Loyalty Management Market Estimated to Grow at a CAGR of 16.1% During the Forecast Period 2021-2026
Loyalty Management Market size is analysed to grow at a CAGR of 16.1% during the forecast 2021-2026 to reach $17.92 billion by 2026. Loyalty management is a strategic marketing approach in which a company focuses on growing and retaining existing customers through incentives. Branding, customer experience management product marketing, customer retention and channel loyalty marketing are all components of the customer proposition, which is the customer’s subjective assessment of whether or not to purchase a brand based on an integrated combination of the value they receive from each of these marketing disciplines. Since loyalty management revolves around pleasing/rewarding an organization’s repeat customers, developing customer-centric strategies has become necessary to maintain a high customer retention rate, driving demand for loyalty management programmes. Increased adoption of omnichannel and multi-channel programmes, technological advancements, and a growing need for competitive differentiation are major growth drivers for the market. The increasing internet penetration rate, smartphone proliferation, and rising consumer preference for online shopping are all expected to contribute to market growth. Given the ability of advanced AI-based loyalty management platforms to facilitate enhanced analytics and reporting facilities and intelligently reward customers, and as a result, the growing adoption of loyalty management software as a service solutions based on machine learning and AI to enhance loyalty programmes while catering to the growing customer preference for personalization bodes well for market growth.
Loyalty Management Market Segment Analysis – By Deployment
During the forecast period, the cloud segment will grow at a faster CAGR. The widespread use of the internet, as well as the widespread adoption of various technologies such as mobile, web, and social media, have aided in the growth of digital content. Organizations require solutions to better manage and repurpose their native and web-based content, as well as integrate it with other loyalty management systems, such as CRM and marketing resource management, to strengthen their marketing efforts and enable real-time content collaboration among employees cost-effectively for analysis and other purposes. Such solutions, however, are costly and have limited scalability. As a result, companies are more likely to adopt cloud-based loyalty management solutions. Because there are no high upfront costs, these solutions provide all of the benefits at a lower cost. Furthermore, they help organisations with scalability and ease of access to organisational content, regardless of employee location, thereby assisting with business continuity.
Loyalty Management Market Segment Analysis – By Operator
B2C segment is analysed to grow at highest CAGR of 7.2% during the forecast period 2021-2026. Loyalty management solutions are increasingly being adopted by B2C companies seeking to reap the real-world benefits of customer experience management for their bottom line and reputation at the same time. Loyalty management solutions can collect business-critical data to predict and influence potential customer behaviour, from gathering customer satisfaction information proactively to internal sourcing of customer experience (CX) data. Freson Bros., a Canadian grocer, recently prioritised data-driven loyalty by implementing Clutch’s intelligent customer marketing platform and redesigning its existing loyalty programme. The company is likely to outline insights that will help the company reward its customers in a personal and valuable manner using the revamped programme. As smartphones become more prevalent in B2C loyalty programmes, vendors are being compelled to develop enhanced smartphone-oriented programmes. For example, after determining that mobile orders and payments account for 11% of all transactions in the United States, Starbucks launched its mobile app for leveraging loyalty programmes.
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Loyalty Management Market Segment Analysis – Geography
North America is analysed to be the major region with a share of 35.2% in 2020 for the Loyalty Management Market. The region includes developed economies such as the United States and Canada, which have fairly adopted latest tools in domains such as customer data analytics and real-time reporting, in addition to incorporating advanced technologies such as machine learning and AI, allowing organisations in these economies to excel in the loyalty management market space. In North America, the United States has the highest self-reported rate of loyalty programme participation. Over 80% of people in the United States have signed up for at least one loyalty programme in the retail, travel, or hospitality sectors. With the retailer’s mobile applications, the traditional methods for presenting their loyalty enrollment at retail locations, such as scanning a card in-store and looking up by phone number or email, are re-established. Some of the largest loyalty management companies have their headquarters in North America, including Aimia, ICF International Inc, Epsilon, Bond Brand Loyalty, Kobie Marketing, Maritz Holdings Inc., and TIBCO Software.
Loyalty Management Market Drivers
High demand for advanced solutions to monitor customer scores and improve customer engagement:
In today’s business world, a company’s success is determined by the success of its customers. The higher the level of customer engagement, the higher the level of customer satisfaction. As a result, businesses require appropriate software solutions to continuously monitor customer scores. Customer lifetime value ratings, Customer Effort Score (CEC), Customer Satisfaction Score (CSAT), Net Promoter Score (NPS), and Recency, Frequency, and Monetary (RFM) analysis scores are all examples of customer scores. The CSAT score informs businesses about whether their customers are satisfied with their products/services, whereas the NPS score is used to calculate customer loyalty by determining how likely customers are to recommend the brand to others and purchase from the company again in the future. RFM analysis scores, on the other hand, indicate how frequently customer purchases drive the company’s revenue. Customers who are experiencing customer churn or who want to expand their customer base use loyalty management solutions to gain real-time visibility into the health of their customers by using algorithms and rules to predict the likelihood of subscription renewal. The solutions generate customer profiles based on their behaviour and analyse them to gain a better understanding of customer engagement, usage frequency, and subscription utilisation. In turn, the analysis results assist Customer Service Managers (CSMs) in developing campaigns and strategies to target specific customers in order to increase customer engagement, retention, and satisfaction. It also aids in increasing revenue and the economic value of a firm’s investment.
Growing importance of customer insights to predict the customer intents:
Organizations see customer loyalty management solutions as one of the most important tools for identifying customer interests and forecasting purchase intent. The solution’s loyalty analytics feature enables marketers to predict which customers are likely to leave or switch away from a product. The marketer could devise customer retention strategies and offer incentives such as discount coupons or product upgrades. Once the buyer persona has been identified, it is critical to define a customer loyalty strategy that maps all relevant touch points along the customer journey in order to better plan and organise how a company will interact with customers at each touchpoint. This will assist companies in designing and marketing products that are tailored to the needs of their customers, ultimately increasing product adoption and, as a result, the company’s market share.
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Loyalty Management Market Challenges
Stringent government regulations:
Regional regulations have an impact on the liability modelling of loyalty programmes. Various regulations, such as the Credit Card Act and the Durbin Amendment of 2010, are putting pressure on the banking industry to restructure its reward programme portfolio. For example, Ontario’s Protecting Rewards Points Act went into effect in January 2018, changing the loyalty programme and reward point process in Ontario and Quebec, Canada. With the implementation of the General Data Protection Regulations (GDPR) on May 25, 2018, it is critical that businesses understand how it will impact their business policies. Loyalty management programmes are the most effective way to collect consumer data, emphasising the importance of GDPR compliance. The definition of personal data, consent, partners and business communication, and information withdrawal are the major factors that affect campiness loyally programme under GDPR. With the threat of major penalties to a company’s revenue, following effective data protection policies is critical when it comes to compliance.
Loyalty Management Market Landscape
Technology launches, acquisitions, Partnerships and R&D activities are key strategies adopted by players in the Loyalty management market. In 2020, the market of AS-interface industry outlook has been fragmented by several companies. Loyalty Management top 10 companies include
Bond Brand Loyalty
Kobie Marketing
Epsilon
ICF Next
Aimia
Annex Cloud
Oracle
SAP SE
Apex Loyalty
Capillary
Acquisitions/Technology Launches/Partnerships
In January 2021, Flipkart introduced a digital payment option, SuperCoin Pay, to strengthen its SuperCoin Rewards program. The new program provides rewards and benefits to the customers who will shop on this platform.
In February 2020, Aimia Loyalty Platform (ALP) SaaS is now available on Microsoft Azure. Aimia has integrated its ALP SaaS environment with Azure to increase scalability and reach for brands looking for a dynamic customer loyalty management platform. End users have benefited from streamlined deployment and improved platform management as a result of the integration.
Key Takeaways
Loyalty management is used by key companies in a variety of industry verticals, with the primary goal of client retention and the development of long-term customer relationships.
During the forecast period, North America is expected to account for the largest share of the loyalty management market. The region includes developed economies such as the United States and Canada, which have fairly adopted latest instruments in domains such as customer data analytics and real-time reporting, as well as incorporating advanced technologies such as machine learning and AI, allowing organisations in these economies to excel in the loyalty management market space.
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