The market for the software that drives customer loyalty schemes has exploded in size recently and seems set to carry on growing in the next few years. What are the key figures for this market and what factors will determine which companies are successful in implementing their own loyalty schemes?
The Recent Report
The latest figures come in a report from Straits Research, and it tells us that the customer loyalty management software market size was $844 million in 2021. Their study suggests that it will carry on growing at a compound annual growth rate (CAGR) of 8.9% in the period between 2022 and 2030, which would mean that it reaches a total of $1,820 million by 2030.
While these numbers represent the global situation, the report points out that North America is the most important region, as this is where many of the industry’s key players operate and where important new pieces of technology are expected to come from. The American customer base is also significant, although it’s also worth bearing in mind that 80% of the British population has joined at least one loyalty program.
Examples of Loyalty Schemes
The best way to understand a loyalty scheme is to see how they work in practice. And it’s not difficult to find examples, as some of the largest industries offer them.
The online casino market is a good example, as it’s a hugely competitive industry where the operators need to work hard to stand out from the crowd. This list of the best online casinos with no deposit bonuses confirms that the leading sites offer interesting incentives to encourage people to sign up. A look at the ongoing benefits tells us that some of these casinos have loyalty programs, which are often complex and see users build up points that can then be converted into bonuses or cash. This shows us how loyalty schemes are developing to meet the needs of different industries.
The food and beverage industry also has a high percentage of companies that provide some form of loyalty program. In its simplest form, this allows customers to obtain something free for spending a certain amount. The Starbucks Rewards scheme shows us how this works, as members earn stars for each purchase that they make, and can convert them into free drinks. However, they also add in extra benefits like birthday treats, free refills and the ability to order ahead using their app.
Perhaps the greatest number of different approaches can be seen in the retail sector. Given the huge variety of companies and products, it’s no surprise to see that their loyalty programs are so different from one another. Amazon is one of the biggest names in this market, and they revolutionised it with their Prime subscription service, which acts like a loyalty scheme in many ways but involves paying a fee to join it. Those members who pay to join Amazon Prime receive a range of benefits but also spend twice as much as regular customers.
These programs vary widely, as each company has to decide what they want to offer their most loyal customers as a reward for continuing to use their services while continuing to stick to their key values to build their brand. This can range from discounts to special offers or invitations to VIP events and so on. In addition, the approach varies according to industry, as we can see by looking at a few areas where loyalty incentives are currently popular.
The Way Ahead
All these methods have in common that they use software that makes the whole thing appear simple and intuitive for the customer. Even if the scheme itself is complex and difficult to run, it has to appear to the customer that they’re just getting something free as a reward for being loyal to their favourite brand. Companies can also use these schemes as a clever way of getting hold of extra personal details and information on their customer’s preferences, so there’s another advantage for them.
Since personalization is one of the key factors that keeps people using any loyalty program, we can expect emerging technology like artificial intelligence (AI) and virtual reality (VR) to be used to make solutions that are suitable for each type of person. In fact, it’s technological advances like that that will help to drive the market, as well as the ability of companies to use it to its full potential. We’ve already seen the effects this is starting to have in the current Straits report. It will be interesting to see what news the next report brings.