2014 predictions for Loyalty – do you agree?
It wouldn’t be the New Year if we didn’t have countless files open with predictions from experts about what to expect in the coming year.
This year is more unpredictable than most. No-one knows how the surging use of mobile will affect the loyalty business, but one thing is becoming extremely clear. Loyalty programmes, points collection and redemption will be key drivers for mobile wallet and mobile payment adoption.
And keep reading to the end of the article because we have a number of 2014 predictions from the president of PayPal, David Marcus. As his predictions for 2013 were pretty good, he is definitely one soothsayer to bear in mind.
Another area that is of key important to loyalty is the use of big data analytics to understand customer behaviour and point out trends.
Dominic McNamara, Global Leader of Hydrogen’s Technology Practice, said, “Technology is being talked about much more by the wider business community, especially in the US and UK which are seeing major investment into big data companies. It is no coincidence that these two countries were also voted the top two destinations for tech professionals in Hydrogen’s Global Professionals on the Move report this year. The best global candidates are at the forefront of this rapidly evolving trend that is having a huge impact on business as a whole. The industry is now extremely powerful and professionals are travelling overseas to capitalise on their expertise in new markets.”
Building on major industry shifts such as mobile, social, cloud and Big Data, Sabio emphasises the transformative role that technology needs to play in improving service performance levels – as well as unlocking real operational savings within customer service operations.
Sabio’s Founding Director, Adam Faulkner gives his top ten technology trends for 2014:
- Mobile apps set to bypass traditional IVR processes – Smartphones and mobile apps now give users the chance to bypass traditional IVR processes and start interactions straight away. 2014 will see mobile apps combine with services such as callback and web chat to make engagement even easier for customers
- Web-enabled omnichannel engagement – Today’s consumers are more demanding than ever, using ‘always-on’ multiple digital channels to interact, connect, share and shop. Organisations that provide consumers with a seamless, omnichannel delivery will have an advantage in 2014
- Equipping agents to deliver social media support – While voice remains the primary touch point for many, organisations are increasingly relying on the contact centre to manage other contact channels such as social media. The key to success here is making sure agents have the tools in place and the training to resolve issues quickly
- Putting Big Data to work –Today’s contact centres generate essential Big Data feeds including ACD data, CRM systems, call & screen recordings, customer feedback, speech analytics outputs, and social media inputs to external databases. Technologies such as web and speech analytics will unlock the value inherent in unstructured contact centre data
- Virtual Agents – When it comes to successfully challenging contact centre demand, one innovation set to have an impact is the use of virtual, task-oriented assistants for enterprise. Unlike personal assistant technologies such as Apple’s Siri, enterprise personal assistants can offer real domain expertise thanks to close knowledge base integration
- Optimised ‘Contact Us’ strategies – In 2014 more organisations will challenge demand levels by deploying Embedded Service solutions on their websites to streamline engagement. The goal is to pre-qualify queries – ideally resolving them with relevant information, removing the need for formal contact. Adopting such an approach requires a well-integrated customer contact infrastructure, but the benefits are significant in terms of challenging demand
- Seamless Contact Centre security – Contact centres are often caught in the middle of the growing conflict between the compliance and customer service functions of a business. The application of innovative technologies – such as voice biometrics and speech analytics – can help achieve compliance goals while still delivering a level of seamless customer service
- Acting on Customer Feedback – Capturing customer feedback is great, but it’s what you do with it that really distinguishes an organisation. There are multiple ways of collecting feedback, however it’s essential not just to collect scores but also capture customer comments to gain a sense of what customers actually think
- Knowledge Management – effective Knowledge Management plays a critical role when it comes to addressing customer queries online – particularly when it’s powered by near real-time knowledge base updates from the contact centre. Look for more organisations taking this approach in 2014
- More effective Call Steering – Bad IVR systems can undo multiple productivity gains – often leading to increases in transfer rates of up to 10%. Streamlining the experience by applying intelligent routing to each stage of the process will contribute directly to an improved customer experience
“With digital now the default starting point for many consumers, it’s essential for organisations to have a single, integrated view of customer engagement across multiple channels. However, the reality is that there’s a growing gulf between customer expectations and service providers’ ability to deliver,” commented Sabio’s Founding Director, Adam Faulkner. “2014 needs to be the year that organisations actively close this gap, and they can start by taking advantage of the opportunities presented by our top ten technology trends.”
Unstructured data will finally yield insight
Richard Owen, CEO of Satmetrix predicts: “It’s becoming more and more possible for even smaller firms to access the rich wealth of information found in unstructured data, notably in social media. Smaller and medium-sized business can use social data to benchmark themselves against larger players in their industries. For example, a local bank with five branches can gain a lot of value by learning how the largest 20 banks are executing on the root causes of what creates Promoters and Detractors.
Smart companies are preparing to operate in a world where more and more competitors are jumping on the customer experience bandwagon. They’re sharpening their surveys and tapping into unstructured data; I look forward to seeing how many companies adopt this approach.
Hadas Sheinfeld, VP of product management for In-Page analytics pioneers ClickTale, (now numbering over 80,000 clients), has observed several growing trends, including:
- M-Commerce Makes its Mark – Although the hype about mobile began several years back, revenue generated from mobile shopping grew tremendously in 2013, forcing companies to finally focus on optimizing their mobile websites. However, ClickTale feels that we have not yet reached the peak of the mobile trend. In 2014, tablets and smartphones will play an even greater role in commerce, with much more diversity in the types of devices used. With Android growing and devices like “phablets” and convertibles hitting store shelves, the market is diversifying and moving forward.
- A/B Testing and Usability Become Core Issues – There is now a much greater awareness of website usability and its importance to online business success. Companies have come to the realization that simply gathering ‘big data’ is not enough, and that they must actually conduct tests to understand what’s working and what’s not. As we enter 2014, ClickTale expects analytics tools to move to the next step and provide not just data, but real actionable insights that can be translated to website improvements and the achievement of business goals.
- Web Analytics Goes Pro – 2013 was the year in which analytics became a true profession, with e-commerce businesses launching analytics departments and seeking increasing numbers of analysts. In 2014, ClickTale expects to see greater investment by organizations in this area, on both personnel (hiring, training and building dedicated teams) and tools/infrastructure to support their business needs.
- eCRM agency Underwired, whose clients include Sony, ASICS, Travelodge and Marks & Spencer, has identified a shift in consumer attitudes towards loyalty programmes where customer experience is increasingly valued over traditional points-based schemes.
Proving the case for loyalty programmes
Recent research shows that 86% of UK adults own at least one loyalty card and 29% carry five or more. A recent survey by Plastic Card Services has revealed that shoppers save an average of £100.32 a year by using the loyalty points they have built up but shoppers are still sitting on £351m worth of unused points annually, an indication that the value seen in these rewards is dwindling.
Underwired believes that the only brands to succeed in the future will be those that put customer insight at the centre of their marketing activity, rather than putting loyalty programmes ahead of real customer loyalty.
Here are the four elements, identified by Underwired that brands will need to embrace in the future:
1. The heart rules the head. Neuroscience is revealing new insights into the role played by emotion in influencing seemingly rational activities such as our purchase decisions. What’s really interesting is the extent to which this happens without our being consciously aware of it. Consequently brand owners need to consider the emotional ‘story’ as much as the rational argument.
2. If you have to buy it, it ‘ain’t’ loyalty. A programme that serves to ‘buy’ desired behaviours can provide short-term gains but is just not sustainable as brands find themselves having to out-gun the schemes their competitors set up in response. Simplistic points-based mechanics are easy to imitate and easy to exceed. If one brand can buy loyalty one week, so can a competing one the next. The net result is that you risk being left with a programme that has become an undifferentiated commodity.
3. What’s the real value? Given the cost of loyalty programmes, they can dilute profit and drain resource with little positive effect on consumer consumption habits, simply mirroring existing behaviours amongst existing customers. Furthermore, loyalty programmes can cause brands to waste huge volumes of rich data – viewing customers as blunt generalised groups understood only in terms of functional behaviours.
4. Loyalty is the outcome. It’s important to view loyalty as an outcome of a wider customer strategy. True loyalty is the natural result of ensuring your customer experience is strongly aligned with the needs and motivations of your consumer and understanding what they value most. True loyalty meaning; earned not bought, difficult to replicate, enduring, emotional not simply functional.
Taking a look at the year ahead, Underwired’s Planning Director, Tim Williams, explains the approach brands will need to embrace to achieve sustainable customer loyalty (and a lot else):
“As the airline industry discovered to its cost some 20 years ago, consumers have come to regard traditional loyalty programmes as something of a hygiene factor – one which is expensive for the brand owner to maintain and increasingly ineffectual in actually promoting loyalty.
A smarter strategy, that is both simpler and more differentiating for your brand, is to focus on the key aspects of the customer experience that matter most to most people. Consider where is the greatest risk for something to go wrong and conversely, where is the greatest opportunity for something to go right?
Act on this insight and you will find yourself having created a highly effective loyalty programme almost by default.
Not only that, but as a bonus you will also have created a sound basis for your acquisition, retention, win-back, social media and advocacy strategies.’
Paypal President David Marcus gives retailers the lead
Because sometimes it is necessary to watch what is happening outside of one’s immediate area of concern, here are predictions from David Marcus, President of PayPal.
Last year he highlighted four “thought starters”—the continuing lack of adoption of NFC technology at the cash register; the merger of payments, loyalty programs, and coupons; the rise of mobile cash registers, and the beginning of location-aware, context-relevant shopping and payment experiences. He didn’t do too bad did he? So here are his predictions for 2014.
1. Traditional retail fights back
In recent years, technology innovation from companies has disrupted traditional retail by making it easy for consumers to browse in a store and then buy online at the cheapest possible price. It’s a practice called “showrooming” and in-store merchants understandably hate it. This year, retailers will start leveraging and converting their retail footprint into logistical assets to enable shoppers to buy anywhere they want: in-store, on mobile, and on the web, and get fast-delivery, or pick-up in store the same day. Local will be more important than ever – and from our perspective we couldn’t be more excited about innovations like PayPal Beacon which will transform the retail environment for your local main street by bringing back opportunities for personalized service all driven by mobile.
2. Mobile will transform commerce forever
If you work for a payment technology company, this prediction won’t be a surprise. But many consumers are just beginning to experience the freedom, flexibility, and fun of mobile payments and shopping, and they’re going to want more. This will lead to a flood of new payment experiences built on technologies such as sensors, geolocation, and the cloud that will soon make standing in a long checkout line and paying with a card seem like something out of the Stone Age.
3. iOS and Android will drive a retail revolution
Last year, I predicted the beginning of the end of the fixed-location cash register in favor of mobile checkout technology. In 2014, the entire retail infrastructure will follow suit. And why not! In less than four years since the launch of the iPad, tablets have become a fixture of our everyday lives. This year, they’ll become a standard tool in retail environments too, and merchants will use them for everything from Point of Sale to inventory, fulfillment, customer relationship management, and more.
4. Bitcoin will continue to gain ground (but not as a currency)
Bitcoin will continue to attract more people as a store of value and a speculative investment asset. I predict that the value of Bitcoin still has the potential to double (as of December 11, 2013 at 8:08 AM PT: 1 BTC = 915 USD) by the same time next year. But I believe it will have a hard time becoming mainstream as a currency, due to its expected continued volatility amidst regulation authorities and governments figuring out what to make of the cryptocurrency.
5. The year of disruption . . .
I love disruption—it’s when rules get broken and new ideas are born and tested that things get interesting. This trend has been gathering momentum over the last year or so as smaller players in the payments industry power a wave of startups that use mobile payments to fuel segment-transforming new business models. (Full disclosure: PayPal recently acquired Braintree, which provides the payment technology engine behind disruptive startups like Uber, Airbnb, and OpenTable.)
In 2014, you’ll see larger payments entities scramble to accelerate the pace of their innovation to catch up to these smaller and more nimble competitors. Meanwhile, smaller players will scramble to achieve the scale and experience needed to compete in a global business. As a result, billions of dollars will be at play in the payment industry, and 2014 will be a year of game-changing disruption.
6. . . . and consolidation in the payments industry
Our industry has a lot of players. Too many. No doubt there’s a ton of great innovation out there, but a lot of it works better in combination than on its own. And some of today’s bright young firms will never achieve the scale to survive without joining forces with someone bigger. This will lead to a wave of acquisitions in 2014. Meanwhile, new alliances will create intriguing partnerships that span payments, retail, and more. It simply won’t be the same industry in 12 months that it is today.
Whether you agree with these predictions or not, you probably won’t argue with the view that the industry is in the midst of incredible and exciting change right now and that 2014 is going to be an interesting year.