8 Loyalty Program Trends for 2020

by: Nichole Gunn January 21, 2020

Interested in learning more about the loyalty program trends that will be driving customer loyalty in 2020? Recently, Incentive Solutions President and CEO Mark Herbert sat down with Performance Incentive Products Magazine to discuss the trends business leaders should consider when designing their customer loyalty programs.

In the article, Mark Herbert discusses 5 important loyalty program trends for 2020 (plus, we’ll be exploring a few bonus trends!):

  • Today’s customers expect more personalization.
  • Using your loyalty program to collect customer data is more important than ever.
  • Automation leads to better customer engagement and streamlines administration.
  • Omnichannel communication connects with a multigenerational customer base.
  • Marketing departments require measurable ROI and reporting features.
  • The rise of e-commerce makes integrated loyalty programs a must-have.
  • Loyalty program participants want experiential rewards that enhance their lifestyle.
  • Loyalty program gamification is becoming more than a novelty feature.

8 Loyalty Program Trends for 2020

Is your loyalty program designed to capitalize on these 8 trends for 2020?

1. Today's customers expect more personalization.

Today’s customers expect a higher degree of personalization. According to Salesforce, 59% of customers say personalized engagement is very important to earning their business. This trend is even more pronounced in the B2B space, where buyer expectations are shifting to match their B2C customer experiences. In 2020, loyalty programs will have to use improved segmentation to offer customers personalized offers and relevant communications.

Customer Centric Loyalty Programs
Today's buyers expect customer-centric loyalty program experiences.

To quote Mark Herbert:

“Each participant wants to feel that the sponsor of the program is speaking directly to them and engaging with them on a personal level. This has required the need for greater data analytics in order to segment participants into narrower and narrower bands, so that messaging and calls to action can be more targeted.”

2. Using your loyalty program to collect customer data is more important than ever.

More personalization requires more data. Not only that, as businesses become more reliant on business intelligence tools and AI, good, clean customer data and analytics has become increasingly important.

In the interview, Mark Herbert says:

“With emergent technologies and digitalization, access to data is a competitive differentiator.”

In 2020, more companies will structure their loyalty programs to capture relevant data about their customers – from contact and demographic information to program engagement – to fuel their marketing efforts and personalize their loyalty programs.

3. Automation leads to better customer engagement and streamlines administration.

One trend Mark Herbert has noticed is that businesses today require more automation and integration from their loyalty programs:

“Greater personalization is also coinciding with the need for more automation. The systems that the members of the IESP have created need to continually adapt to our customers' needs and create efficiencies where manual processes used to be required.”

Modern loyalty program software automates manual functions for a more responsive customer experience, faster reward delivery, and streamlined administration. We expect this loyalty program trend to only become more pronounced in 2020.

4. Omnichannel communication connects with a multigenerational customer base.

From Gen Z to Baby Boomers, today’s customers span a handful of generations. They grew up with very different forms of communication – from letters and landlines to Snapchat and FaceTime. Most likely, all of these generations will be represented within your customer base in 2020. It’s important to connect with them on their terms.

Mark Herbert speaks on the importance of utilizing different mediums of communication according to customer preference:

"There is also the need to be able to communicate with each participant depending on their particular preferences. With four generations in the workplace today, each group likes to communicate differently. Chatting, texting, e-mail and mail are different communications methods that each generation responds to differently."

An effective loyalty program in 2020 will provide relevant communications across all of these channels.

5. Marketing departments require measurable ROI and reporting features.

Of course, one of the benefits of a loyalty program is that it does create a positive emotional impact on customers. There is a feel-good element. But savvy marketers know that a loyalty program is an investment, not a cost. And investments produce measurable results.

One of our focuses at Incentive Solutions is to continue to provide reporting and ROI measurement tools to justify loyalty program costs and maximize their benefits. To quote Mark Herbert:

"Another hot topic with our customers is how to measure the return on the investment of any results-based program. With the increasing demand from the C-suite on leveraging spend on the most effective tools, incentive program sponsors are having to justify the budgets spent on these types of programs.”

Check out our ROI calculator to project the potential revenue increase your business could experience from a loyalty program.

6. The rise of e-commerce makes integrated loyalty programs a must-have.

E-commerce is expected to make up 15.5% of all retail sales and 12.1% of all B2B sales in 2020. That’s trillions of dollars. Those numbers show no signs of slowing down. Integrating your loyalty program with your e-commerce platform can have profound effects on profitability.

Benefits of e-loyalty programs include:

  • Increasing online sales, which typically have a lower “cost-to-serve” than in-store sales.
  • Training customers to shop online for new e-commerce platforms and retaining existing online shoppers.
  • Driving more traffic to your e-commerce site, which gives you more opportunities to build brand awareness and generate sales.
  • Gaining online customer referrals and social shares.
  • Capturing more complete customer data.
  • Providing more personalized digital communication.

Loyalty Program Trends Integration
Integrate your loyalty program with your business platforms for a better UX.

This loyalty program trend is especially important for manufacturers and distributors, who are increasingly moving aspects of their business online. Check out how we helped a wholesale distributor integrate their loyalty program with their e-commerce platform to increase order quantities by 319% and generate 655% more in monthly revenue from customers enrolled in their e-loyalty program!

7. Loyalty program participants want experiential rewards that enhance their lifestyle.

In 2019, we surveyed thousands of participants across hundreds of loyalty programs to see what loyalty rewards they wanted from their program in 2020. We found that participants are overwhelmingly interest in experiential and lifestyle rewards. The top 5 reward interests included:

  • Travel
  • Sports
  • Music
  • Tech
  • Tools

Other examples of experiential and lifestyle rewards include event passes, movie tickets, tours, Uber gift cards, and merchandise rewards like kayaks and mountain bikes. Loyalty program participants want to live it up in 2020! Stocking your loyalty program with these kinds of rewards will maximize its value proposition.

For fully survey results, check out “Your Rewards Program Needs These 5 Reward Categories in 2020.”

8. Loyalty program gamification is becoming more than a novelty feature.

Another loyalty program trend that’s on the rise is the use of gamification. Gamification uses game-like features like points-scoring, achievements, leaderboards and competitive elements, to build engagement. Digital transformation has made gamification much more scalable and accessible. It’s become something customers expect.

Consider the following stats:

  • One-third of all loyalty program participants and 40% of Millennials report that they are more motivated and engaged by loyalty programs that include elements of gamification. (Forbes)
  • Gamification grows e-commerce activity by an average of 68%. (PostFunnel)
  • Almost one-third of companies that use gamification improve registration conversion rates by more than 50%. (Medium)

Loyalty Program Trends Gamification
Using elements of gamification boosts engagement.

Many B2C companies already use elements of gamification to build customer loyalty. But this strategy can be even more impactful for manufacturers and distributors, where it can be challenging to create engaging, rewarding brand interactions.

BONUS: Trends for Loyalty Program Budgets in 2020

There you have it! But if you made it this far, we wanted to share some loyalty program budget trends from our friends at the Incentive Research Foundation:

  • 50% of loyalty program participants will earn a reward in 2020 (compared to 38% in 2019).
  • The net increase in overall loyalty program budget is 43%
  • Investments in loyalty program technology has had a net increase of 43%.
  • The net increase in loyalty program communications budgets is 31%.

How to Stay Ahead of the Trends

Your loyalty program has to keep evolving the match the expectations and interests of your customer base. Competition is fierce – and judging by the trends, it will only rise in the coming decade. In order to compete, it’s important to invest in loyalty program software and reward platforms that’s better, more responsive, and more data-driven than your competitors.

But more than that, it’s important to invest in platforms that are structured for continuous improvement – so that can always capitalize on the latest loyalty program trends!

Get the platforms and rewards you need to build loyalty in 2020.

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About Nichole Gunn

Nichole Gunn is the VP of Marketing at Incentive Solutions, an Atlanta-based incentive company that delivers advanced, agile B2B customer loyalty and channel sales incentives programs.