back icon Back Insights 07/10/2024

Loyalty Program Evolution: Adapting to Changing Consumer Behaviors

The loyalty market is rarely stagnant. After all, in a world that’s become increasingly interconnected—with consumers who can make purchases, share brand recommendations, and redeem rewards all from the single tap of a button—consumer expectations for convenience and value grow by the day. So, it’s no surprise that consumer behavior is actively powering the evolution of loyalty programs. 

What are the emerging trends in loyalty program development? From personalization in loyalty programs to blockchain for loyalty rewards, shifts in consumer behavior have necessitated technological advancements and innovations in modern loyalty programs. Explore how changing consumer behaviors are shaping the future of loyalty programs, with strategies to keep up. 

The State of Modern Loyalty Programs (2024) 

Gone are the days of traditional points-based loyalty programs, which offered customers meager dollar-to-perk ratios with little else to engage them. The past several years have sparked a loyalty program evolution in which simple initiatives have progressed into comprehensive customer retention and engagement strategies encompassing personalized experiences and rewards. 

In fact, 26% of consumers now consider loyalty programs the leading factor in securing their brand loyalty ahead of a company’s website, mobile app, or social media presence. As consumer behavior in loyalty programs becomes more relevant to engagement and spending, multi-channel loyalty programs and advanced technology have taken center stage globally. 

Consumer Behavior Driving Loyalty Program Evolution

All this talk about evolution brings us to the ultimate question: How have consumer expectations changed the landscape of loyalty programs? Now, more than ever, consumers have heightened expectations for convenience and value in loyalty programs, which take the shape of zero-party data, personalized interactions, and seamless experiences across purchasing channels. 

“We rely a lot on what’s called zero-party data, or data directly provided by our members, knowing we’re going to use that data to provide a more holistic and more targeted experience for them,” explains arrivia CMO Jeff Zotara. “What the research shows is that most of our members want a more customized experience overall, and they’re willing to provide us with that data.”

In other words, customer data and loyalty go hand-in-hand. Zero-party data powers personalization in loyalty programs, providing members with perks that are more relevant to their preferences (and more in line with their expectations). This data also feeds artificial intelligence (AI) loyalty programs, which use consumer behavior to tailor rewards and communications effectively.

Technological Advancements Shaping New Loyalty Frameworks

What role does technology play in the evolution of loyalty programs? A huge one. Technology like AI and machine learning (ML) can now analyze member data and predict consumer behavior at light speed, enabling more effective personalization in loyalty programs. AI in loyalty programs is also powering more relevant marketing materials, helping to enhance targeted interventions. 

“What we’re moving toward now is more customized, personalized, and overall optimized user experience, not only on our websites but in the type of marketing that we do,” adds Zotara. “At the end of the day, members are really excited because they’re getting more relevant offers, and they’re not feeling like they’re being inundated with emails that are completely irrelevant to them.”

Beyond AI, blockchain for loyalty rewards is reshaping loyalty frameworks — particularly multi-channel loyalty programs — in a significant way. Blockchain, a technology that maintains a record of member activity and transparent data sharing across a loyalty network, appeals to privacy-conscious consumers by enabling seamless reward redemption and secure transactions.



Strategies for Adapting Loyalty Programs Across Industries

Now is the time for organizations across industries to adapt loyalty programs (and their loyalty technology) to accommodate evolving consumer behavior. For instance, AI chatbots for loyalty programs are on the rise worldwide, enabling brands of all types to personalize member communications, provide more relevant rewards, and power more convenient experiences. 

Industry-specific strategies to adapt loyalty programs for evolving customer behaviors include, but aren’t limited to: 

  • Retail brands can incorporate omnichannel loyalty programs or initiatives that enable seamless rewards earning, redemption, and tracking across multiple channels, such as mobile loyalty apps or mobile wallet solutions
  • Hospitality and travel brands can lean into personalized service offerings that leverage customer data and loyalty preferences, such as AI-powered travel itinerary planners that provide tailored suggestions for travel rewards. 
  • Service-based brands can deploy paid subscription models or tiered membership benefits, such as exclusive savings on products or tier-specific events access, to enhance customer engagement and provide more membership value. 

Looking Ahead: The Future of Loyalty Programs

As consumer behavior continues to evolve, we can expect that the digital transformation in loyalty programs has only just begun. AI is doing the bulk of the legwork in shaping the future of loyalty programs, collecting consumer preferences, and modifying program offerings to be more relevant. However, other types of technology also power the evolution of loyalty programs. 

Augmented reality (AR), a type of interactive technology that combines computer-generated 3D content with a user’s view of the actual scene in front of them, is a strong contender for providing users with virtual rewards, like concert experiences from home. AR can also help connect rewards members on social media platforms, helping to build stronger communities of loyal customers. 

Remain Flexible for Evolving Consumer Behaviors with arrivia 

If there’s one thing you can expect from consumer behavior in loyalty programs, it’s that it’s sure to evolve. For your loyalty program to keep pace with the evolution of the loyalty program, you’ll need to remain flexible. Fortunately, partners like arrivia help organizations across industries innovate and adapt to continuously maintain relevance, market competitiveness, and member satisfaction.

With a full suite of travel benefits, we turbo-charge your loyalty program with unique itineraries, flexible rewards currency, and data-driven marketing based on your consumer’s behavior. Explore arrivia services today to evolve your loyalty program.