Customer loyalty

Emerging Customer Loyalty Trends in 2023

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May 3, 2023

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We uncover emerging customer loyalty trends, from gamification to personalization, and offer strategies to crack the loyalty conundrum.

Did you know that customers are 83% more likely to purchase from a brand they have an emotional connection with? This may be surprising, as it’s more intuitive to assume that the quality of the product or service should be the bottom line. However, a Harvard Business Review report suggested that emotional connections actually matter more than customer satisfaction. Better emotional relationships lead to increases in customer loyalty. 

The value of customer loyalty is tangible in a company’s business. In our last post, we covered the different methods and KPIs you can use to track customer loyalty. We also pointed out that most of your profits come from existing customers and that retaining customers is far cheaper than acquiring them. Expectations that customers have with their favorite brands are changing and it’s important to understand how people engage with companies before building a relationship. 

But therein lies the million-dollar question: How do you build an emotional relationship with a customer?

Before suggesting strategies to increase customer loyalty, let’s check the market temperature to see what’s working and what’s not.

Trend 1: Human-first loyalty

Never lose a bead on the importance of human-first loyalty. Digital strategist Natalia Real at AIQ suggests that human-first mobile experiences mean designing apps and experiences around the needs and preferences of individuals rather than blanket marketing messages. This means that regardless of your research, audience profiles, and other statistics, always be mindful of the fact that your customers are individuals. 

Everyone wants a good deal. Who wants to spend $1000 just to get $10 off? Customers can see through meaningless discounts and lackluster loyalty programs. The net result isn’t loyalty, it’s disengagement. 

Money matters, but remember humans are emotional creatures at heart. A study performed by Nobel-prize-winning psychologist Daniel Kahneman found that the financial decisions people make are based 90% on emotion. This is where understanding the goals and values of individuals is necessary. What does your audience care about? What do they engage with? How are you fostering these relationships and engaging with them? 

Trend 2: Experiential, meaningful rewards

So how do you balance profits with increasing customer loyalty? This is where constructing an effective reward scheme is critical. A reward scheme is a loyalty strategy that incentivizes customers to return to a brand for repeat business. It may provide them with a discount or a unique experience for engaging with the program. Take Starbucks Odyssey, for example. Starbucks has a history of having an incredibly effective retail loyalty program with over 16 million active members on their mobile app in 2019.  The company added a Web3 rewards program in order to gamify its scheme and provide more meaningful benefits. Odyssey rewards repeat customers with collectable Stamps (NFTs). These stamps can be traded with other members or redeemed for unique, immersive coffee-related experiences. 

Starbucks Odyssey’s NFT rewards program excels because it balances transactional and experiential benefits:

  • Transactional rewards systems – traditionally provide immediate, tangible value to customers while not necessarily being exciting or unique. 
  • Experiential rewards systems – provide unique experiences that stand out and build strong relationships with customers. 

The value of experiential rewards hasn’t always been tangible, but Web3 opens up some incredible opportunities to alleviate this.   

Trend 3: AI and frictionless shopping

One of the biggest gripes of online shopping is the sheer volume of products and services available on the web. Customers want to find what they need, buy it, and receive it with no additional hassle. Streamlining the shopping process as much as possible is referred to as frictionless shopping.  

For example, Caper – a software company that develops AI-powered automated checkout devices – partnered with tech company NVIDIA to create AI-assisted shopping carts. These carts recognize products placed in them and allow customers to check out from stores without cashier lines. 

Streamlining these shopping experiences often involves creating accounts and joining membership and other loyalty programs. But offering a smoother shopping experience than the competitors can be more than enough of a motivator on its own to engage with these programs. 

Trend 4: Gamification 

Look around at popular brand apps and you’ll see almost every company is finding ways to incorporate points, badges, checkpoints, or achievements. The aforementioned Starbucks Odyssey involves interactive journeys that users can take to explore coffee farms and play interactive games. 

But these apps aren’t just games - they’re ancillary apps or programs that promote a company’s service. Putting game elements in non-games is called gamification. Gamification increases user engagement with visible progression and accomplishments for actions taken by users. Reward programs that implement gamification typically award the user points or achievements for repeated transactions at a company. 

Gamification requires careful design and development to maintain user engagement,  while not overly rewarding someone for their actions. The rewards distributed to “players” may also be difficult to logistically organize and associate with value. But, Web3 will ease this by letting you tokenize rewards to create small economies of trading and selling rewards in your brand’s community. 

Trend 5: Personalization

All audiences – but particularly younger ones – want to be acknowledged and recognized as individuals. This means offering them rewards and experiences customized to their interests. In fact, 87% of loyalty program members are interested in having their activity and behavior monitored in order to access more personalized rewards or engagement. That said, customers aren’t going to give up their data for free — you need to establish that you’re using this data exclusively for better personalization such as:

  • Targeted deals
  • Recommendations based on purchase history
  • Convenience and ease of use
  • Experiences relevant to customer interests

How to solve the customer loyalty puzzle

customer loyalty strategy puzzle

With so many spinning plates to balance with customer loyalty, it’s challenging to devise a strategy that effectively covers all your bases. While the solution you land on will be unique to your brand, industry, and audience, here are some ideas to help you retain the customers you have. 

Establish a confident brand identity

Brand identity, much like a person’s identity, is tied to a lot of different factors. Your company’s identity will be influenced by your brand values, public communications, iconography, and public perception. Having a strong brand identity, transparent public communications, and values that align with your customer base will increase their loyalty to your brand.

Incentivize referrals 

81% of people trust the advice of friends and family over business advice. Creating incentives for your loyal customers to refer other people they know is a simple way to decrease customer acquisition costs while creating brand advocates. Companies like Monzo Bank and AirBnB used customer referrals to grow quickly. 

Create meaningful rewards programs

We’ve already talked a lot about rewards programs, but remember that repeat customers will spend more than first-time customers. Incentivizing your customers to stay with your company with comprehensive rewards is vital, and rewards systems are more accessible to create than ever

Build a community

Community relationships help establish direct lines of communication as well as express your values with customers. Hosting spaces for your customers to connect with one another also allows you to paint a more accurate picture of your audience and their interests. Your eventual Web3 rewards will also involve these communities, so it should be a supportive space that encourages connectivity.

Focus on personalization

This may seem impossible to manage with your customer base, but emerging tech like AI and Web3 technology will actually make this feasible. Whether you’re creating digital experiences based on customer data, or just looking for a way to organize your audience, the only limit is your team’s creativity.

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