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A customer loyalty program is simply the best way to ensure strong customer retention, which is a crucial goal of nearly every business. However, not all customer loyalty programs are the same and loyalty program trends are constantly-evolving, especially after going through the pandemic and facing the current economic uncertainty.

In this post, we're covering the latest and greatest customer loyalty program trends and what that means for your business. Top trends for 2023 include:

  1. Prioritizing Engagement Will Drive Retention
  2. Consumers Want Personalization in Their Rewards Programs
  3. Easy-to-Use Customer Loyalty Programs Will Flourish
  4. Advanced Analytics Will Be A Significant Investment
  5. Gamified Loyalty Programs Can Have a Big Impact on Consumer Behavior
  6. Tiered Loyalty Programs Offer an Elevated Customer Experience
  7. Nurturing Emotional Connection Increases Customer Loyalty

To provide all this, we've collected some of the recent data on customer loyalty trends and called on two of Friendbuy’s enterprise CSMs (customer success managers) to offer their expert interpretation and advice.

7 Loyalty Program Trends That Foster Customer Retention

Customer loyalty means that your customer returns to your brand, over and over again. Your loyalty program should engage your customers and build a relationship that keeps them coming back for years to come. In fact, according to McKinsey, customers were 43% more likely to buy weekly after joining a loyalty program. Here are seven trends to support your customer loyalty program and lock in that long-term retention.

#1: Prioritizing Engagement Will Drive Retention

One of Friendbuy's senior enterprise CSMs, Ryan Caviston, highlights that retention will be the number one goal for loyalty marketing over the following year. "Merchants are beginning to realize that it is significantly cheaper to retain a customer than it is to acquire a new one," says Caviston.

How much cheaper?

Harvard Business Journal writes that acquiring a new customer can be anywhere from five to 25 times more expensive than retaining existing ones.

One study from Bain & Company says for financial services, a 5% increase in customer retention produces more than a 25% increase in profit.

This may seem like a fairly intuitive concept — it's far less work converting someone who already knows and likes your product versus brand new customers who you have to find and explain your product or service to. 

However, it’s not just businesses that want the biggest bang for their buck, either. Both businesses and consumers are laser-focused on getting the most value out of their money. And that means retention is top priority.

What this looks like in practice is a bit more challenging. According to a report from Harvard Business Review, 80% of participants said they would try a new brand in 2023 if they thought it could help them achieve their goals. A few ways businesses can do this is by helping customers build healthy habits, introducing new products, assisting in financial goals, prioritizing value in their offerings, and supporting socially responsible initiatives to retain customers

Conversely, that means customers are more likely to leave the brands they're currently using if they don’t help them achieve their goals.

To make the most of this trend, find new ways to engage your customers so your retention stays strong. For example, brainstorm creative earning events that encourage customers to do things like subscribe to your email and SMS messages, or attend an event.

You can see how we helped Botanic Tonics prioritize engagement in their earning events:

botanictonics loyalty program ways to earn points (1)

Our loyalty program software supports customer retention by keeping your customers engaged.

#2: Consumers Want Personalization in Their Rewards Programs

These days, the market is flooded with loyalty programs (in statistical terms, more than 90% of companies have some sort of loyalty program). With that kind of competition, just having a basic loyalty program won't cut it for holding onto your customer base.

Instead, companies that create a personalized customer loyalty program that truly understands the needs and desires of their customers will have the best chance at keeping their most loyal customers happy. The proof? A study from Redpoint Global found that of 1,000 U.S. consumers surveyed, 74% noted feeling valued and understood as the key component in a brand loyalty program. 

Plus, a study from Bond found that 87% of customers were interested in having a loyalty program monitor their activity and behavior for more personalized rewards or engagement. Rewards programs that allow consumers to choose the rewards they personally want will continue to drive higher customer satisfaction in years to come.

"Underperforming loyalty programs are often due to a bare-bones experience with rewards that don't align with customer expectations," says Caviston.

For a greater impact over the next two to three years with your loyalty strategy, Caviston recommends you "place a greater emphasis on benefits, such as free products, experiences, and early access, which go beyond the typical coupon reward model."

Some examples of what personalization could look like in your loyalty program include:

  • Personalized gifts or event access based on interests.
  • Sending a personalized thank-you message.
  • Offering personalized suggestions or product recommendations based on previous purchases.
  • Using customer location to offer specific location-based recommendations, events, or store information.
  • A personalized dashboard to track purchases and rewards (like the personalized dashboard Friendbuy provides loyalty customers).

ann marie loyalty program account page

Take Annmarie Skin Care as a shining example of personalization. The brand integrates their loyalty program seamlessly into their customer experience. 

A beautifully designed, easy-to-navigate, personalized loyalty dashboard blends in so well that it feels like a natural extension of Annmarie’s shopping experience.  And that’s how it should be.

That’s where Friendbuy shines. Our team helps brands craft a brand-aligned, user-friendly experience.  And we do it with speed and expertise.

#3: Easy-to-Use Customer Loyalty Programs Will Flourish

Put simply, the easier brands make it to earn rewards, the more they'll increase brand loyalty. Let's break this down a bit.

If the average customer has to spend ten minutes entering purchase information on a desktop-only customer loyalty platform to earn loyalty points or rewards, they are going to move on to other brands that make it easier.

"The more hurdles that we put in front of a customer, the more difficult it becomes," explains Ivette Muller, one of Friendbuy's Enterprise CSMs.

Businesses that develop intuitive loyalty programs, enabling repeat customers to effortlessly record their purchases across various platforms - be it in-store or on a mobile device - are poised to become the preferred brands among consumers. 

Muller offers e.l.f. Cosmetics as a good example because they allow customers to earn rewards on all purchases regardless of where they buy the product. "So for example, if I go to Target or anywhere and get an e.l.f product, I can upload my receipt to the rewards platform and get my points even though I didn't shop online."

While ease of use has always been a priority, consumers are flocking to these easy, stress-free loyalty programs as attention spans continue to decrease. Now, we have just 8 seconds to keep a customer engaged before they move onto something more interesting. 

In practice, companies continue to make loyalty programs easier through things like card linking, fully integrated mobile apps, omnichannel strategies that allow customers to access the loyalty program from multiple touch points, and rewards that are easy to find and redeem.

We worked with ALOHA Collection to make it easy for customers to track and redeem their rewards right from their account page.

aloha loyalty rewards desktop (1)

#4: Advanced Analytics Will Be A Significant Investment

The right customer data and analysis can track your ROI, help get even more value from your customer loyalty program, and can help you make that program even better for the customer. 

So what type of analytics are we looking at? Here is some of the common information to track in your loyalty program:

  • ROI (Return on Investment): A measure of the profitability of an investment.
  • Redemption Rate: The percentage of customers who use a given coupon or reward.
  • Enrollment Rate: The percentage of customers who sign up for a program.
  • Repeat Purchase Rate: The proportion of customers who have shopped more than once.
  • Average Order Value (AOV): The average amount spent per customer transaction.
  • Active Engagement Rate: The percentage of active users interacting with a product or service.
  • Net Promoter Score (NPS): A measure of customer loyalty based on their willingness to recommend a company.
  • Basket Analysis: A method to understand the relationships between products purchased together.

But detailed analytics like this often come with a heavy lift (and price tag) as businesses try to understand the data behind customer behavior.

Muller notes how users access performance analytics is an important factor. "Given the current state of SaaS, people want to make sure they're getting an ROI," says Muller. "We have the data, but it needs to be on the dashboard, easy to find, and easy to query."

loyalty member purchases and revenue

This is where sophisticated loyalty program software comes into play. A platform that allows brands to slice and dice the data on their customer loyalty program and take action based on that data is invaluable. Friendbuy makes data analytics an easy and automated process by displaying real-time data from your loyalty program on the platform. 

loyalty earning events and points dashboard

#5: Gamified Loyalty Programs Can Have a Big Impact on Consumer Behavior

Gamification in loyalty programs refers to the application of game-design elements such as points, levels, and rewards in non-game contexts, like customer loyalty programs, to enhance customer engagement and incentivize desired behaviors.

Harnessing that game-like excitement in your loyalty program can make your customers even more excited to purchase from you and influence the way they make purchases. It can even become addicting.

In fact, it’s a powerful way to get around the 8 second attention span mentioned earlier. By locking consumers into a cat-and-mouse game, where the consumer is the cat and the reward is the mouse, brands can keep their customers engaged beyond 8 seconds.

Muller offers the Starbucks rewards program as an example. "I am obsessed with my Starbucks rewards." Why are Starbucks stars so addicting? It's gamified. You can get bonus points for different actions, boosters for certain events, and you can strategize to get the best deals. "My behavior is changing based on what the rewards will be because I do the math and I really game the system to get my stars," says Muller.

If you can turn your customer loyalty program into a game that people want to play, you can harness that competitive spirit in people and influence customer behavior. Bond's 2019 Loyalty Report noted that 53% of consumers say they're interested in using game mechanics in loyalty programs. Further, a survey from Colloquoy found that 27% of millennials continued participating in a loyalty program because it featured a competitive game or social element such as leaderboards or communities.

#6: Tiered Loyalty Programs Offer an Elevated Customer Experience

Tiered rewards programs work because they make the customer's comfort the highest priority. Tiered loyalty programs incentivize consumers to stick with you and it makes your most loyal customers feel that much more appreciated.

Muller gives the example of Hilton's tiered loyalty program, which provides an array of perks once you achieve a certain loyalty level. Programs that let loyal customers feel like VIP members will continue to flourish over the next few years. Especially for industries where experience and service is high priority, these types of loyalty benefits appeal to customers because they make life easier and more comfortable.

Offering rewards like exclusive access, premium customer service, or exclusive gifts can further delight your customer, increase brand loyalty, and overall improve the customer lifetime value.

See how we helped OLLY create a tiered rewards program that optimized customer engagement.

olly loyalty program landing page tiered rewards-min

#7: Nurturing Emotional Connection Increases Customer Loyalty

There's increasing demand for businesses to be more than just a company — consumers respect businesses that support noble causes too. Customer loyalty program trends show that brands can build on this emotional connection by offering rewards that align with the customer's values.

While prices, discounts, customer service, and quality products all nurture brand loyalty and help retain customers, emotions can be equally if not more powerful for retention. If consumers feel good about your loyalty program and your product, they'll stick around and advocate for your brand.

Want the numbers? Bond's 2022 Loyalty Report found that when your brand purpose aligns with customers' values, consumers are:

  • 63% more likely to do businesses with your brand
  • 3.4 times as likely to be advocates for your brand
  • 9.9 times as likely to spend more with your brand.

rei loyalty program example

One example of a brand that's emotionally connected to its customers is REI Co-Op. The Co-Op's paid loyalty program sells lifetime membership for a one-time fee. While customers have to pay, REI makes it feel good for the buyer by showing how this membership makes them part of a community that's making a difference in the outdoors. According to its site, REI Co-Op has over 21-million members.

Brands Leading Customer Loyalty Trends

If you want more examples of companies nailing customer loyalty right now, our experts highlighted these top brands leading the charge:

See even more loyalty program examples with more details about how to put these trends in action.

Closing Thoughts

From small businesses to the large corporate companies, loyalty programs that are personalized, easy to use, and connect with the consumer on an emotional level are prime for a positive ROI. These trends, when effectively implemented, can significantly enhance customer loyalty and drive a positive return on investment. 

Let Friendbuy help your brand stay ahead of these trends and continuously innovate our loyalty programs to meet and exceed customer expectations. Learn more about how a loyalty program can earn your company more money. Schedule a call with Friendbuy today.