Shaun Hatrick, Director of Nectar Partnerships

You don’t have to look far to see that loyalty programmes continue to be a reliable and effective strategy for driving customer retention and strengthening brand connection. Across the globe, it’s rare to find a country without some form of established loyalty initiative. From retail, to travel, dining, cinema and entertainment many industries offer compelling examples of how these programmes are being successfully implemented.

But while loyalty may be a fixture of our lives, that doesn’t mean it stands still. Nectar has operated for 23 years, and just in the seven years that I have been with the business, I have seen significant changes to the way our industry works.

Digital transformation sits at the centre, and it has brought with it increased personalisation, stronger engagement and a richer array of rewards and possibilities. The loyalty space has also become more accessible over time, and new players now enter at a rate that would once have been unthinkable.

But amid the influx of new entrants, it is crucial to recognise that competition still allows plenty of room for collaboration and this can take many forms. 

Loyalty is still an important tool for brands

Loyalty represents an evergreen principle, and loyalty programmes continue to do what they set out to do: give brands the power to give back to customers while providing an incentive to choose that brand over others. 

The power of coalition loyalty programmes

At Nectar, we operate a coalition model, where we help partner brands integrate loyalty into their offering. We’re flexible – capable of being the primary loyalty solution or filling gaps for businesses with sporadic customer engagement.

Loyalty programmes sometimes struggle in industries with low purchase frequency. Travel is a good example: infrequent travellers may not always make the most of loyalty programmes because they don’t travel enough to get the same value as frequent travellers.

This is where loyalty coalitions shine. Partnering with companies who sell regularly but perhaps not often, and putting them in a programme among brands that generate frequent everyday purchases, gives consumers the ability to collect points at more locations more often, while both customers and brands enjoy increased value.

Understanding the customer you’re trying to target

Technology has transformed how brands are approaching loyalty, particularly through the vast amounts of data-driven insights that are now available, which constantly open up new ways to understand customers and their expectations. Search insights, for example, provide countless opportunities to dig deeper into customer tastes and shopping habits and gain a fuller understanding of who your audience is.

Customers want personalised experiences tied to the points they’re collecting. They want to know how their loyalty currency can be used and of course, they appreciate it when those uses are perfectly tailored to their needs. Using the knowledge we have on our customers, we can target relevant offers and creatives to achieve new levels of personalisation. 

What’s next for loyalty? 

Five years from now, judging by the changes we have seen already and the opportunities we know are in the pipeline, loyalty will be a whole new ball game, and I’m excited to see what will be next. 

From the conversations I’ve been having, here are the things we should be placing our bets on for the future of loyalty:

Creativity will take centre stage, with a particular emphasis on scaling various creative elements, including copy and animation. Video content is likely to play a pivotal role in this creative surge. 

AI will start to play a more intricate role in how marketing plans are developed and work as a guide for campaign production in the future. 

Cross-industry partnerships will be on the rise, and these will be one of the keys to giving customers ongoing relevance and flexibility through your loyalty programme. 

Collaboration over competition. Not everybody is a rival, and brands and loyalty programmes can work really well together and provide an even more high-value proposition for your customers.

So, while loyalty programmes have lived a remarkably long and fulfilled life to date, there is no indication that they are losing their fundamental value. Instead, they are only becoming more sophisticated, more effective and more flexible. And they also remain that rare thing: a marketing strategy that works better when you open the doors and get others involved.