A Definitive Guide On How Digital Marketing Has Improved Loyalty Program Industry

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A Definitive Guide On How Digital Marketing Has Improved Loyalty Program Industry

Loyalty programs can be traced back to the 1700s and have evolved into a full-fledged industry, adapting over the years to the changes in consumer behavior. In general, loyalty programs follow the loyalty business model, where the company provides customers with benefits, increasing the customers’ loyalty and bringing them back for further business and encouraging word-of-mouth advertising.

Loyalty programs are used by a variety of industries, including retail, entertainment, banking, hospitality, and travel, offering benefits such as discounts, redeemable points, early access to selected products, etc.

Digital marketing offers a significant boost to the loyalty program industry by facilitating two-way communication between companies and consumers, so that companies can revise their product offerings based on feedback from customers. 

Digital marketing refers to marketing conducted through digital forms, including online, on mobile phones, digital display boards, and any other format. As consumers are shifting their focus and time to digital engagements, digital marketing has become an integral part of modern marketing.

How Digital Marketing Has Improved Loyalty Program Industry

The global loyalty management market is expected to reach a value of $201 billion by 2022, growing at a Compound Annual Growth Rate (CAGR) of 4-5 percent. While there is high market maturity in regions of North America, Western Europe, Japan, Australia, Hong Kong, and Singapore, markets in other areas of APAC and LATAM are expected to be growth driving markets. The market for loyalty programs is driven by an increase in online buying culture at a global level and has been further boosted by digital marketing, in various ways.

  • Personalization: Customer loyalty programs are an ideal way for companies to identify which products and services are preferred by customers as they have access to past purchases made. Based on the data, digital marketing can design more personalized advertising campaigns, whether to the same customer or a similar customer base that would likely respond in a similar manner. Digital marketing campaigns can further be planned on the basis of data collected from the loyalty program, bringing in more customers.
  • Avenues for Engagement: Gone are the days that customers had to physically visit a shop to make a purchase; now nearly every market is available online. The change in purchasing patterns also require a change in marketing strategies, but the challenge is that there are numerous mediums of digital engagement so choosing the best option becomes complicated. Effective digital marketing can bring in customers from platforms best suited for a specific company, generating more opportunities for loyalty programs. The data harvested from loyalty programs can in turn also identify additional avenues that can be used for digital marketing
  • Customer Feedback: The relation between seller and buyer has typically been a one-way street, although significant efforts have been made to introduce ways to assimilate and implement customer feedback. Loyalty programs to an extent help provide feedback to companies, but when combined with digital marketing, the scope of customer feedback increases multi-fold. Digital marketing can more effectively engage customers, especially those already a part of loyalty programs, and gain detailed and extensive feedback from customers, in a manner that is convenient for the customers as well.
  • Retaining Customers: Loyalty programs are effective in retaining customers to an extent, however, in the modern market there is immense competition offered by local sellers and even international sellers. Despite existing loyalty programs, customers often turn to competitor companies if there is an appealing deal or product. Digital marketing can help support loyalty programs and aid in retaining customers by promoting products and services that will reduce the appeal of competitor companies. Targeted digital marketing often provides incentives for customers returning to a particular company, increasing the loyalty of the customer.
  • Promoting Loyalty Programs: Digital marketing also directly improves loyalty programs by promoting such programs directly, through a variety of digital mediums. The loyalty program industry continues to reinvent itself, by offering versatile options for customers, and digital marketing plays an important role in conveying the benefits of loyalty programs to potential customers. The role of digital marketing becomes even more critical for e-commerce companies that offer their entire range of products and services through an online model.

Loyalty programs have been in use for centuries, and have adapted to the changes in customer behavior. In the digital age of today, digital marketing has served as a major boost in improving the loyalty program industry, by working in cohesion with loyalty programs. The data amassed from loyalty programs, regarding customer preferences and history is useful for digital marketing that is personalized and relevant.

 On the other hand, digital marketing aids in reaching potential customers and opens a two-way conversation between customers and companies, moving beyond typical feedback. The market for loyalty programs is growing at a rapid pace, driven by an increase in online shopping, especially in developing markets.

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