The Deloitte Consumer Review

The report argues that traditional loyalty schemes require a revamp due to evolving consumer expectations and operational challenges. Loyalty should extend beyond programs to encompass brand recognition and consumer allegiance, with a focus on customer experience as a key differentiator. The report explores seven perspectives, including the need to rethink points-based schemes, embrace personalization, and integrate new technologies to meet digital-era demands. Research highlights that many consumers engage with loyalty programs but often see them as standard rather than distinguishing. A significant portion expresses the need for more than points to drive brand loyalty.

Consumer desires have shifted toward personalized and relevant experiences. Younger demographics, especially, value personalization but engage less with traditional points systems. The advent of analytics and machine learning facilitates personalized consumer interactions, enhancing loyalty in an agile, digital context. Brands are encouraged to develop collaborative loyalty programs, adapting quickly to changing expectations.

In the digital era, consumers are drawn to experiences over brands, amplified by technology's role in shopping habits. While many consumers seek personalization, businesses are also recognizing the need to adapt their loyalty strategies to align with technological advancements. Adapting loyalty programs encompasses providing relevant experiences, integrating innovative tech solutions, and ensuring agile program frameworks.

Despite the challenges, loyalty programs are witnessing increased investment and new executive roles like CCO and CDO are emerging to manage these initiatives. While traditional programs register lower engagement rates among young consumers, businesses are prompted to revamp loyalty strategies to avoid financial liabilities tied to unredeemed points. A move towards experience-based schemes is encouraged, though they pose scalability and transparency challenges.

Ultimately, the report suggests businesses develop flexible, data-driven loyalty ecosystems. Companies are increasingly shifting from third-party schemes to proprietary solutions, employing open-source software and data science to customize offerings aligning closely with consumer preferences. This shift allows for rapid program refinements and more meaningful consumer engagements.

The report concludes by recommending the integration of data science in loyalty strategies, promoting mobile-enabled identifiers, gamifying engagement, and enhancing customer control over experiences. Enhanced customer retention, particularly among younger demographics, is underscored as a key metric for profitability, advocating for equal investment in retention alongside acquisition strategies.