The last two years have seen dramatic and significant changes in consumer behavior caused by the pandemic’s disruption, which in turn has had a tremendous impact on the loyalty industry. As business sustainability and competition became more and more challenging, loyalty emerged as a true winner, helping to retain customers even in precarious circumstances.
While 2020 and 2021 saw a growing awareness and shift in focus towards loyalty marketing, 2022 could become the renaissance year of loyalty marketing. Listed below are 10 popular loyalty trends and predictions for 2022 according to Point of Loyalty CEO Adam Posner, Annex Cloud, and other loyalty leaders.
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Loyalty Programs will Emerge as a Winning Medium for Data Collection with Attention to Privacy and Consent
According to Eco Consultancy, 92% of leading marketers believe in using first-party data to continuously build an understanding of what customers want. And with Google planning to phase out third-party cookies by 2023, the era of third-party data is coming to an end. In 2021, loyalty programs emerged as the most viable means to procure data ethically and legally based on consent. With consent and adherence to global data protection guidelines becoming imperative, loyalty programs will emerge as a winning medium for extracting zero- and first-party data that beats second- and third-party data in quality, authenticity, and accuracy.
Annex Cloud’s Take:
Agreed! Loyalty is the answer so many brands are looking for as they scramble to find accurate data to support their acquisition efforts. Our hope is these organizations learn that loyalty brings much more value than the priority focus on acquisition. As you dig in and realize that more than 60% of new customers churn, knowing who these customers are right at the beginning of the relationship with the support of a loyalty initiative enables companies to retain significantly more first-time customers and pave the way for lasting bonds.
Loyalty Programs will Drive Demand for Chief Data Officers and Data Analyst Roles
After Capital One appointed its first Chief Data Officer (CDO) in 2002, only a handful of businesses followed suit. Firstly, because fewer data protection laws were in place and secondly, there simply wasn’t a dire need for dedicated personnel to oversee data-related activities. We’ve come a long way since, with compliance to global data protection laws becoming a prerequisite to complying with consent. This is why more and more brands are hiring CDOs. As loyalty programs become the prime source of data extraction in 2022, a dedicated department undertaking the responsibility of ethical and legal data extraction and transfer processes will be a must.
Annex Cloud’s Take:
We agree but, taking this a step further, we see loyalty becoming more integrated across the organization. Perhaps not in 2022 but within the next few years, we’ll see more and more organizations tying loyalty directly to their customer experience efforts—where loyalty and CX span the entire organization fully integrating their focus, priority, and data throughout.
Cryptocurrencies and Non-fungible Tokens (NFTs) will Become Mainstream in the Loyalty Industry
One of the most popular predictions by Adam Posner and numerous loyalty leaders is NFTs and cryptocurrencies taking center stage as a way to capture more loyal customers. The popularity of cryptocurrencies and NFTs has skyrocketed in the past two years and top brands like Estee Lauder, Jimmy Choo, Nike, Starbucks, and McDonalds have already begun to make these part of their loyalty strategy. One of Estee Lauder’s brands, Clinique, was the first to hold an NFT raffle. Jimmy Choo launched mystery box NFTs which immediately sold out, reinforcing the potential of NFTs in the years to come. The year 2022 will see more and more brands following suit and improving customer loyalty through cryptocurrencies and NFTs which add value to the overall customer experience and are more appreciated than tangible rewards.
Annex Cloud’s Take:
NFTs are a great way to create something unique to your brand. Providing your customers access to these through a loyalty program or, better yet, offering exclusive assess through VIP status within a loyalty program will go a long way in building a strong emotional bond between these valued customers and your brand. We expect to see more and more brands offer NFTs for purchase as well as rewards within their loyalty initiatives.
Loyalty Programs will Shift Focus from Birthday/Anniversary Rewards and Miscellaneous Perks to Solving Problems
Forrester’s March 2021 report showed that customers in the USA, UK, France, and India trust brands more than reigning governments. This means brands now have an inherent responsibility to drive change and do good in society to uphold the high stature customers have bestowed upon them. Adam Posner predicts loyalty programs will undertake more responsibility toward social causes. Brands are gradually moving from rewarding customers for their purchases, to rewarding behaviors that are conducive to the environment and add value to the overall social construct. Marks and Spencer’s donate to charities like Cool Earth, The Marine Protection Society, and others every time a customer purchases from the brand. Tesco Clubcard enables its members to donate their vouchers to charities. In 2022, Qantas Frequent Flier is set to introduce a ‘Green Tier’ to offset emissions in the everyday lives of their customers and help them earn valuable Qantas Points. There is a conscious shift in customer sentiment brought on by the COVID-19 pandemic—and more and more brands are expected to support this by addressing ecological and economic concerns.
Annex Cloud’s Take:
Reading this prediction for the first time, we thought “isn’t this old news?”. But then we dug in and looked at most programs in the market. Many still have this “lite-personalization” approach. We agree with Adam Posner, that we’ll see much more focus on social responsibility and causes. Plus, a broader focus on personalization.
Annex Cloud attests customers are indeed holding brands accountable. Customers expect companies to work harder toward sustainability and stand up for social causes.
In addition, customers want recognition, they want brands to meet them halfway to create a two-way value exchange. This year will see more brands implementing more personalized recognition strategies. This recognition will run the spectrum from notes of appreciation to badges, “awarding” customers with an achievement badge to recognize their behavior and loyalty.
Brands will further Leverage FOMO
For years brands have leveraged fear, uncertainty, and doubt in their marketing efforts to create urgency, exclusivity, and a limited-supply mindset with the end goal being to motivate customers and prospects to act. The millennials and Gen Zs have a term for this—FOMO—which is an acronym for ‘fear of missing out’. From popular books to cosmetics and stocks, the fastest-selling products remain the most coveted. Limited NFTs and unique or special loyalty rewards have created FOMO. Customers who successfully grab these limited-edition items proudly show off their collectibles on social platforms and associate with the brand on an emotional level rather than simply a transactional level. In 2022, various brands are expected to create FOMO with their limited-edition deals and special rewards as a part of their loyalty strategy to emotionally tie the customer with the brand.
Annex Cloud’s Take:
We agree! FOMO is a powerful marketing tool. In the past, marketing and loyalty gurus leveraged FOMO in the form of platinum/black cards or special VIP status. In 2022, NFTs, special events, and limited-edition products and product rewards will leverage the FOMO strategy to create market buzz. In fact, Annex Cloud has clients that are already hosting special auctions and events as well as creating limited-supply items especially for loyalty redemption. These programs are seeing higher engagement and redemption rates compared to other marketing campaigns.
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Top 10 Loyalty Trends and Predictions for 2022
What you will learn:
- Key 2020 trends that impact your business performance and growth
- Annex Cloud’s take on these important trends & predictions
- How to position yourself for success in 2022 and beyond