Close this search box.

PREDICTIONS How retailers and brands will approach customer loyalty in 2023

Image: Fotolia

Each year, InternetRetailing looks ahead to the coming year in a series of predictions. Today, the final instalment in the series explores how industry members see a new level of customer loyalty developing over  the coming year. 

The importance of retaining loyal customers in a challenging economy

Charlie Casey, chief executive of LoyaltyLion, says: “The cost of living crisis, war in Ukraine and Covid-19 pandemic have resulted in consumers tightening their purse strings and being more considerate when making purchases. That’s why in 2023, more than ever, retailers will need to focus on retention over acquisition.

“More and more brands are not just implementing loyalty programs but making them a central part of the user-journey. We see these implementations becoming increasingly more sophisticated and personalised as this trend continues. We expect to see brands signposting their programs more effectively, and creating more targeted loyalty touch points across the customer journey, meaning users are more likely to convert.

“We’ll see loyalty programs being used as vehicles to collect data to further enhance and personalise communications, and programs that promote engagement in between purchases by rewarding social follows, ensuring retailers can build the relationship with customers even when they’re not buying. By focusing on retention next year, brands can make sure they’re the one shoppers save up to spend with. Stores will also reduce acquisition costs, drive organic growth and create genuine lasting relationships that will survive these uncertain times.”

Zsuzsa Kecsmar, chief strategy officer and co-founder of Antavo, says loyalty programmes will be a lifeline during difficult times. “Retailers view loyalty programs as a valuable investment during the potentially upcoming recession,” says Kecsmar, citing Antavo’s Global Customer Loyalty Report of 2023. “In fact, 55.9% of respondents envision the role of customer loyalty as essential or very valuable in overcoming the inflation crisis and a potential recession. Also, 67.7% plan to increase or significantly increase their investments in customer retention. Customer acquisition is generally seen as a less favourable investment.”

Kecsmar adds: “Currently, 55.8% of program owners are satisfied or very satisfied with their loyalty program and say that their rewards program contributes to sales, delivers great ROI, and is popular among customers, a figure that has remained stable since the 2022 report. The reason behind this positivity may come from high returns on investment.”

Boosting loyalty through personalisation  

Eyal Elazar, policy abuse expert at Riskified, says: “In a competitive ecommerce environment, you’ll be hard pressed to find a retailer that isn’t hard at work looking for ways to increase (and ensure) customer loyalty, something which will be of paramount importance as we go into 2023 and economic uncertainty continues. 

“While much is said about personalising the customer experience (from retargeting to customised content to product recommendations) there are areas of the ecommerce shopping experience, like checkout and post-purchase, that also afford very interesting opportunities. Retailers that want to be competitive should make customers feel special by offering flexible payment options and methods and tailoring return policies to recognise and reward loyal customers. The key to winning in 2023 will be embracing creativity and moving away from a one-size-fits all approach at every stage of the purchase experience.”

Harry Hanson-Smith, regional vice president at Dynamic Yield, a Mastercard company, says: “With the increased online traffic from the last few years, brands are spending a considerable amount of time and resources to ensure those new visitors come back. But in a saturated market, it’s critical for a brand to do more to differentiate their business – that’s why a huge focus in 2023 will be leveraging personalisation to bolster retention and build loyalty.  

“Personalisation allows teams to break free from the mould of traditional ecommerce site templates and inject dynamic content, recommendations, messaging, and more that reflects each visitor’s needs and in-the-moment preferences. And we’ll see retailers embed personalisation tactics more cohesively across channels – from the digital, like email and mobile, all the way to the physical, like digital kiosks – to ensure relevant experiences no matter where the customer engages. A brand that manages that will be winning in 2023.”

The role of subscriptions in loyalty

John Phillips, general manager of Zuora, says: “A challenging economic period lays ahead for the retail sector, with many consumers tightening their belts amid the cost-of-living crisis and a looming recession. In 2023, only the brands who have a loyal customer base will be able to weather this storm. Research has revealed that for 88% consumers, it takes three or more purchases to build brand loyalty. One way to achieve numerous purchases and build relationships with customers? Subscriptions.

“Historically businesses that offer subscriptions continue to outperform more traditional product-based models. Through recurring revenue models, retailers can use data to give their customers personalised offerings, making sure they are getting what they want, when they want. By creating tailored, flexible shopping experiences and helping customers to manage their finances in tricky times – by providing the ability to pause or opt out of services, for example – retailers can set themselves ahead of the competition. There’s no sugar-coating that the next year will be difficult for the retail industry however, when used correctly, subscription models can provide reprieve during these concerning times. If past economic downturns have taught us anything, it’s that they can coincide with great opportunity. In 2023, retailers who continue to focus on their customers will be able to not only survive but thrive.”

Oscar Wall, general manager – EMEA at Recurly, says: “In 2023, consumers will lean on the subscription model as a means of payment to avoid any additional costs and spread budgets during the economic downturn. The customer experience throughout the subscription model is positive from start to finish as they avoid dark patterns -which mislead consumers and cause a disconnect between them and the retailer. Subscriptions offer different flexible payment options and loyalty schemes which create a positive customer journey, even when a customer has to leave, this positive experience leaves a lasting impression and  increases the likelihood they will return – a short term loss, but potentially a long term gain.”

Social for customer care

Zarnaz Arlia, CMO at Emplifi, says: “It’s undeniable that the pandemic forever changed the way customers and brands interact with one another on social media. Social customer care has always been in the shadows, but with lockdowns and travel restrictions the invisible cloak was removed as brands soon realised – they just weren’t equipped. This trend isn’t going anywhere anytime soon and we will increasingly see that customers will turn to social media platforms to connect with brands about service-related issues. In fact, a recent survey indicated that two out of three consumers prefer to use social media during the buying process to ask questions, make purchases and seek post-purchase customer support. With growing numbers like these, brands will be looking for ways to harmonise the way customer support and social media marketing teams interact in order to provide the best customer experience possible.

“In 2023 we predict brands will leverage new technology like live video streaming to provide quality service to customers straight from social media apps. Customers will be able to receive the same expert advice they would get in-store from the comfort of where they are. Brands like Orbit Baby are already implementing the power of live-streaming into their social media care strategy. As customers demand immediate responses from brands, we’ll see this trend will be one that will take root long term.” 

The need for focus on first-party data

Bethan Rainford, head of paid media at Vervaunt, says: “We are finally in the last year of cookies, so advertisers need to adopt a first-party approach to be smarter with collecting data. These changes can make it far more challenging for marketers to understand at the same level of detail what is or isn’t working and to quantify the success of their digital marketing investment. 

“Retailers should adapt to the likelihood of having less visibility on their target audiences as most ad platforms will have reduced ability to target based on audience intent and behaviour, and we are starting to see a shift of platforms moving back to contextual targeting, and one benefit of having first party data is that you will be able to build lookalike audiences. Brands should also ensure they are engaging with privacy-centric solutions such as consent mode, GA4 and enhanced conversions as well as adopting the newer campaign types such as Advantage+ across meta which power AI through probabilistic models.”

Read More

Register for Newsletter

Group 4 Copy 3Created with Sketch.

Receive 3 newsletters per week

Group 3Created with Sketch.

Gain access to all Top500 research

Group 4Created with Sketch.

Personalise your experience on