THE CLARUS Blog

3 Outside of the Box Loyalty Trends We’ll See More of in 2020

Nearly 70% of consumers say their loyalty is more difficult for a retailer to maintain than ever before.

Given the unlimited options for consumers, retailers need to rethink their respective loyalty programs and strategies.

Since power has moved from brands to consumers, brands know that customer loyalty is more important now than ever.

With differentiation and experience as key factors driving loyalty, more and more successful brands are thinking outside of the box and getting creative.

Here are three ways that brands are rethinking loyalty to appeal to the modern consumer.

 

1. Strategic Loyalty Program Partnerships

Brands forming strategic partnerships to better serve similar customers is nothing new.

Look at Red Bull and GoPro. Both brands share a customer base that is energetic, extreme and action-packed.

GoPro provides extreme athletes with the tech and funds to capture action sports events and Red Bull uses its experience and reach to run and promote the events.

Taco Bell and Frito Lay teamed up to launch the Doritos Locos Taco in front of a massive audience which resulted in over a billion being sold the first year.

We’re starting to see brands take advantage of these partnerships in the loyalty space.

Earlier this year Hilton Honors and Lyft announced a partnership that is the first of its kind in the travel and hospitality industry.

Hilton Honors partnered with rideshare leader Lyft to reward the 89 million Hilton Honors loyalty members in their everyday lives.

Now, when members link their Hilton Honors and Lyft accounts, they’ll earn Hilton Honors Points for every $1 spent on Lyft rides in the US and Canada.

Mark Weinstein, Senior Vice President and Global Head of Customer Engagement, Loyalty and Partnerships at Hilton, talked about the partnership:

“We know ridesharing is important to our members and extends beyond getting to and from our hotels to a function they rely on nearly every day,” Weinstein explained.

“It’s easy to see how the missions of Hilton Honors and Lyft came together so nicely. That intense focus on creating a better customer experience, prioritizing and pioneering innovation in travel and committing to leaving the world a better place than we found it by reducing our impact on the environment and increasing our commitment to our communities.”

After launching its NikePlus Unlocks rewards program, the global retail icon partnered with Apple Music, the mindfulness service Headspace, and the education service ClassPass.

Leveraging fitness tracking clothing with Apple products to monitor your workout levels is the focus of this loyalty partnership.

Rewards are earned via gamification, specifically through workouts.

Nike officials want to expand the frequency and variety of rewards for members.

For example, a member can buy a Nike Epic React Flyknit shoe in an exclusive color and receive four months free of Apple Music.

Will the next partnership be Nike or another athletic apparel retailer teaming up with a fitness chains and health food store for an active lifestyle?

What about a luxury car maker teaming up with a high-end clothing brand and fine dining group?

I believe we’ll start to see more of these strategic loyalty partnerships in 2020.

 

2. Loyalty Programs That Give Back

Corporate social responsibility has been tied into loyalty programs before, but as brands try to appeal more to people on an emotional level, I think we’ll see this trend grow.

For example, DSW VIP members can donate shoes and rewards to those in need through Soles4Souls and Be Strong.

Since May 2018, over 1.4 million shoes have been donated.

And Target just announced the nationwide rollout of its Circle program.

Among the transaction benefits, Target Circle members will also have an opportunity to cast votes to help direct Target’s giving to approximately 800 nonprofit organizations in their local communities.

We encourage more brands to think about what is meaningful to their customers.

While many people still do value discounts and personal experiences, many of them remain loyal to brands that are aligned with their beliefs and help to make a difference.

 

3. Premium Loyalty Programs with Elevated Benefits

Eighty percent of millennials (and 68% of non-millennials) they would be willing to join a premium loyalty program if their favorite retailers offered them and the benefits were valuable to them.

While traditional, free loyalty programs still have a place among the casual consumers, we’re starting to see more brands launch premium programs.

In the simplest terms, a premium loyalty program is a loyalty program that’s so valuable, your customers are willing to pay for it.

And 87% of consumers who are satisfied with the special benefits offered by a retailer’s paid loyalty program will likely choose that retailer over a competitor that is offering a lower price.

In addition to increasing engagement and putting an end to the “loyalty to the coupon” phenomenon, premium loyalty programs also open the door for a boost in brand advocacy from your best customers.

In fact, 84% of consumers are likely to recommend a retailer to friends or family when the retailer offers a paid loyalty program with benefits that are valuable.

And around 90% of consumers would choose retailers with premium loyalty programs they belong to over other retailers.

These are the folks you want to build deeper relationships with.

RH, Lululemon, Overstock and CVS Health are just a few that are finding success and we expect this trend to continue rising.

 

Loyalty Isn’t Getting Easier

Nearly 70% of consumers agree their loyalty is more difficult for a retailer to maintain than ever before, while 88% agree retailers could do more to earn their long-term loyalty.

In this Age of the Customer, retailers need to continue to evolve their loyalty programs and can’t rely on traditional loyalty programs to protect their customers from the competition.

With 2020 right around the corner, how are you thinking outside the box on loyalty?

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