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As the beginning of the new year slips into the rearview, it’s clear that the 2024 customer loyalty landscape will deliver plenty of challenges for brands. In addition to navigating a shifting economic climate and pivoting to meet the expectations of an increasingly demanding customer base, brands must determine what new technologies to leverage in support of their customer loyalty efforts. They must prioritize what functionalities and benefits can be added to their programs in order to differentiate their offering and stand out in a noisy environment competing for consumer attention and affinity.
Marketers might be working with budget constraints while pursuing ways to better personalize the customer experience through real-time engagement and relevant “in the moment” messaging. The road to delivering exceptional customer loyalty experiences is not for the faint of heart.
Headquartered in Jacksonville, Florida, FIS Global is a provider of technology solutions for merchants, banks, and capital markets firms globally. The company helps clients apply technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. The team at FIS is committed to arming brands with the tools necessary to meet today’s — and tomorrow’s — challenges within customer loyalty.
Mark Johnson, CEO of Loyalty360, spoke with Mladen Vladic, General Manager, FIS Loyalty Engagement Solutions, about looking at the holistic enterprise value of the consumer, the value in looking inside the organization to determine friction at touchpoints, and the challenges and opportunities in customer loyalty in the year ahead.
Disruption in 2023 Impacts How Marketers Think in 2024
According to FIS, 2023 was an active year in terms of customer loyalty — one that witnessed many changes because of increased disruption in the marketplace and rapidly evolving consumer preferences. Those forces have effectively impacted how marketers and loyalty professionals think about the loyalty space.
“We all witnessed good examples of program simplification,” begins Vladic. “For example, when I think about the retail space, there are examples of how NFTs and subscription-based programs have been introduced.”
Some brands have implemented successful omnichannel engagement strategies, encouraging program members to complete quizzes, surveys, and games to earn loyalty currency.
“One thing we saw in 2023, and I believe we’ll see more of in 2024 and beyond, is the concept of additional experiential rewards offered in the retail sector and financial institution loyalty space,” says Vladic.
That being said, Vladic also notes that some brands removed or reduced program benefits, effectively devaluing the value proposition for consumers. In some cases, consumer backlash delivered a hard lesson in how brands should communicate changes to avoid losing customer engagement.
The majority of FIS’ clients work in the financial institution loyalty space, and FIS saw more focus being placed on the enterprise’s relationship with the consumer. Brands are taking a holistic approach versus solely concentrating on transactional-based loyalty.
2024 Themes for Customer Loyalty
Vladic believes brands will continue working on shifting from transactional loyalty to experiential and emotional loyalty as they move into 2024. Gamification, building emotional connections between consumers and brands, and implementing subscriptions —potentially — are several of the big themes he predicts.
“Concentrate on maximizing the value for your most loyal customers,” advises Vladic.
Drive the First Experience as Early as Possible
More emphasis is now being placed on looking at the holistic enterprise value of the consumer versus a siloed view that is tied to a loyalty offer or loyalty program in which they’re enrolled. Vladic contends that this will become increasingly relevant to some brands but not all. He also notes that brand marketers and loyalty professionals will continue to monitor traditional key performance indicators (KPIs), such as the source in terms of spend, tenure of the relationship, frequency, and digital engagement.
“Brands are paying attention to that first engagement, first redemption, and first experience,” explains Vladic. “We know that previously, it took a long time to put the consumer or customer through that first experience.”
With brands zeroing in on driving that first experience as early as possible in the brand-customer relationship to ensure that they engage in a proper way, the probability of retention increases in everything else.
The brands FIS works with want to know how to access and leverage more data intelligence around the predictability of future engagement. To start, brands must look at past behavior, transaction history, and every digital footprint made when trying to predict engagement over the next month and beyond.
Top Trends and Innovations
As we move into 2024, brands are taking steps to look at loyalty efforts and programs holistically as part of their ongoing strategy versus remaining reaction-oriented based on what the competition has implemented or what the market touts as the latest trend. Moreover, it’s critical to think about the process as a long-term engagement with implications because it impacts fiscal expectations in terms of the cost and commitment made to the consumer.
“The number one trend we’ve seen is the simplification of the program,” says Vladic. “Brands must make sure it’s easy for the consumer to understand so that they are engaged in a meaningful way and know what is expected of them.”
Unsurprisingly, Vladic expects to see brands effectively focusing on experiential rewards as another trend, followed by partnerships in a broad sense. Indeed, an increasing number of brands are training and setting expectations with customers that they will be experimenting with forming partnerships. Some may not necessarily pan out in the long term, and it might be a temporary benefit or engagement.
Technology and Customer Loyalty in the Coming Year
While many brands express an interest in increasing the efficacy of their programs by leveraging technology, the adoption of new technologies can be problematic regardless of whether the technology is introduced incrementally, or the brand chooses to invest in a total revamp.
“I am a big proponent of thinking about this journey as an evolution versus revolution given the commitment implementing a new technology requires from the brand,” says Vladic. “Consider, too, the fact that you have a core customer base already engaged with your program.”
In sum, Vladic prefers to see a brand evolve its program versus relaunching and starting over. However, the actual execution for each brand can be different because it is dependent on where they are in their customer loyalty journey. Brands need to evaluate to better understand which components of the program work and drive engagement — the components that can be proven as successful when measuring with KPIs.
Over time, if it makes sense to form a partnership, new features or functionalities can be supported by a supplier or an in-house team.
“Move forward in phased and segmented approaches so that you can test pilots on a smaller scale before you deploy this to your complete customer base,” recommends Vladic.
Brand Budget Constraints
Some of the biggest brands are certainly successful in driving customer engagement. They’ve developed strong product roadmaps, and they have ideas and concepts they would like to deploy. However, marketing and loyalty teams may be operating within budget constraints in addition to internal priorities and technology limitations.
“Those brands may need to scale back in terms of the phased approach,” explains Vladic. “Perhaps it means you will deploy the functionality or added benefit to only a segment of your customer base, then measure the impact. This incremental process can allow for marketing content endorsement. Successful results can help build a case for a bigger budget during the next budget cycle.”
How can a brand stand out in customer loyalty?
Vladic reports that a large majority of executives believe that one of the challenges for their brand is that their programs or engagement strategies are not differentiated enough when they compare themselves to the competition. This is an opportunity for brands that plan to introduce new loyalty programs in 2024.
“These brands can learn from all the feedback and experiences that other brands with deployed programs went through,” says Vladic.
For those brands with existing programs, they can start by training program members to embrace the journey as changes are made. Let them know that functionalities and benefits may be introduced, and testing will be part of the process. If partnerships are being considered in a different way, keep members informed as needed.
“As long as your customer is embracing you, then that gives you permission to try new things,” says Vladic. “I want to be very clear. That doesn’t mean customers are giving you permission to bring them something irresponsibly that won’t work, but it does — with the proper cadence and discipline — provide an opportunity to innovate and look for that differentiation so you can truly distinguish your program from the competition.”
Also, there can be tremendous value in looking inside the organization, at the consumer journey, and at the friction at every touchpoint — Vladic provides the example of an abandoned shopping cart. He encourages brands to look at the digital engagement footprint holistically for places where enhancements could be made to the customer loyalty program and potentially drive differentiation.
New Technologies Impacting the Customer Experience
From artificial intelligence (AI) to gamification to leveraging zero-party data, brands seek the best technologies for their programs that offer the most promise for enhancing customer loyalty in 2024 and onward.
“I’m a strong believer in AI,” affirms Vladic. “We are in the early days, but we will start seeing some real use case applications in 2024. It’s only accelerating.”
Vladic sees AI as a deflationary tool because of the capabilities it brings to the table. It can help organizations think about controlling expenses better as a result of the capabilities that AI promises for brands.
“One of the first applications I envision impacting the loyalty space is going to be on the servicing component of those programs — in automation and large language models,” says Vladic. “Then, in 2025 and beyond, we will see more and more AI being used in content creation and curation of that content.”
Personalization in the Coming Year
While AI could be leveraged for content creation, it could potentially generate more personalized offers, discounts, etc., further engage loyalty program members and customers on a one-to-one level and even “in the moment.”
Loyalty360 asked Vladic for experiential rewards ideas that brands could use to drive uniqueness and engagement. He saw many good examples in the last year, from leaving a review to “refer-a-friend” to hosting local events. Photo contests, allowing early access, offering “meet and greet” opportunities, and early bird testing also made the list.
“I would build a correlation to the concept of looking inside the organization,” Vladic says. “When you look at digital engagement with your customer and all the different touchpoints, I believe it offers a lot of content to loyalty marketers to potentially come up with ideas that can truly drive differentiation.”
While Vladic believes it’s still a minority of customers, he sees some as valuing experiences over rewards such as cash-back perks. He also contends that some in the loyalty industry tend to over-index traditional transactional loyalty over emotional loyalty and delivering personalized experiences.
When he looks at the customer base of the majority of brands FIS partners with, he observes a smaller segment of those who are truly appreciating and looking forward to experiential rewards.
“I would argue that it’s probably no more than a quarter of your customer base that is going to be keen on and exclusively using personalized rewards today,” says Vladic. “However, I expect that number to grow over time.”
For a brand to successfully deliver on providing experiential rewards and cultivating customer engagement, careful evaluation and a clear understanding of customers and their preferences are absolutely crucial. It’s easy to make a mistake because many brands have employed a one-size-fits-all loyalty program model based on transactional loyalty for a long time.
“If we claim we truly know the customer, yet we deliver an experience that is irrelevant to them, the damage that can be done to that relationship is much greater,” warns Vladic. “Know your customer. Understand the data you collect — use every opportunity to collect their preferences along the consumer journey.”
All in Real-time
Real-time interactions and real-time payments are growing areas of interest for many brands. Being able to meet customers in the right channel, “in the moment,” is an attractive goal. And yet, it’s challenging due to a variety of factors, such as having the right data, technology, and integrations in place.
Vladic shares that this is an area in which FIS is focused on — embracing the concept of pivot points in real-time. This is designed to bring the customer experience closer to real-time. The success of the concept is feeding the company’s product roadmap, and the FIS team is thinking about those kinds of applications or similar applications in 2024 and 2025.
“On this front, I see ‘in the moment’ messaging as key,” adds Vladic. “Given the fact that we’re all bombarded with a number of messaging and value propositions communicated through so many channels, brands are looking to provide more ‘in the moment’ relevant messaging to the consumer. The right offer at the right time is going to resonate with the consumer.”
See also: Loyalty360 Executive Spotlight: Mladen Vladic, FIS Global
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