Loyalty programs were the talk of the town in 2022. As the economy struggled to stabilize due to lingering supply chain shortages caused by the pandemic, coupled with the highest inflation in 40 years, retailers turned to loyalty to attract and retain customers. For brands with existing membership programs, we saw many updates to benefits, rewards, and redemption terms—some of which members received positively, while others were seen as making it more difficult to redeem the rewards members had worked so hard to earn. As we look to 2023, let’s consider what will carry over from last year, and what we can expect to see more of in 2023.
2022 Carry-Overs
Experiential Benefits
Experiential benefits are a staple of best-in-class loyalty programs. A technique for keeping members engaged between purchases, they also help create a strong emotional connection with members. As customer attitudes have shifted in recent years, demanding more than just discounts, retailers have been forced to respond—including reassessing their loyalty program offerings. In 2023, this will not change. Brands should continue to evaluate their programs to ensure their benefits balance the transactional with the experiential. If you find your program is weighted toward discounts and monetary rewards, conduct research to determine what experiential benefits resonate most with your members. And remember, a balanced offering is loyalty best practice and should always evolve and change with your members over time.
Environmental Sustainability
Customers today are more socially and environmentally conscious than ever before. Research shows that 78% of customers say environmental practices influence their decision to buy from a company.1 And as younger generations amass more spending power, they will vote with their wallets and choose retailers whose values align to their own—they won’t make decisions solely based on price. Loyalty programs have already started to respond, from offering points when members bring their own shopping bag, to making donations with every new membership enrollment. In 2023, customer demand will grow, and membership presents a unique opportunity for brands to differentiate by finding ways to authentically give back in ways that align to their brand values. Watch for more brands to follow suit in 2023.
Personalization
A key objective of any loyalty program should always be to deliver a personalized, omnichannel member experience. This was true in 2022 and will remain in 2023 and beyond. Research shows that 56% of customers expect offers to always be personalized and 62% report the importance of feeling an “emotional connection” to their favorite brands.2 By using just a few key pieces of member information, you can create timely, anticipatory, relevant communications, offers, and experiences that can engage members and drive conversions.
Progressive profiling keeps zero-party data up to date which helps create a holistic and actionable member profile. In 2023, brands should aim to extend beyond tailored first-name emails. Personalization should show up across all channels in nuanced, meaningful, and fun ways such as product suggestions, offers, content, customized imagery, and more. And while personalization is a spectrum and the intensity will vary by brand, it enhances the member experience by building trust, showing members that something meaningful is being done with the precious information that they are providing.
2023 Headliners
The End of Third-Party Cookies
In February 2020, Google announced the end of third-party cookies in Q3 2024. Since Chrome is the most used web browser globally, brands have been scrambling to uncover strategic alternatives that garner third-party customer data without sacrificing the user experience. In 2023, we expect to hear more about strategies for collecting zero-party data as other browser extensions and APIs are tested in the post-cookie world. Loyalty programs, of course, are an excellent vehicle through which to collect zero-party data. Brands should use this time to evaluate their member profiles and ensure they represent a well-rounded view of their members—not just demographic, but psychographic data too. This year, expect to see programs collect more customer information, either refreshing old or collecting new. And many loyalty platforms today offer functionality like polls and quizzes that make collecting information fun and engaging for members so it doesn’t feel like “data collection,” especially if it’s tied to an earn incentive.
Web3, Metaverse, and Blockchain
Hot topics in 2022, these innovative technologies made headlines as brands tried to understand the evolving landscape and incorporate them into their business plans. This year we’ll continue to hear about the evolving Web3 ecosystem as brands continue to discover the opportunities it presents for their businesses and for their customers. For membership, we saw flagship brands enter the field as they bought space in the metaverse, some even incorporating tokens into their loyalty programs. In 2023, retailers will continue experimenting with what these frontier technologies can offer their members in a meaningful way. As many brands know, it’s not enough just having space in the metaverse or owning an NFT, brands must consider how it elevates their overall brand value proposition and delivers actual member value and brand affinity.
Partnerships
As the economy struggled in 2022, brands got creative about how to keep customers’ attention (and share of wallet) while managing costs. For many, that meant establishing strategic partnerships. We began to see more collaborations across retailers where members could connect their memberships to enhance their rewards. These complementary partnerships include airlines and coffee shops where members could earn bonus points, or sporting goods retailers and sport brands where members receive exclusive benefits and products when they link their accounts. These alliances are better serving members by extending the value of membership beyond the core competency of their brand into an adjacent, but still relevant space that provides value to the member. In 2023, we expect to see this trend continue as brands look for ways to deliver more to members without adding gross amounts to their P&L. For loyalty programs, the possibilities are vast, and partnerships that offer a value exchange can drive member engagement, retention, and profitability for both brands.
Authenticity
A popular outdoor apparel company made headlines in 2022 when its founder announced that he would be giving away his company. Ordinarily, this might have been seen as a publicity stunt, but that was far from how it was perceived. Rather, the company founder had a history of environmental advocacy and the brand had long been known as a sustainable retailer; it’s this history that made his unorthodox move so authentic and so compelling. And authenticity isn’t just lip service. In fact, 71% of US consumers report they want to support brands they consider “authentic.”3 In 2023, we expect to see more brands evaluating their mission and what makes them, them, to find ways to show up in customers’ lives in a genuine way. Membership should be an extension of the overarching brand and in that, a reflection of its mission and values. How a membership program is delivered to members through its benefits and features is a manifestation of a brand’s individuality and authenticity. This year, watch for brands revising their programs to reflect more of their overarching brand values.
Although the future is always uncertain, we can look to broader societal, environmental, and economic trends to help predict the changes afoot for loyalty. A membership program should always be evolving to reflect the constant evolution of its member base. In 2023, this evolution will continue as customers explore new digital domains, seek authenticity from brands, and demand more value from the memberships they carry.
How will your company prepare for these trends and more in 2023? Connect with our experts for a consultation today.
1, 2 “State of the Connected Customer,” 5th edition, Salesforce, 2022.
3 “Consumers Crave Authenticity, And CMOs Can Deliver,” Forrester Research, Inc. blog, Alex Schanne and Anjali Lai, April 5, 2022.
Meg Tronquet
Principal, Integrated Loyalty Solutions
