventional points-for-purchases system and align their offers with the priorities of their clientele.
