Loyalty programmes: The move to digital engagement

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By: Len Lubbe CEO at LoyaltyPlus

Loyalty programmes have been a mainstay of customer retention strategies for hundreds of years. Yes, you read that correctly. The first recorded customer loyalty programme dates back to 1793 when an American merchant handed out copper coins to repeat customers. A far cry from the digital engagement of today where technology has transformed loyalty.

In the 1930s, companies like S&H Green Stamps introduced trading stamps. Customers would collect these based on their purchases and redeem them for different items. It was so popular, that the trading stamp model became part and parcel of customer loyalty for several decades.

This gave way to what many consider the start of the modern era of loyalty programmes in the early 80s with the launch of frequent flyer programmes. It was American Airlines who first introduced this in 1981, offering miles for flights that could be redeemed for future travel. This revolutionised customer loyalty and saw several other industries following suit and providing similar initiatives for their customers.

A digital transformation

Thanks to the internet and the ubiquity of mobile technology, the late 90s and early 2000s resulted in a significant shift in loyalty programmes. The technology now enabled improved data collection and analysis, allowing businesses to understand customer behaviour in far more nuanced ways than were possible previously.

This marked an exciting period with several innovations being introduced in digital loyalty programmes:

1. Personalisation: Technology has empowered businesses to tailor loyalty programmes to individual preferences. So, by using data analytics and machine learning, businesses can offer personalised rewards and recommendations, enhancing the customer experience and increasing engagement.

2. Omnichannel integration: Loyalty programmes are no longer confined to physical stores. They integrate across online and offline channels, ensuring a consistent customer experience. Whether shopping in-store, online, or via mobile apps, customers can earn and redeem rewards without issues.

3. Real-time engagement: Digital platforms enable real-time interaction with customers. Businesses can send instant notifications, updates, and offers based on customer behaviour and preferences. This immediate engagement fosters a stronger connection between the brand and the customer.

4. Gamification: Incorporating gamification elements into loyalty programmes has proven to be highly effective. By introducing challenges, levels, and rewards, businesses can make the loyalty experience more engaging and fun, driving increased participation.

5. Social media integration: Social media platforms have become integral to loyalty programmes. Companies can leverage social media to promote their loyalty initiatives, encourage customer participation, and even allow customers to earn rewards through social sharing and engagement.

Innovations to consider

With technology continuing to evolve, there are many exciting opportunities to reshape customer loyalty programmes. For example, AI and predictive analytics can further enhance personalisation. By analysing large amounts of data at scale, companies can use AI to predict customer needs and preferences. In this way, they can introduce hyper-targeted rewards and make recommendations at an individual level.

While many have a love-hate relationship with blockchain technology, it can introduce transparency and security to loyalty programmes. In this way points and rewards can be accurately tracked and redeemed to increase customer trust and virtually eliminate the potential for fraud.

Of course, in South Africa and the rest of the continent, integrating loyalty programmes with mobile wallets can significantly streamline the customer experience. Using their digital wallets, consumers can access their rewards and make purchases through their smartphones. This blurs the lines between physical and digital engagement with many retailers around the world already embracing this.

With many consumers becoming increasingly environmentally conscious, loyalty programmes will introduce more sustainable and ethical rewards. For example, companies can offer eco-friendly products, make donations to charitable causes, and launch other socially responsible incentives.

An exciting future

We have certainly come a long way from copper tokens and stamps to AI and mobile wallets. One thing is certain – loyalty programmes will continue to evolve and become more personalised, integrated into our daily lives, and engaging.

At LoyaltyPlus, we remain committed to staying at the cusp of these innovations to empower our clients to create loyalty programmes that build long-lasting relationships with their customers.