The Future of Customer Retention: Next-Gen Loyalty Programs
If you try to create a future-proof loyalty program, chances are that you'll probably fail. Not because you are not capable of doing it, but because no one is. Human thinking and behavior have evolved rapidly due to technology's influence. That's why loyalty programs need to make a transformative leap to keep up, meaning that there is no exact formula for "future-proof". In order to keep pace with something that evolves constantly, you need to evolve constantly too.
But, is there a way to do it without shooting in the dark? Of course, that's why we did the hard work for you: We took a deep dive into already existing Next-Gen loyalty programs and took out what's important. Here are the key factors that, when implemented, make a Next-Gen loyalty program.
1. Learn About Your Demographic and Their Trends
With each generation, loyalty towards brands is declining. According to Forbes, only 37% of Gen Zers are ‘loyalists’, meaning that they bought a product from the same brand they were considering at the start of the shopping journey, compared to 56% of boomers.
Loyalty programs intended for younger shoppers need to adapt in order to deliver an experience that will result in customer retention. Younger customers are digital natives, so consider an omnichannel presence of your program along with its digital accessibility through apps and web. Remember that next-gen loyalty programs look nothing like the tier-based plastic cards.
The same research article by Forbes states that young shoppers tend to do more research:
"While millennials used the highest number of sources (23), Gen Z wasn’t far behind (19). In fact, 80% of shoppers we surveyed are now using online sources before making a purchasing decision across our range of categories."
They also shop based on values:
"Younger shoppers are also more inclined to view their purchases as key to understanding who they are and what matters to them. The figure is 68% among Gen Z and millennials, while just 43% of boomers agree."
Now, if you don't feel like adapting your loyalty program to the younger audiences' needs, just remember that the lifetime value (LTV) of loyalty program members is still 6.3 times more than other customers. So, what better way to invest in the future than paying attention to younger generations?
2. Consider Simplicity
Restructuring your loyalty program does not essentially mean more, because in many cases, simplicity is the key. The elements of simplicity include clarity, relevance, transparency, consistency, and utility.
Take a look at this simple infographic from Siegel+Gale research about World's Simplest Brands:
"Brand complexity results in $780 billion of total annual unrealized revenue among the global brands surveyed. Additionally, since 2009, the publicly traded simplest brands consistently outperform the average global stock index by 1,600%."
Think about it, your loyalty program is probably not the only one presented to your customers. There are numerous options for them, along with numerous features and so on. Customers no longer have the patience to wait for distant promises to fulfill nor the attention to explore your complex program in depth. Give them what they need: simplicity.
3. Don't Copy-Paste
As already mentioned in the paragraph above: your loyalty program is probably not the only one presented to your customers. Now, we understand that copying and pasting something is much less work than actually trying to be original and unique, plus, someone did it so it should work, right? Well, think about it from your customer's perspective. Would you like to be a part of something that's copy-pasted or unique? You might 'catch' some people in but that's not the way for the future.
"With a more personalized loyalty program experience, customers feel as if they are part of it. This feeling enhances their emotional bond with your brand."
Source: https://www.yollty.com/blog/what-is-the-psychology-behind-loyalty-programs
Your loyalty program doesn't need to be something totally different. Instead of copying, dissect the already existing loyalty programs into components and change some of those. The outcome is that you'll end up with creating something new and unique while following the already successful blueprint.
4. Bring Value Through Your Rewards
Psychology says that people won't remember what you did for them, but how you made them feel. That's why rewards are one of the key components of loyalty programs. Don't just put out a product (or a discount for a product) that no one buys expecting customers to be happy about it. Give them something that shows them that you really care.
For example, Nano Buddy came up with an idea of white labeling their products, offering them to business that want to include them as a reward in their loyalty program. Nano Buddy is a versatile sticker that can be applied to various surfaces. It neutralizes harmful electromagnetic radiation and provides protection against electromagnetic fields using advanced nano technology.
Why does this make a good choice for a reward in your loyalty program? Because it has real value. This product is protecting the health of your customers, educating them on a threat they didn't even know about, guarding them from tech that's getting even more dangerous by day. Also, it literally is a Next-Gen product itself. Customers will feel thankful that your brand did for them what others couldn't: show genuine care.
Now think about your rewards? Do they provide value? Because value sticks, and what sticks stays with us through the future.
Final Word
In conclusion, the future of customer retention lies in your ability to innovate and adapt your loyalty programs to the ever-changing needs of your audience. It's not about finding a one-size-fits-all solution, but about evolving with your customers, understanding their values, and offering them genuine value through your rewards.
By focusing on simplicity, avoiding the temptation to merely copy existing programs, and tailoring your approach to resonate with the younger, more digitally savvy generations, you position your brand not just for the present, but for sustained success in the future.
Remember, a loyalty program is not just a strategy—it's a commitment to your customers, showing them that their loyalty is valued and that you’re willing to go the extra mile to earn and keep it. As you move forward, let your loyalty program be a testament to your brand's dedication to providing meaningful and lasting value.
