Loyalty programs have long been a staple strategy for businesses seeking to enhance customer engagement, retention, and acquisition. In the United States, these programs have witnessed a dynamic evolution, spurred by changing consumer preferences, economic fluctuations, and technological advancements.
As Australian marketing and loyalty professionals seek to optimise their strategies, there is much to glean from the US experience, particularly in the innovative realm of Card Linking Technology (CLT). This article explores the evolving landscape of loyalty programs in the US, delves into the role of CLT, and offers insights for Australian professionals to enhance their approach. And according to research, 45% of businesses that participated in the 2022 Digital Commerce Alliance Annual Industry Study implemented card-linked loyalty programs in 2022 compared to 34% in 2020.
The Shifting Paradigm of Loyalty Programs
Traditionally, loyalty programs in the United States were synonymous with physical loyalty cards, punch cards, and paper coupons. These programs, while effective to an extent, often lacked the personalisation and seamless experience that modern consumers demand. As economic uncertainties and competitive pressures mounted, businesses were prompted to rethink their loyalty strategies.
The digital revolution reshaped the loyalty landscape, prompting the transition from tangible cards to digital platforms. Mobile apps, email subscriptions, and online accounts became the new vehicles for loyalty engagement. This shift not only offered convenience to consumers but also allowed brands to gather invaluable data on customer behaviour, preferences, and purchase patterns.
In the face of economic challenges, brands began to scrutinise the costs associated with traditional loyalty programs. High printing and distribution expenses for physical cards, coupled with the need for manual tracking and processing, led to a revaluation of loyalty program structures. This prompted a search for innovative solutions that could reduce costs while enhancing customer experiences.
Enter Card Linking Technology
Card Linking Technology emerged as a transformative force in the loyalty domain. Rooted in convenience and efficiency, CLT bridges the gap between consumers’ payment methods and loyalty programs, creating a seamless experience that resonates with modern consumers. By digitally connecting customers’ credit or debit cards to loyalty programs, CLT eliminates the need for physical cards and simplifies the redemption process. Research also indicates that 27.7% of participants in an industry study preferred using card-linked offers and technology compared to 2020, overtaking social media marketing, which was only preferred by 17.5% of businesses.
At the heart of CLT lies its ability to seamlessly integrate with existing payment infrastructure. Through API integration, CLT enables automatic data exchange between payment transactions and loyalty profiles. This automation not only expedites the reward earn and redemption process but also empowers marketers with real-time insights into customer spending behaviours, transaction frequency, and preferences.
Important to note, offers can originate from either your own sources or funded by a third-party aggregator.
Key Benefits of CLT for Marketers
1. Enhanced Customer Engagement: CLT streamlines the earning and redemption process, making it more enticing for consumers to actively participate in loyalty programs. The removal of cumbersome manual steps fosters a stress-free experience that resonates with the modern shopper.
2. Data-Driven Personalisation: CLT’s ability to capture and analyze transaction data enables marketers to craft personalised rewards and incentives. This data-driven approach enhances the relevance of loyalty offerings, strengthening the emotional connection between the brand and the customer.
3. Operational Efficiency: By eliminating the need for physical cards and manual data entry, CLT reduces operational complexities and costs. Marketers can redirect resources toward strategic initiatives, thereby optimising loyalty program management.
4. Seamless Integration: CLT integrates seamlessly with existing payment systems, minimising disruptions to the customer journey. This frictionless experience is essential for encouraging enrolment and active participation in loyalty programs.
The Prominence of Card-Linked Technology
According to the 2021 Digital Commerce Annual Industry study, it was observed that card-linked loyalty programs outperformed a slew of equally critical marketing channels, overtaking social media. The study revealed that 35% of businesses that integrated card-linked programs experienced phenomenal growth.
In terms of year-on-year growth, card-linked technology and loyalty programs made an even bigger impact in 2022. 37% of respondents stated that their card-linked offers and loyalty programs helped maximised their sales by more than 100%.
In addition, a quarter of the businesses that participated in the 2022 Digital Commerce Annual Industry study indicated that their card-linked offers grew from 50% to 100%, whereas 22% of businesses reported a moderate increase in sales from 10% to 50%. These trends paint a more permanent picture for the long run, and it’s pretty clear that card-linking technology is here to stay and will keep on growing not just for e-commerce businesses but for brick-and-mortar establishments as well.
Translating US Insights for Australian Loyalty Strategies
As Australian marketing and loyalty professionals seek to elevate their strategies, several key takeaways can be drawn from the US experience:
1. Embrace Digital Transformation: The success of digital loyalty programs in the US underscores the importance of embracing technology. Australian businesses should invest in user-friendly digital platforms that facilitate enrolment, engagement, and redemption.
2. Prioritise Personalisation: Consumers today expect tailored experiences. Australian professionals should leverage data analytics to gain insights into customer preferences and behaviours, enabling them to craft personalised loyalty offerings.
3. Streamline Operations: The cost-efficiency of CLT serves as a valuable lesson for Australian brands. Exploring technologies that reduce operational complexities can lead to higher ROI and improved customer satisfaction.
4. Seamless User Experience: The ease of CLT integration exemplifies the significance of a seamless user experience. Australian marketers should focus on minimising friction points and simplifying the enrolment and redemption processes.
How Australian Marketers Can Benefit from a Loyalty PPaS.
Loyalty incentives and programs associated with card-linked offers saw a drastic climb in 2022. The growth indicates that more and more businesses will use CLO and CLT as primary sources of marketing, placing them above traditional digital methodologies such as search engine optimisation and social media marketing.
At the Australia Loyalty Association’s 2023 annual conference, it was clear that a number of technologies and solutions are emerging to help Australian loyalty professionals deliver greater experiences. However in a world of adoptable technologies such as Generative AI, NFTs and Automation, it’s important to start with solutions that can leverage tools (both hardware and software) already existing within your loyalty program’s framework. Think of Platform-as-a-Service solutions like OpenSparkz as engines fuelling greater delivery of your program’s benefits
So, what does this mean for you? Adopting card linking technology is not just going to help you drive down your operational costs but it’s also going to help you link your reward and incentives offers directly with your customers’ credit and debit cards, enabling real-time redemption. At the same time, you’ll be able to maximise your customer retention and be able to gather more relevant data associated with the consumer buying journey.
But perhaps one of the best advantages of collaborating with an end-to-end service provider is that there will be no need for merchants to update or modify your point of sale. This can significantly help you mitigate costs, boost the revenue acquired from third-party programs, and enjoy optimised profit margins from your customers’ thanks to enhanced retention and customer experience.
The evolution of loyalty programs in the United States serves as a compelling case study for Australian marketing and loyalty professionals. As businesses adapt to changing consumer expectations and economic realities, Card Linking Technology emerges as a central catalyst for enhanced engagement, personalisation, and operational efficiency. By embracing the lessons from the US experience and leveraging the capabilities of CLT, Australian professionals can navigate the evolving loyalty landscape with confidence, propelling their brands toward sustainable growth and customer loyalty in the digital age.
To learn more about how OpenSparkz’ payment embedded loyalty solution could help transform your loyalty program, contact us today.
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