Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals.
I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
You Welcome to episode 72 of Let’s Talk Loyalty.
And today, I thought it would be useful to share some global perspectives on what the year 2021 might hold for loyalty marketing.
So I’m delighted to have the opportunity to present insights from some of my colleagues from The Customer Strategy Network, or CSN, a global loyalty consulting organization that I am a member of.
CSN members provide expert independent advice spanning all aspects of consumer loyalty, which we’ve gained from our own experience working with leading brands and technology companies across the world.
Each of the contributors to the articles is also a CLMP, or Certified Loyalty Marketing Professional.
So here are the predictions from this unique group of global experts, which we also shared with our friends in The Wise Marketer.
I’ll start with our predictions from the UK, then Australia, and then my own predictions.
So firstly, we have Nick Chambers, CLMP, and CEO of Mobile Loyalty Technologies in the UK.
Firstly, Nick is predicting the reinvention of brands.
He says that brands will reinvent their operating models around consumer data to personalize at scale, respond in real time, and continually reinforce a cycle of relevant content and experiences.
He believes this will mean more investment by brands in value propositions that help capture consumer permissions and consents, and those MarTech stacks that enable data optimization and drive profitable changes in consumer behavior.
Secondly, the convergence of loyalty and payments.
More companies, he believes, will take advantage of open banking to build payment services based around the use of personal and transactional data.
New payment services will emerge with personalization at their very core.
The value exchange and permission-led approach associated with the loyalty program will evolve to drive the adoption of alternative payment methods.
Just as loyalty programs have become hidden for brands like Amazon, the payment process will also be hidden from consumers.
Thirdly, Nick predicts the rise of conversational commerce.
WeChat and Alipay in China have shown us the way in combining messaging and payments.
Western platforms like WhatsApp, Google Messenger and iMessage will follow.
Brands will need to find alternative ways to operate where their customers interact.
He talks about being on Instagram.
Imagine seeing a picture of food and ordering it for delivery on Amazon Prime.
Or chatting with a friend on Facebook Messenger and then leaving a tip on their restaurant food bill.
This is a future in which customers look to interact with brands in more ways and have an ability to do so much more with their chosen channel.
Secondly, Richard Button, CLMP, is Managing Director of the ELIAS Partnership in the UK.
And Richard is laser focused on privacy and in particular GDPR.
Richard predicts that data security concerns will draw the attention of the C-suite.
He says that the loyalty sector will not be exempt from the fallout from two recent incidents, the SolarWinds and FireEye hack.
The unprecedented nature, particularly of the SolarWinds hack, will ensure there’s increased scrutiny by major brands and loyalty program owners and operators of their digital supply chain and their cyber security status.
Richard says they have seen evidence in recent research into household brand names of highly vulnerable internet-facing properties.
And a similar picture is emerging in his review of loyalty program providers.
The threat landscape is increasing and a major breach is inevitable in 2021.
Richard says, closely related, attention to privacy and data rights will move front and centre for consumers.
Apple’s pivot to privacy, manifested most recently by their privacy nutrition labels, will stir consumers around the world.
He says that brands that build a path to privacy into their loyalty programs will flourish and those that don’t face an existential threat.
Thirdly, we move to Australia with Simon Rowles, CLMP and Managing Director for Beyonde.
Firstly, Simon says there are changes coming to the Australian loyalty market in 2021.
He says his analysis shows that credit card loyalty programs used to make up half of all of the money invested in loyalty in Australia.
Most of that has in turn been invested in bank-issued airline co-brand credit cards, offering points in the frequent flyer programs of Qantas and Virgin Australia that dominate his market.
But that’s changing.
Credit cards are being replaced by debit cards, which don’t have rewards.
And payment reforms are reducing the funding line the remaining credit cards can contribute to loyalty.
This hurts the airline frequent flyer programs, who now more than ever need to rely on their members earning points on the ground rather than in the air.
Secondly, Simon talks about retail customer experience and loyalty acceleration.
In Australia, leading retailers have doubled down on their offerings over 2020 and accelerated their transformation agendas.
They focused on loyalty of course, but also everything else in the customer experience.
The largest Australian retailer Woolworths has advanced and rebranded its loyalty program.
It also rapidly advanced digitization with new scan-and-go autonomous stores and also in-app digital receipts.
Simon says that still to come is the arrival of weighing scales that use artificial intelligence to identify fresh produce and speed up checkout and also image recognition cameras to scan for empty supermarket shelves.
Thirdly, Simon talks about loyalty from better and better banking.
Three types of regulation that have already happened in other parts of the world are about to happen in Australia.
Firstly, privacy, also known particularly in the UK and Europe as GDPR, credit card funding reductions and interchange reform, and also open banking, the customer data right.
These are perfect conditions for fintechs, insure techs and retail techs born in those regulatory environments to drive advances in Australia.
Simon says that their homegrown neo banks are struggling.
One of the first, called Zinja, has just closed its doors after just a year.
The technological advancements are happening inside large incumbent banks.
Commonwealth Bank, the biggest in Australia, already has the best banking app in the market and the third best in the world, according to Forrester.
So, fourthly, Australia, in 2021, the covers come off.
Simon tells us that the Australian economy is already out of recession.
The customer experience winners have spent 2020 investing in better customer experiences and 2021 will see them launched and dominating their sectors.
He expects to see the adoption of global winning solutions to deliver the best customer experiences and so drive loyalty in Australia.
He expects that many of the big moves in loyalty in the UK this year to hit Australia in 2021 and some of these are already visible.
For example, the Pret a Manger programme in the UK launched a coffee subscription loyalty programme, which is delivered by UK loyalty leader Eagle Eye.
Australia’s largest retailer Woolworths quietly struck a deal with Eagle Eye late in 2020.
Also, this year, Barclays Bank in the UK will roll out Bink, which is a fintech who invented the category of payment link loyalty and will launch them in the main banking app.
Card linking has only hit the mainstream in Australia this year.
Australian banks and retailers are uniquely primed to adopt Bink’s unique loyalty solution.
There has been strong interest in bringing Bink to Australia from both.
Australian-born iZub’s data unique technology platform enables enterprises to share and analyze customer data between them without ever seeing it.
Virgin Australia’s frequent flyer program Velocity has used this to advance its loyalty program.
And in closing, Simon misquotes William Gibson.
Australia’s loyalty future is already here.
It’s just not evenly distributed.
And finally, my own predictions of loyalty in 2021.
Firstly, I really believe that loyalty programs will launch more media solutions.
Loyalty programs will find new ways to leverage their data and drive advertising revenue.
Inspired by the giants of digital media such as Google, Facebook and Amazon, loyalty program owners will realize the media value of the relationships and attention they nurture.
Following the launch of media businesses by major US retail brands such as Walgreens Advertising Group, loyalty program owners with comprehensive consumer permission will increasingly leverage that first-party data and offer powerful third-party marketing solutions.
Secondly, loyalty programs and new channels.
Loyalty program operators will continue to develop new channels to connect with customers, led by WhatsApp and Facebook Messenger as well as voice assistants mainly at home.
I believe that innovative programs will increasingly leverage the power of both voice and messenger channels to support their consumers beyond simple customer service.
To include detailed transactional information and loyalty account inquiries and data management.
Eventually, over time, supporting extensive loyalty program needs such as redemption functionality.
Thirdly, I believe that loyalty professionals will increasingly lead CX or customer experience initiatives.
Loyalty professionals will be increasingly called upon to create extraordinary customer experiences.
With loyalty programs seen as just one tool that truly can drive customer connections.
With their experience, training and passion to delight customers, many loyalty programs, I believe, will upscale even further and be the natural leaders of CX initiatives at senior or C-suite level.
And fourth, paid loyalty will continue to explode.
As seen by the 2018 Delphi Report and the success of Panera Bread and subscription-based meal kit companies in the UK and the US, followed by increasing adoption by retailers such as Pret a Munch in the UK, many other sectors will launch their own subscription-based loyalty.
Even the success of global retailers such as Circle K with innovative ideas such as their car wash subscription product and other premium tiers launched by, for example, Alibaba with their VIP program in China.
And these will transform relationships with consumers, engaging more but in fewer and fewer programs.
My fifth prediction is for payment linked loyalty and digital receipts to continue to grow.
I believe consumers will continue to place extraordinary value on simplicity.
So platform enhancements such as payment linked loyalty and digital receipts will truly delight customers in more and more countries and ensure deeper loyalty for brands who invest in these customer centric features.
Digital receipts will increasingly delight consumers around the world who value environmental initiatives by leading loyalty programs.
And finally, local loyalty and community-based loyalty.
As consumers continue to cope with the global pandemic, their values and priorities are changing.
CSR programs will no longer earn the attention or respect they once did, with members increasingly craving connections to each other and to brands they honestly believe in, particularly at a local level.
So that’s it from our predictions from the CSN for 2021.
In closing, I’d like to thank Nick Chambers, Richard Button, Simon Rowles and Mike Capizzi for their time and expertise in putting this article together.
And of course, I’ll include links to all of the guys and this article itself in the show notes.
That’s it from this episode of Let’s Talk Loyalty, and I wish you a truly successful 2021.
This show is sponsored by The Wise Marketer, the world’s most popular source of loyalty marketing news, insights and research.
The Wise Marketer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.
For more information, check out thewisemarketeer.com and loyaltyacademy.org.
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