As we move into 2025, the loyalty program landscape presents both notable troubles to tackle and emerging trends to harness.
Understanding and addressing these dynamics is essential for creating loyalty programs that are profitable and sustainable for your business and meaningful and desirable for your members.
Troubles
There are many and varied. Here are three on my mind:
1. External: Apathy and fatigue.
Attention anxiety is a real thing. Consumers are hit with a barrage of loyalty programs to join and to engage with. This erodes at their time, energy and emotions.
Question to answer: Is your program (SPV) = Simple + Personal + Valuable?
2. Internal: Loyalty programs are not a magnetic island.
They cannot exist in solitude. They are connected to the brand like an octopus arm. The must feel, look and be part of the brand’s body.
Question to answer: Does your loyalty program’s promise reflect and reinforce your brand promise?
3. Internal: Programs that are only a price-play.
Anyone can do price better. If there is little or no position away from price (discounts/savings/cashback/points for purchase), it’s generic. It’s not sustainable. Move from value to values. Transition from offering mere monetary value to reflecting the brand’s deeper values connecting with your member’s values.
Question to answer: We are the only loyalty program that…. (without mentioning price)*.
(*unless you are an everyday low-price brand)
Trends
Three trends I have been thinking about that minimise the mention of AI, personalisation (hyper), payments/wallets, privacy or fraud (yes they are trending and important).
1. External: Be emotional.
Enhance emotional loyalty. There is finance in feelings. This is where the power of personalisation comes to the fore. The one example that makes it real (for me) is the Spotify ‘end of year wrapped campaign’ which plays on my nostalgia and individuality. It blends data-driven insights with personal storytelling (my songs story) to deliver an impactful emotional high.
Question to answer: How will you create more emotional connections with your members? (Think Joyalty* Moments of Magic)
2. Internal: Brands with programs need a language of loyalty.
This may be random, however this year of consulting has highlighted to me the impact of no common loyalty lexicon. No dictionary, no definitions to align, no direction. Say one thing, mean another. As an example, the clear and present danger of not having a unified definition of ‘activity’ comes up too often. And then the one that is close to my heart – what does loyalty mean to the brand internally vs from the customers point of view.
Question to answer: Do you have a loyalty dictionary? Without defined and aligned terminology, misalignment and miscommunication can undermine program success. Sounds basic, but it works when the language is known, understood and aligned on.
3. External: Community is the new currency. Curate a community connected to your brand. Communities change the focus from members collecting belongings to members connecting and belonging:
Question to answer: Not every brand and their program can foster a community of engaged members, however please ask the question – can we nurture a community of connected customers and members?
Two cases in point are the community in Lego Ideas and their 3 million members and “How the Nike Run Club became a community powerhouse”
Six actions to minimise the troubles and amplify the trends
Here are six actions that focus on the fundamentals (for those with programs) and guide those without loyalty programs, who are planning one.
Some will refer to the Trouble and Trends and others are fundamentals no matter what the Trouble or Trend.
- Check the temperature of your program with the leadership and wider team. Why do we have a program? All aligned, seat belts on, time to shift and lift.
- Do a new or review an old financial model. If you have a model, revisit the inputs for alternative outcomes. If you don’t have a dynamic financial model, do not pass go, do not collect 200. All programs need a financial model that has a P&L, Cashflow and Balance sheet for at least 3 years.
- Focus on metrics with the greatest downstream impact. There are many metrics, however, focus on those with leveraged impact eg net member growth, activity (scan rate), redemptions, incremental ROI - see 2. above.
- Review your proposition with your members. The Six Currencies of Collection loyalty program members care about + Joyalty* Moments of Magic). It will minimise Troubles 1. and 3. It will maximise Trends 1.
- Implement a Loyalty Program Frustration Reduction Plan. Ask your members to rank the 21 friction points of your program and prioritise a Frustration Reduction Plan.
(For the full list of 21 pain points, access the For Love or MoneyTM 2024 report) - The games people play. A gamified experience must be on the list of program engagement, either as a tactic or part of program structure. Loyalty programs are based on games structure, so let them be part of the program DNA.
Summary
- Activate a loyalty program 'Troubles and Trends' working session with your wider team.
- Identify actions to minimise the Troubles or amplify the Trends.
- Create a 2 x 2 grid to assess each action based on criteria eg Investment (high / low) x Impact on defined metrics (high / low)
- Then review by timing and people to make it happen.
May 2025 be the year for your loyalty program to Minimise the Troubles and Maximise the Trends.
Have a happy loyalty 2025!
