It is crazy to think that it has been more than a year since COVID-19 first hit the United States in January 2020. Our world has forever been changed, and this even includes how, what, and where consumers now shop. For example, FIS’ Generation Pay Report, which interviewed 2,000 consumers regarding their payment preferences, showed that 58% of consumers in the United States shopped more online than they ever had in years before, and 42% bought more items through their mobile devices.
Now, although generations have different preferences in how they spend their money and choose to pay, they tend to have similar interests when it comes to loyalty programs. The biggest appeal of loyalty programs is earned points that don’t expire and a high value of cash rewards. To keep them loyal, consumers prefer to earn points at a variety of retailers, participate in special promotional campaigns, and have plenty of appealing redemption award options. In fact, 35% of consumers that responded for the Generation Pay Report said that they frequented businesses that offered loyalty and rewards programs more.
How do loyalty programs affect commerce?
Loyalty programs are affecting commerce on a multitude of levels. These loyalty programs extend the buying power that the individual consumer has at their desired retailers and will lean towards financial institutions that provide cards that reward them in the way that they see fit. As we established earlier, consumer preferences have changed, and they have had to adjust the channels in which they shop. That means that consumers who did not want to shop online are now doing so, but what happens as more and more industries get back to normal?
A real-world example of this comes in the form of delivery service companies like Door Dash, Postmates, Uber Eats, etc. These companies saw a tremendous amount of growth during the pandemic as both restaurants and consumers turned to these services to both get their food out of the door or onto their table. However, with more states lessening the restrictions on restaurants, it is only a matter of time before some users turn their back on these delivery services. This is where a loyalty program can play a crucial role in helping organizations that saw increased sales and traffic to their website keep that new audience. Providing timely, relevant rewards and offers to consumers can make or break whether an organization keeps that newly found audience.
The right technology partner can make all the difference.
Again, think back a year ago and where your organization was in terms of the technology it used. How much have you and your entire company had to adapt to stay in touch with each other, meet your team goals, and deliver the best possible experience for your users at every point in the customer life cycle? A technology partner can help your organization deliver a best-in-class loyalty program to your consumers at a pace that fits your organization.
Customization is also a necessity with loyalty programs. That is where an open loyalty network concept, that allows users to tailor their preferences and create a level of engagement that fits their individual needs comes in. In the future, users can expect to be able to exchange points not only for discounts at different points of sale, but to redeem their hard-earned points to exchange stock shares, cryptocurrencies, and a large variety of other options, making this engagement truly currency agnostic. Organizations that do not have the right technology partner to handle the details to make that happen risk being left behind by the competition.
In summary, the pandemic had a tremendous impact on all of us consumers. Our preferences changed, and we are more willing to share more information about our lives in order to expedite transaction processing, remove friction, and improve convenience. As a result of that, traditional transactional loyalty programs are being phased out and replaced with more sophisticated programs that emphasize emotional loyalty and relationship between brands and their consumers.
About The Author
Mladen Vladic is Director – Loyalty at FIS.