With people suffering from loyalty programme fatigue, the benefits and perks offered by brands need to show better value for their customers argues Zac Eller, GM, Global Partnerships, ExpressVPN.
Across industries, there’s a tried and tested method businesses use to keep customers engaged: loyalty programs. Offering rewards, discounts and cashback incentives, these plans have been a cornerstone of customer retention. But times are changing—and loyalty programs will need to keep up.
Over the years, we’ve seen almost every brand jump on the loyalty bandwagon, leading to what many are calling “program fatigue”. Consumers are inundated with loyalty programs, each promising exclusive discounts, points-based rewards and promotional deals. What once gave brands a competitive edge is now a race to the bottom.
Brands need to break this cycle and deliver rewards that provide real utility. Retention now requires offering customers something that adds value to their daily lives, not just when they make a purchase.
Not all that glitters is gold
With the rise of remote working, digital interactions are becoming the norm. As of October 2024, 41% of UK workers work remotely at least part of their week. Whether they work from home or not, people are looking for tools to enhance their digital lives.
While traditional incentives like free trials, one-off discounts and promotional offers may attract customers in the short term, they often fail to drive lasting engagement and value. Once the free trial period ends or the discount expires, customers have little reason to continue their relationship with the brand.
Instead, loyalty programs that cater to the modern-day consumer’s evolving needs are what will foster lasting loyalty. Brands like Dell, Dropbox or HubSpot, which are incorporating digital solutions into their loyalty schemes such as cloud storage, advanced budgeting software or professional learning platforms, are aiming to create a much stronger emotional connection with customers.
Exploring more substantial solutions is the first step to seeing the greatest return. Offering practical, long-term benefits such as digital privacy solutions, online learning subscriptions, AI-powered writing tools, or even access to mental wellness apps can significantly enhance a loyalty program’s value proposition for today’s consumers.
What consumers really want
Gaining a deep understanding of what makes your customers tick and putting that at the heart of your loyalty strategy is key to long-term engagement and loyalty. Think of how seamlessly the iPhone took over our lives or how Spotify became the go-to music streamer. Both of these added value in a very simple way and are now a key part of people’s lives.
A 2024 YouGov survey found that special pricing and monetary rewards were most likely to impact brand consideration, especially among younger demographics. On the flip side, subscription fees and irrelevant rewards were the top barriers that dissuaded Brits from signing up to or continuing to use a loyalty programme.
Loyalty programmes need modernising to provide more relevant rewards based on the world around them. For example, with travel booming again, brands in the travel and hospitality sector have moved quickly to offer perks such as eSIMs, access to luxury airport lounges and free cabin upgrades.
Another example is the rise of fraud cases and cyber attacks and of consumers wanting to protect themselves from these things. As these attacks have become more sophisticated, one of the most valuable additions to modern loyalty in recent years has been digital security. 96% of Americans think online data privacy is important to them, and globally, consumers are becoming increasingly aware of online privacy risks and the need for secure solutions.
Brands need to show their commitment to their customers’ well-being beyond the point of transaction. If they can find a way to bake long-term value into their loyalty programmes, brands can foster trust, build new and existing relationships and gain a competitive advantage.
Create lasting value
The loyalty landscape is shifting, and brands that fail to evolve risk losing customer engagement. To build genuine, long-lasting loyalty, brands must offer meaningful, everyday value through digital perks that enhance productivity, security, and convenience.
By integrating practical everyday solutions into loyalty programs, brands can move beyond just a rewards system and establish themselves as an essential partner in bringing long-term value to their customers’ lives.