PREDICTIONS FOR LOYALTY IN 2021
Each year The Point of Loyalty publish a survey and analysis of customers perceptions of the benefits of loyalty programs. The report is well known to the hospitality industry. In January, Adam Posner (CEO – The Point of Loyalty), curated thoughts from global loyalty leaders on the shifts that could play out in 2021 for Loyalty and Rewards programs. Here are some selected thoughts on what 2021 may bring:
- Retention will be more important than acquisition: Customer retention and loyalty will receive greater investment than customer acquisition in 2021.
- Loyalty program member segmentation re-evaluated: Programs will re-calibrate their member segmentation and tiering based on the huge shift in behaviours in 2020.
- Data and privacy stays top of mind: Data use, security, sharing and transparency will continue to rank as a priority with more data compliance officer roles being recruited for.
- Program propositions to solve problems: Programs will by necessity lift themselves out of the sea of sameness. They will move from the bland and boring – points, perks, bonuses and birthdays to solving customer problems, anxieties, friction issues and world issues – mostly linked to the environment, sustainability and then to relevant causes or charities.
- Gaming mechanisms to become more essential to program design: Gaming mechanics and associated principles will be integrated into more program structures (but not as one-off promotions).
- More moments of Joyalty*:Brands will create more magic in the lives of their customers. Joyalty – “Your customer’s feeling of maximum joy and delight from one or a series of moments of magic delivered by your <brand>” will be agenda item #1 on how to move customers from a transactional connection to an emotional interaction.
*Joyalty originates from Brand Currency by Steve Susi and the above definition has been created by Adam Posner.
- Coalition partners reconsider: Partners of coalition programs will re-evaluate the viability of being a partner ie borrowed loyalty (one spoke in a bigger wheel of fortune) vs owned loyalty (the whole wheel of fortune).
- More Investment– Loyalty programs will finally be recognized as the most important marketing discipline within every organization. I hope this will mean there will be a more deserving focus on investment in the value proposition and the tech stacks that enable them.
- A shift in focus– Programs will emerge in more meaningful areas of everyday life (Housing, Rent, Mortgage, Health) focusing on the consumer’s largest monthly outlay.
- Pay up front– Subscription programs in travel will emerge to cover annual (change fees, cancellation, premium economy upgrades, bags).
- Loyalty is an art, entrust it with your/the best– Programs who don’t engage with relevant content and lack personal recognition and engagement will see massive attrition and become a cost to the organization. It will be important to ensure loyalty teams are staffed or supported with the proper expertise.
- Redemption breeds Loyalty and delivers profits– Redemption will become much more important to the revenue managers and more and more programs will attract new and engage existing members with engaging redemption campaigns.
- Get in touch with tomorrow– There will be a realization amongst the legacy/established programs that they have an over dependency on an older generation business traveler. There will need to be a significant evolution of their programs to become relevant to GenZ.
- The program should prop up the cobrand not vice versa– Cobrand(s) will battle for share, airlines and hotels survival will depend on who wins here. However, they need be a little more concerned about cards coming to the market that are more generational in focus. The value proposition that resonates to daily life, sustainability and purpose could be a challenger.
- Honey I shrunk the Program!– Loyalty programs downsize and go back to basics, ie. spam email marketing (no segmentation or intuitive structuring)
- If you wanna make $1m start with $1bn– More Airlines go bankrupt and ultimately close programs
- Gimme Free Status– Customer Acquisition/Retention becomes a game
- Status stops the Rona! – Status becomes more important and is about safety and security (keep me away from everyone else that’s infected)
- The arse falls out of the Points Market– points volumes Decline – or remain depressed affecting “notional valuations” of programs
- Cash is King– Every airline CFO “forgets” about the loyalty program as ticket sales/cash is the focus.
- They continue to get it wrong – No-one understands how to revise their loyalty accounting assumptions.
For further insights from global experts, read more here: www.thepointofloyalty.com.au/2021-loyalty-predictions/
