Memberships of loyalty programmes with a digital element will increase from 37 billion in 2020 to 48 billion in 2023 globally. The figures are contained in a new study by Juniper Research.
The whole loyalty market in Australia is under scrutiny at the moment with the ACCC suggesting late last year that broader legislative reforms are required to protect consumers using loyalty schemes. The ACCC reviewed local customer loyalty schemes in early 2019, and identified significant problems with the programs which include frequent flyer, supermarket and credit card operators.
A key focus of the ACCC investigation was on how the schemes collect and use consumer data, and how little consumers know about what goes on behind the scenes when they are collecting points for shopping.
The report recommends loyalty schemes better inform consumers, improve their data practices and stop automatically linking members’ payment cards to their loyalty scheme profiles. It also calls for broader changes to consumer and privacy law.
The Junipr study, meanwhile, called Digital Loyalty Programmes: Market Trends, Credit Cards & Retailer Readiness 2020-2025, the study highlights that as economic challenges remain for both consumers and retailers, digital loyalty will become a prized differentiator as retail markets become increasingly commoditised.
The study recommended that retailers adopt digital loyalty solutions that enable them to leverage their abundant customer data to offer omnichannel loyalty experiences; combining offline and online touchpoints. This is critical for ‘bricks-and-mortar’ retailers, which will struggle to recover from revenue lost during lockdowns and increased off-to-online spend migration.
Report author Susannah Hampton says: ‘Leveraging digital loyalty is all about understanding customer behaviour. In markets where QR payments are gaining traction, loyalty must follow, or it will lose out to more locally appropriate solutions. As such, digital loyalty platforms must be highly agile and channel-agnostic’.
The research also found that the total value of mobile coupons redeemed will grow from $51.6 billion in 2020 to $67.6 billion in 2023; driven by increasing QR and app coupon usage. QR coupons will continue to grow strongly in China as QR payments are dominant there, but QR coupon redemption in India and Africa will also grow three-to four-fold in the next 5 years as the appeal of QR widens.
The research estimates that the value of credit card rewards will exceed $68 billion in 2023, driven by increasing competition between providers and the ability to link spending to existing loyalty ecosystems.
The US is expected to remain the largest market for corporate card rewards over the next 5 years, despite a 2020 COVID-related dip, as businesses look for ways to optimise cashflow and harmonise corporate spending.