Ninety-one percent of consumers say that many loyalty programs feel similar. Often belonging to many in the same category. To stand out, digital loyalty leaders must move beyond tired discounts and embrace innovation — enhancing engagement, integrating payments, and delivering real value.
Here’s how forward-thinking companies can break free from the “business as usual” trap and redefine loyalty for the modern consumer.
1. Customer engagement & retention
Concern: Ensuring the program keeps customers active, engaged, and incentivized to return.
Status quo: Adding more discounts for marginal returns, eroding margins.
Innovation: Personalize rewards without sacrificing margin. Offer loyalty perks like early access to sales, limited editions, or exclusive experiences. Zero-party data can guide low- or no-cost rewards that are meaningful to your customers.
2. Seamless user experience
Concern: Creating a frictionless, intuitive digital experience for earning and redeeming rewards.
Status quo: “If it isn’t broken…” Inertia can kill a once-vibrant program. Loyalty programs can quickly move from being the crossroads of tech, loyalty, and CX to being the collision of opposing forces. Tech elements can take months, launches slow, and pushback from customers who don’t see the value in change.
Innovation: Gradual changes, such as adding a wallet feature to existing apps, create a smoother customer experience. Adding a wallet capability to an existing loyalty app is one step, initially serving as a repository for cashback offers, discounts or other promotions. It can also serve as a barometer of change acceptance and interest in additional services, like an attached debit card or P2P transfers.
3. Omnichannel integration
Concern: Ensuring loyalty features work across mobile, web, in-store, and partner ecosystems.
Status quo: A small change to the program can cause unintended results, creating dependency issues and disrupting other areas.
Innovation: A holistic approach, integrating a single platform across all channels, ensures consistent branding and a unified user experience. A singular platform for all channels powers consistency even with varied functionality. Access is on-brand, assuring consumers of an expected and trusted experience.
4. Data & personalization
Concern: Leveraging customer data to tailor rewards, offers, and experiences without infringing on privacy.
Status quo: Reliance on 3rd-party cookies, which often fail to provide a complete customer view. Even companies with healthy data sources rarely get a full 360° view of their customers’ purchase patterns and desires.
Innovation: Collect first-party data via branded cards and wallets. A debit card attached to a loyalty wallet gives real customer spending data, which can be used for merchant-funded rewards and to personalize offers.
5. Fraud prevention
Concern: Safeguarding against misuse, fake accounts, and reward exploitation.
Status quo: Relying on existing KYC processes and tweaking program elements to limit fraud.
Innovation: A more holistic approach embeds KYC and fraud protection directly within the loyalty platform, using a provider that applies rules in compliance with best practices. The provider should also leverage AI and machine learning (ML) to quickly identify suspicious patterns for mitigation.
6. Payment & wallet integration
Concern: Connecting loyalty wallets to digital payments, alternative funding sources, and stored value accounts.
Status quo: Data integration across systems often leads to delays and complications.
Innovation: A unified platform for loyalty wallets, including alternative payment options, cards and stored value. Funding options can include non-network methods like ACH, direct deposit and offer P2P or remittance transfers.
7. Regulatory & compliance risks
Concern: Navigating financial, privacy, and data security regulations for stored value, rewards, and customer transactions.
Status quo: Each new feature or program requires fresh oversight from a regulatory standpoint. The impacts can extend to how the program is described in marketing material, and how funds are accessed by the consumer.
Innovation: Partnering with an embedded finance partner that is a licensed financial institution removes regulatory risks. Ongoing compliance is ensured through continuous monitoring and expert guidance. Additionally, Alviere experts have an in-depth understanding of the disclosures and agreements that need to be in place and are clearly communicated.
8. Monetization & ROI
Concern: Proving that the loyalty program drives revenue, increases lifetime value, and offsets operational costs.
Status quo: Program elements are often driven to match competitive actions, or keeping unprofitable elements active to assuage customers.
Innovation: Offering alternative payment methods decreases the cost of payments, and creates a seamless CX when these are added to the existing loyalty app. Incentives for non-network payments can be funded by interchange cost savings. Funds held in loyalty wallets for future purchases earn interest until the moment they are removed from the wallet. The goal to self-fund the loyalty program is attainable.
9. Technology & scalability
Concern: Ensuring the platform can scale with business growth and support new features.
Status quo: Legacy systems may be stable but stagnant, requiring costly integrations with third-party services. These vendor add-ons can also remove your loyal customer further from your brand.
Innovation: Scalable platforms that allow for incremental growth are key. A loyalty wallet can evolve from simply holding cashback rewards to offering pre-funding for purchases, P2P transfers, remittance, and open-loop debit cards for wallet spending.
10. Competitive differentiation
Concern: Keeping the loyalty program fresh and compelling compared to rivals.
Status quo: Competitive parity often results in customers spreading their loyalty across multiple programs.
Innovation: Differentiate by offering meaningful value in payment options and rewards. Personalizing earnings tiers, offering more value with each interaction, and perhaps most importantly, making the experience consistent and seamless, will separate companies from their stiffest competitors.
