By Andrew Mitchell, Head of Loyalty Solutions at Arvato Loyalty Services.
In the face of growing competition, brand loyalty programmes will need to deliver more immediate value, choice and personal relevance whilst still creating long-term brand equity.
Brands will have to work harder than ever to win and retain customers this year, given the current myriad of promotions, discounts and loyalty incentive offers.
Brands and retailers are bombarding consumers with offers right now, so loyalty managers are under pressure to make their programmes work harder and deliver more value back to loyal customers," says Mitchell.
In the absence of additional budget for their programmes, the keys to success will be creating more engaging reward propositions, driving operational efficiencies to increase reward value, and making more intelligent use of data insights to deliver relevant and timely rewards.
As brands look to enhance their loyalty reward propositions in 2010, I predict 5 key value-driving trends in the market for the coming year:
1. Increased integration of loyalty into broader brand engagement strategies
A growing focus on 'brand engagement' means that loyalty programmes will become increasingly creatively-driven and core to brand strategies in 2010.
Creative agencies will take on more planning and design of innovative programmes to engage consumers; collaborating with specialist loyalty service providers who will take responsibility for delivering the brand promise at all touchpoints.
Wider recognition that operational efficiency is one of the best ways to increase the overall value of a loyalty programme to members will accelerate the acceptance of this type of partnership.
2. Centralisation and consolidation of loyalty services
As loyalty managers look to drive down operating costs, there will be a trend towards reducing the number of service providers in any single loyalty programme.
By consolidating loyalty services into multi-service providers, clients will achieve economies of scale and integration efficiencies.
Service providers who can deliver loyalty services across multiple countries from centralised bases whilst maintaining or increasing the quality of customer experience are set to prosper.
3. More integration between short-term promotions and long-term loyalty schemes
Consumers are being bombarded with short-term promotional offers as brands focus on boosting immediate sales.
But many cashback offers and vouchers simply encourage brand promiscuity and do nothing to build long-term loyalty. In 2010, more promotional activity will incorporate loyalty elements. Data captured from promotions (in multiple countries) will be fed into centralised databases, with intelligent insights used to drive more timely, relevant sales-driving activity.
4. Drive to increase the perceived value of rewards
In order to increase the attractiveness of their propositions and differentiate themselves from voucher and discount schemes, loyalty programmes will offer more tangible, indulgent rewards with higher perceived value.
New brand partnerships will enable loyalty schemes to offer exclusive benefits, driving consumer engagement. 'Voucher fatigue' may well see UK consumers shift back to a preference for more physical rewards from leading brands.
5. Growth in multi-channel loyalty programmes to offer more consumer choice
Developments in mobile and online technologies will drive more integrated 360° multi-channel loyalty programmes.
These will offer consumers more choice in terms of when, where and how they interact with brands' loyalty schemes - with a growing use of online and mobile delivery platforms.
Greater flexibility in the delivery of loyalty programmes will increase engagement and the overall value of the scheme to consumers.
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