Video Interview featuring loyalty experts: Shyam Shah, CEO, Loyalty Juggernaut, USA/ Peter Kisbye, CEO, Loyal Solutions, Denmark / Chuck Ehredt, CEO Currency Alliance, Spain / Ani Elmaoglu, CEO, Ketchup, Turkey / Tony Piedade, Deputy Chair, GLO / CEO, Redwing Consultants, UK / Iain Pringle, Partner, New World Loyalty, UK
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Shyam Shah, CEO Loyalty Juggernaut, USA
I believe that are certain trends that started in 2022 and will intensify in 2023. First and foremost, we talked about the lifestyle-oriented loyalty ecosystems – we see the stronger emergence of that model of the loyalty programme as the consumer brands see the need to compete at scale, and to provide the organisation with a robust data foundation. A conventional loyalty programme’s value proposition is built around brands, products and services. However, the lifestyle-oriented loyalty programmes or loyalty ecosystems, as I like to call it, the value proposition is built around customers’ lifestyles, as well as the digital experiences. So not only will we see, the emergence of new loyalty ecosystems in 2023, but we’ll also see a lot of existing loyalty programmes evolving and transforming into ecosystems in order to better compete, and also deliver a lot more enhanced value proposition to their customers. So, I think that is one trend that we are seeing going forward.
The second trend I see is major changes in the whole data economy as we will be ushering into a cookieless world. That means that the reliance on high-quality zero-party and first-party data will be greater than ever before. I also expect a much deeper and broader adoption of loyalty programmes across b2c industries, including those industries, which have been on the fence for many years. We will see those industries now exploring the idea of a loyalty programme. In fact, I would expect loyalty programmes to start to become mainstream, just like the marketing and customer service functions. It makes marketing more effective and customer experience and customer service a lot more personalised.
Another trend that would be a continuation of what happened in the last two years is that we will see that the loyalty programmes will make bold experiments with reward strategies beyond points, so points and miles are here to stay. However, we’ve seen in 2022 and slightly before that, loyalty programmes embarking on exploration, introducing elements like privileges entitlements, and money can’t buy benefits. We will see in 2023, greater curiosity and adoption of NFTs and crypto as part of the programmes’ rewards strategies. As the technologies mature some of those strategies will become mainstream.
Another trend as we know within the whole reward domain would be more and more loyalty programmes would like to give the power of choice into the hands of customers. In other words, they would like the customers to decide how best to like to be rewarded for their loyalty. And I think that’s where that’s the holy grail of loyalty programmes is that it is the beginning of making your loyalty programmes truly individualised at a one-to-one level.
And lastly, we have heard about sustainability for some time. Loyalty programmes, being used as a catalyst to drive sustainable behaviour hasn’t been quite a well-entrenched concept, but 2022 saw some of the forward-looking loyalty programmes particularly in airline and hospitality truly establishing working models which are driving results. And I do definitely see more and more loyalty programmes now beyond airline and hospitality, starting to explore the use of loyalty programmes as a catalyst to drive sustainable behaviour. I think it is a win-win scenario. It is a win for the environment, and it is a win for the customers in terms of incentives. It’s also a win for the brands in terms of cost savings. So that’s another trend that I see, catching on going into 2023.
Ani Elmaoğlu, CEO Ketchup Loyalty , Turkey
Most significant developments in loyalty 2022 were: 1) mobile wallet solutions with number mechanics integrated which are capable of triggering the next purchase; 2) paid membership in e-commerce companies with extra benefits and offers, and 3) pre-paid packages and bundles in fast consumer product companies with discounts.
Iain Pringle, Partner New World Loyalty, UK
The largest driver of loyalty in 2022 was clearly the race to value or the cost-of-living crisis. I see a lot of loyalty programmes growing, there are more loyalty programs out there. But if you take research studies in the UK and in Australia, membership in big loyalty programmes is falling, not rising. There has been a steady decline over several years, where the big traditional loyalty programmes are generally in decline. That’s by membership and by engagement. What we are, however, seeing is that these programmes are becoming more effective at changing behaviour. And we’re seeing more loyalty programmes, but membership in the larger countries is falling. So, we are seeing more programs, and more competition but less membership and less engagement.
Charles Ehredt, CEO Currency Alliance, Spain
I think 2022 was an interesting year – a recovery year after the COVID pandemic. 2020 and 2021 were also interesting years because of the COVID pandemic. We saw in 2020 and 2021 brands adding a lot more partners, especially in the travel industry, because customers weren’t travelling, but the brands wanted to keep their brand on top of their customer’s minds and so they started adding partners like grocery store chains or fuel retailers or financial service companies so customers could continue earning points even if they weren’t travelling. 2022 was kind of a recovery year and in fact, a fantastic year for most travel brands because they were at full occupancy during most of the year. And therefore, the loyalty programmes were extremely popular, and customers were very active in those loyalty programmes.
In the 2nd half of 2022 the global economy started to show all types of unusual signs – increasing interest rates, the stock markets taking a dive, etc. It was unclear whether different regions of the world would enter a recession or not. There’s been a much greater focus on cost control. Consumers were much more interested in extracting value from the brands in the form of discounts or cashback and also trying to get the maximum value from the loyalty programmes or redeeming points for things that are most meaningful for customers. And in fact, on our platform, we saw a huge shift between 2021 and 2022 from accrual or earning transactions to a much larger emphasis on redemption transactions, where customers are achieving or realising value from the loyalty programmes.
As we head into 2023, we’re going to see a lot of the same as what we’ve seen in the last six months – a strong focus on cost control, where brands are trying to reduce their operating cost. I hope that most brands don’t achieve those savings by cutting the value of their loyalty currency or removing customer benefits because that just starts a downward spiral. In terms of creating customer value over time. I hope they achieved savings by driving more efficiency in the way that they operate the loyalty programme. But most brands are sophisticated enough that they realise that $1 of incremental revenue generates a certain percentage of benefit for the company but reducing the cost of operation by $1 is worth a whole dollar. Therefore, there’s much more impact on the bottom line from cost savings rather than trying to grow revenues, especially in an uncertain economy.
We’ll continue to see a lot of cost control in 2023, a lot of system enhancements or replacing legacy technology to become more efficient, and, of course, artificial intelligence, which is maturing to the point where it can be deployed at scale for many different use cases, enabling much better personalisation. 2023 is going to be a very interesting year. Some brands still need to do the basics to deliver more value to a larger portion of their numbers, but we’re going to see a lot of innovation in 2023 as well.
Peter Kisbye, CEO Loyal Solutions, Denmark
2022 was similar to 2021 as COVID led a lot of companies to realise how important loyalty is. A lot of companies had to re-focus and when we talk to clients, we see that loyalty became a “hot” subject and important at the C-Level for customer retention. In countries with low penetration of digital payments, for example, Germany, doing things digitally has also become more of a requirement for clients. So, the whole industry has gotten a lot more focused.
On the technology side, I think that customers are becoming more demanding as they are expecting a super easy user experience when they accrue points, rewards, or cash back and even more so when they redeem. That’s both on a value proposition as there is a clear limit on how much the earning and redemption rates can be different as people are smarter and have access to a lot more information on social media. The whole business concept of redemption was reworked and seems like it has become more important for companies, as well as the technology side of loyalty which is becoming super ubiquitous and easy. That was another big development in the industry.
There is also more understanding among the people building loyalty programmes that the programmes need to be more relevant for the end consumer. The days when the reward you got was an umbrella with the company logo on it are gone.
We also saw a lot of activity in the finance space – both within open banking and loyalty with card-linking. It seems like a lot of the old players or banks have finally realised that there are a lot of innovative disruptors out there and they are beginning to take business away. Our company was fortunate not to be affected by COVID and as a company, we have really had a fantastic 2022. We have won a lot of very large customers, including Air Canada, Emirates, Qatar, Best Buy, etc. We were also selected as the provider of technology to Visa on loyalty and software service. 2022 as a calendar year has been very good for us.
Tony Piedade, Deputy Chairman GLO, CEO Redwings Consultants , UK
2022 has been in a way a recovery year, e.g., we haven’t seen the future beyond the pandemic and yet over that period a lot of people have begun to entrench new buying habits – we all have done more online, we worked more remotely so there is generally less of in-person interactions which you would have found before with a lot of companies and particularly retailers. So, I think we are seeing an entrenchment of these new behaviours, yet a lot of retailers would like to see an increase in footfall coming back and into the store environment.
And I don’t think that’s in opposition to personal needs either, because many of us missed the retail environment and going into retail space and have this contact. So, loyalty programs will need to work hard now not just rewarding “repeat purchasing” which you can do online but also “repeat visiting” and coming in person and getting back into the store environment. I think that the biggest impact of the pandemic and the biggest opportunity going into 2023 is how do we use loyalty programs to produce that incentive.
