6 Customer Loyalty Trend Predictions for 2023

Since 2020, businesses have been facing uncertainty and trying to quickly adapt to the pandemic to stay in the market and cater to the shift in customer behavior. And 2023 will be another year of uncertainty too, with economic downturn and geopolitical tension on the horizon.

The continued macroeconomic exhaustion will naturally scare and distract businesses into tightening their spending. But smart business leaders will persevere through distractions and remain focused on their long-term business goals, which include better customer loyalty.

Although there are challenges that brands face when trying to connect with consumers, there are still opportunities for them to provide more meaningful interaction to create stronger relationships. Customer loyalty programs will continue to be one of the successful ways to achieve positive results in the next few years.

Here are some predictions for customer loyalty trends in 2023, based on the insights from various sources and experts:

• Brand switching will be on a rise as consumers look for better deals

As consumers’ disposable income shrinks due to rising prices of food, fuel and other essential items, brand switching is inevitable. This is because shoppers spend more time and energy looking for the best deals and ways to save money. According to recent research, 68% of consumers’ spending has been impacted by rising prices and living costs, which is considerable. Brands will do their best to prevent losing customers to competition via rewards and offers and emotional connections.

• Cashback will increase in popularity

Together with rising inflation, instant and monetary rewards have been well sought after. We’ve seen a rise in enquiries for cashback loyalty schemes from businesses worldwide and Google Trends confirms for this to be reflected in the consumer demand too. The chart below shows a consistently high search interest in cashback reward programs in the past 12 months. This once again shows that easy to grasp reward concepts that require little effort are popular among the consumers. 

• Brands will look for reward partnerships

Reward partnerships have mostly been popular in sectors where it’s difficult to use own products and services as rewards (e.g., finance, insurance, telecommunications). The tightening budgets of marketing departments will however drive demand for reward partnerships outside of traditional industries. Loyalty programs and loyalty points can be a financial burden on any company when the cost of rewards lies solely on one brand. Therefore, we predict that reward partnerships will be popular, as they help to relieve some of the redemption costs. 

Additionally, from a consumer perspective, they provide a more varied and targeted value to customers. Brands offering rewards from other companies recognizes the complex needs and wants of the customer. It means you as a brand show that you value customer loyalty beyond the scope of wanting brand-related rewards.

• The dawn of FMCG/CPG loyalty

FMCG and CPG companies have historically been unable to directly drive customer loyalty without heavily relying on third party sellers and non-trackable advertising. Whilst social media and innovative approach to campaigns have allowed these brands to start communicating directly with their end-customers, customer loyalty in this industry is still in its infancy. Nevertheless, there are now new technologies erupting that will provide the opportunity for FMCG and CPG brands to understand their consumers better on an ongoing basis. There has been a lot of interest in such solutions lately and we predict the results of this will start to dawn in 2023.

• Gamification & new-world rewards

In 2022, we started seeing global brands offering NFT rewards and web3 experiences as part of their customer engagement and loyalty offerings. Surprisingly (or not), they have become very popular amongst consumers and continue to drive engagement, buzz, and PR. This is hence likely to continue and become a more common part of loyalty programs in 2023, along with other forms of gamification.

• Even more seamless experience

The trend of increasingly smoother loyalty user experience will continue. Brands will be exploring new technologies and solutions that help them provide the best possible experience. This means integrations and single sign-on (SSO) connections that allow a true omnichannel experience to consumers, are non-negotiable now. No more siloed technologies and clunky systems.

• Emphasis on savings & providing value

As we’re slowly but surely entering recession, struggling with the energy and cost of living crisis, brands will need to highlight increasingly more how they are helping consumers save money and get better value. Emotional loyalty will be crucial in winning the trust and dollars of consumers. Since money is also tight for companies, brands must home in on the extra value they bring to the table, such as personalised offers that hit the spot, helpful content that answers consumers’ questions, and tangible savings they can make through collecting points or cashback.

Time will tell if these all come to fruition, but one thing is for certain, we’re going to see some serious disruption in the next 12 months. While this will lead to pain for some in the short term, it’ll likely lead to an improved retail ecosystem in the future.

In order to provide a good customer experience and get loyalty from your customers, you need to be dynamic and adapt quickly to the changes and trends in the market. By using the latest technology, you will be able to create new innovative ways to serve your customers that will help you increase your customer loyalty. We hope you enjoyed this blog and found this useful. For more information reach us at www.philomathresearch.com