6 Major Loyalty Market Problems and Ways to Fix Them
Global loyalty market is currently worth approx USD 200 billion. However, its value seems to be growing faster than its participants manage to take advantage of it. This calls for a closer look at the main loyalty-related challenges and the best available solutions.
1. End of the plastic card era
While the number of businesses offering loyalty cards is increasing, space in customers’ wallets is rapidly shrinking. People are less and less willing to carry a pile of plastic around. However, businesses tend to assume that avoiding plastic cards and opting for a more innovative solution is an expensive endeavour, only available to the biggest brands.
Solution: building on existing infrastructure
There are some smart solutions accessible for every company no matter the size and budget. One of the most effective available options is based on integration with point of sale (POS) software providers. This means utilizing the most consistent infrastructure already existing at every merchant’s store — POS terminals used for bank card payment processing. This way participants of a loyalty program get rewarded with cashback instantly every time they pay with a bank card.
2. Predicting customer needs
What encourages customers to buy? Or even better — what encourages every particular group of customers to buy? Correct answers to these questions can be easily turned into increased sales. Consumers don’t want to be interrupted with generic offers, but they are happy to receive an offer for something they need. However, determining it can be very expensive and require extensive research.
Solution: smart customizable loyalty systems
Ready-made smart loyalty solutions offered by experienced loyalty sector experts can help to find an answer to these questions. Businesses do not have to create loyalty programs from scratch, conduct extensive market research and create tools for data analysis. That has already been done by loyalty professionals, using state of art technology to define what works best for every individual business.
3. Estimating if investment is worth it
What stops a lot of businesses from launching a loyalty program is the difficulty of justifying implementation expenses. Conducting dedicated analysis requires many weeks of work and tens or hundreds of thousands of euros.
Solution: real-time data analysis
There are loyalty program management systems with integrated real-time data analytics tool. Based on a company profile and its customers’ behaviour they suggest what kind of investment would be the most relevant for the business. The program performance data is being constantly updated therefore it allows businesses to adjust their expenses and loyalty program’s scope.
4. Spending loyalty points
Less than half of the customers redeem their points and take advantage of loyalty offers in the UK, while in US approx USD 100 billion in points are left unredeemed. Unused points mean low engagement in the program, in other words, it shows that the program is not working.
Solution: giving clients more flexibility in spending accumulated points
Loyalty does not have to be limited only to loyalty points that sits in centralised silos, it can be anything. So why not crypto tokens? When customers are rewarded with crypto tokens instead of limited usage points, loyalty program becomes more open and therefore more engaging. This way businesses are creating real value for their customers who can use their tokens anyway they want.
5. Constantly updating loyalty programs
To keep customers interested in their loyalty programs businesses have to offer something new every few years or even months. The problem is that it is very hard to keep it always fresh and interesting, especially if you don’t have a dedicated team working every day on making your loyalty program relevant.
Solution: using data and tracking trends
The key is to be aware of the market trends and not to wait until is too late and you have to start everything from scratch. Firstly, analyze your customer behaviour and amend your program and offerings based on their shifting preferences. Secondly, make sure you are aware of the market trends and not offering paper stickers to the digital generation.
6. Developing logistics and financial processes
The process of creating new processes in several departments of the company simultaneously can be very problematic. However, it is necessary for the businesses that decide to create their own loyalty programs from scratch. It has to be integrated, otherwise, it becomes a nice-to-have accessory instead of a powerful business tool it could be.
Solution: loyalty tools offering easy implementation and simple management
There are loyalty management tools that are fully digital and require no physical set up. Hence launching a loyalty program, is quick, inexpensive and doesn’t require any technical resource from a merchant. These tools allow a merchant to track and manage all the loyalty-related processes in one place, therefore, solving the problem of data scattered among different departments.
The good news is that powerful loyalty system that solves all of the above mentioned problems exists. Dealoyal created a tool that combines integration with point of sale (POS) software providers, smart AI and machine learning data analysis and blockchain technology in one system. The result is loyalty system, that is convenient, easy to manage and inexpensive to set up for merchants, yet seamless, personalised and liquid for consumers.
If you liked what you’ve read please press 👏 and if you are interested to learn more about an efficient loyalty program please visit Dealoyal.
