Digital loyalty schemes are set for rapid growth as retailers strive to differentiate themselves and driver sales.
According to a study by Juniper Research, the number of digital loyalty programme memberships will exceed 32 billion globally by 2026, up from 24 billion in 2022; representing a growth of 33%.
Defined as a solution comprising traditional customer satisfaction aspects, combined with digital technologies and using personalisation and proactive engagement, digital loyalty schemes are increasingly being seen by retailers as business critical, the report finds.
The research identifies digital loyalty programmes as of particular criticality to customer retention within highly competitive grocery and QSR (Quick Service Restaurants) areas. To date, innovation has been constrained to the largest vendors in these verticals. However, the proliferation of digital loyalty vendors means that smaller businesses now have access to digital loyalty platforms.
To take advantage of this opportunity to improve customer loyalty, the report recommends that digital loyalty vendors must provide the ability to customise and personalise all aspects of the communication and checkout processes.
The research estimates that growth is slowing in the loyalty cards market, as loyalty programmes switch to be digital focused. It forecasts that the loyalty cards market will stagnate, with growth in the number of cards in circulation of only 5% between 2022 and 2026; reaching 7.6 billion in 2026 globally.
Research co-author Nick Maynard explains: “Digital engagement and personalisation using AI means that traditional loyalty cards are no longer wholly necessary. Traditional loyalty card vendors must pivot towards digital solutions as an urgent priority, or they will lose out.”
In a highly competitive market such as digital loyalty, technology is fairly standard at this stage of market development. Accordingly, partnerships are coming to the fore as differentiators. Platform providers must focus on identifying and agreeing the most valuable partnerships, in order to make their ecosystems appealing.
