Anurag Vasisth, Co-Chair and Group CEO, Loyalty Now
The new year provides the perfect opportunity for business leaders to reset and re-evaluate their priorities to align with evolving consumer behaviours and expectations. In the retail sector, one of the biggest trends is the shift in customer loyalty as Australian consumers increasingly make choices based on cost, instead of brand alignment, as they battle with the rising cost of living . In fact, the latest data shows that 23 per cent of customers no longer feel that they can afford to be loyal and 60 per cent of shoppers prioritise cost over loyalty .
However, despite the trend of customers prioritising cost savings over brand loyalty, well-structured loyalty programs remain a compelling solution. Strategically rethinking digital loyalty programs to be tailored to offer value and cost-effectiveness, aligning with consumer preferences in a financially conscious marketplace, can lead to greater success down the line for savvy retailers.
Globally, the loyalty management market is projected to reach US$13.99 billion by 2028 . Loyalty now plays a key role in strategic boardroom discussions, not only the ones impacting customer data, retention, and sustained revenue growth, but also cybersecurity. In Australia, the consequences of neglecting cybersecurity duties can now be severe. Directors could face personal liability, which includes hefty fines and even disqualification from directorship. Embracing this new loyalty paradigm is crucial for businesses to stay competitive, and loyalty has now firmly secured its boardroom seat as business leaders increasingly recognise its value. However, having a loyalty program in place on its own is not enough to sway consumers, especially as they prioritise cost savings; instead, businesses must invest in digital loyalty programs that benefit customers where it matters most—at the point of sale (POS)—to help win back their loyalty.
When it comes to loyalty programs, customers don’t want to wait months to redeem points or see their rewards expire when that could be helping to shave dollars off their bills. Such barriers can contribute to a shift in loyalty, with shoppers moving away from brands that complicate the rewards process. Payment-linked loyalty and rewards programs that deliver secure, frictionless, consistent experiences across all channels can simplify the shopping experience. At the same time, they can deliver crucial cost-savings directly to customers with the help of intelligent data management and enhanced personalisation.
Digital loyalty and rewards programs, especially the ones that combine secure technology with data, empowering merchants to establish a cycle of insights and performance optimisation, leading to greater return on investment (ROI) while promoting brand loyalty, even despite shifting consumer behaviours. This is largely due to data management leading to personalised offers and experiences for shoppers, based on consumer behaviour and trends. For example, payment-linked digital loyalty programs can collect data on when and how customers shop, ensuring that merchants can tailor future offers—such as sales or discounts—to the shoppers. Providing such cost savings serves a dual purpose: it offers respite to customers from high prices while encouraging customer loyalty through repeat business.
Modern customers expect brands to use their data in a responsible and secure way, and using patterns and trends to deliver savings at the POS can empower customers and brands alike. Forward-thinking merchants are increasingly retiring outdated, legacy platforms for secure digital solutions that effectively capture critical customer metrics and transform them into cost savings and enhanced customer experiences (CX). Making this shift now will ensure businesses can help shoppers battle with the rising cost of living and encourage continued customer loyalty beyond 2024. Importantly, digital innovations also let merchants provide a connected ecosystem of program partners for customers to access a diverse range of options for their cost savings and rewards, including cashback rewards or even superannuation contributions, which lets customers save beyond their everyday expenses. While personalised experiences are essential, they aren’t the only benefit digital loyalty programs afford merchants. Software-as-a-Service (SaaS) solutions eliminate the need for complex infrastructure provisioning with simple implementation and ease of use.
Payment-linked digital loyalty and rewards programs are both cost-effective and straightforward to set up, which makes them accessible to merchants of all sizes. This means that small, independent retailers and larger chains alike can offer comprehensive rewards programs that let customers maximise their rewards effectively. With the support of a dedicated technology loyalty rewards platform provider, retailers that lack in-house resources can also more effectively connect with and leverage data collection systems, so they can deliver more relevant offers and opportunities to customers for future transactions. In turn, this helps to drive increased customer stickiness through greater rewards opportunities.