Digital marketing can be defined as any form of marketing that takes place over digital mediums such as mobile phones, the internet and more. As people are shifting towards a more digital-based lifestyle, marketing has correspondingly shifted to digital medium as well. Recent trends are showing the impact that digital marketing has had on the loyalty program industry as well.

The concept of loyalty programs has achieved massive success in the years since they have gained in popularity. Loyalty programs are based on the loyalty business model under which a quality product or service results in customer satisfaction and subsequently customer loyalty that circles back to further purchase. Loyalty programs most commonly use a loyalty card or a club card or rewards card on which customers can gain points and benefits, motivating the customer to return to the same establishment in the future. Such loyalty programs can be witnessed across industries, ranging from travel and hospitality to retailing and entertainment and other industries in between with varying rewards, benefits and schemes.

Apart from bringing benefits to the consumers, the businesses offering loyalty programs also stand to gain significantly. Not only does the business gain a loyal customer, but they can also retrieve valuable insight into the popular products, and choices of consumers, based on the purchase history of the customer. This insight can help businesses in planning future products and services. Common forms of loyalty programs are frequent flyer miles offered by airlines, club cards by wholesalers and other forms of loyalty cards by retailers/restaurants, etc.

Ways Digital Marketing Has Changed The Loyalty Program Industry

Loyalty Program Industry

The Loyalty Program Industry is expected to reach a value of around $201 billion by 2022, growing at a compound annual growth rate (CAGR). The regions of Western Europe, North America, Japan, Singapore, Hong Kong, and Australia have high market maturity while other parts of APAC and LATAM are expected to be future growth drivers for the market. Key drivers for the market are the growth of retail and e-commerce in emerging markets. Use of loyalty programs is expected to further expand into the financial services, food and beverage, and consumer product industries.

The loyalty program market will further be affected by digital marketing in various ways.

Availability of New Insights and Data

Loyalty Program Industry

One of the major benefits of loyalty programs is that businesses can access direct data from the customers, which is authentic and organic. However, when businesses scale up, the amount of data collected becomes massive, in which case digital marketing can prove a valuable resource. Digital marketing and the use of large data tools can help maximize the use of a given set of data or from a specific set of customers as the data collection process becomes digital and more manageable. Based on the feedback data collected, businesses can adapt their digital marketing strategies to further grow the business.

New Engagement Avenues

Loyalty Program Industry

Digital marketing expands the scope for loyalty programs drastically, by enabling the use of similar programs in the digital sphere. Businesses can engage with customers online, through social media, mobile apps, and many more ways, utilizing the presence of customers on digital mediums to further the business market. The same pattern of engaging and rewarding customers can be carried out online, removing the need for customers to be physically present at the business, and thereby increasing the size of the potential customer base. Based on the response of the customers, digital marketing strategies can be adjusted in real time.

Targeted Marketing

Loyalty Program Industry

Digital technology has enabled the use of cost-effective Targeted Marketing, specified on the basis of the customer’s needs and preferences. By combining digital marketing with loyalty programs, the specific needs and preferences of customers can be easily identified and targeted, resulting in an overall more successful marketing process. Customers are also more likely to respond to marketing attempts by businesses with which the customers have loyalty programs.

Real-time Tracking

Loyalty Program Industry

One of the drawbacks of the traditional forms of loyalty programs was that customers could not always access the status of their card and points in real time. A long gap between purchases and visits to the business would tend to detrimentally impact the loyalty program. New technology accompanying the latest forms of loyalty programs include options for real-time checking of the loyalty card status. Digital marketing can use this history strategically in extending further offers to customers and spark interest in customers that were otherwise inactive.  

Loyalty programs have been a successful business model for years, helping businesses build a steady customer base while customers reap the benefits offered by the loyalty programs. The emergence of digital marketing in the modern age has changed the loyalty program industry as well, proving greatly beneficial for both businesses and customers. The use of digital marketing with loyalty programs makes such programs easily accessible, and the data more convenient to analyze, resulting in better-targeted offers for the customers.

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