As we enter a new year, like everyone else, I’m reflecting on this past year, where we are now and reading a lot about people’s thoughts for the new year. Here’s my take on the loyalty space.

A reality check on 2023

Last year at this time, I felt like we were looking at a year of change. It was a time of hope and new beginnings.  

It was a time where we thought true personalization was possible. Heck, we started a loyalty podcast about it. Those of us watching the market thought it’d be the year that older programs would be revamped and that we’d see a big rush of new energy. 

I’d love to hear what you think. But I don’t think we really saw that. We’re still struggling to get our tech stacks right, still light on integrating the loyalty strategy with business goals, still limited by outdated or static customer loyalty software, still struggling to deliver omnichannel experiences, which leaves us limited on our ability to truly personalize. There were some program refreshes but not many. Consumers’ and experts’ favorite loyalty programs remain the favorites, but I hear people reflecting that even those are a bit stale.  

Will 2024 be more of the same?

As we enter 2024, I’m listening to and reading the industry experts. They’re predicting similar things to last year, but with much less enthusiasm. Are you feeling this too? Perhaps, we’re still suffering from our celebration hangovers, getting a slower start to the new year.  

But maybe we’re not. The reality of 2023 is that everything slowed down (except AI and our curiosity for it). During uncertain times, we’re cautious. We move slower. We don’t make quick decisions. Nor do we take risks.  

Let’s face it. Adding a loyalty program or changing an existing one is a risk—and not a small one. Once a brand offers their customers a loyalty program it becomes a part of the brand, a part of its DNA. Once it’s out there, you can’t pull it back.  

What’s riskier than that? What if we don’t get it right? What if it costs too much? What if my customers don’t like it? What if they don’t use it? What if they use it too much?  

Discounts aren’t a growth strategy

I challenge you. Is what you’re doing today a risk? Not doing anything? Keeping the status quo? For most, this means continued discounts. We all know that, to drive more customers in, the discounts have to get deeper and deeper.  

For 2024, I choose hope-full. I dare each of you to dream and execute a well-crafted intentional loyalty strategy. Doing so will elevate your mindset, your goals and your successes.

Loyalty programs enable new possibilities

Loyalty programs done right and that leverage the right customer loyalty software will become a part of your DNA. They’ll function alongside all your priorities, elevating your customer experiences, elevating your bottom line.  

For some inspiration, I like to use Ulta Beauty as one of the best cases for loyalty. While I’d argue they still have a long way to go with their personalization and omnichannel customer experience, the way they’ve approached their loyalty strategy has powered the brand and management to predictable and profitable growth.    

Many people don’t know that Ulta started as a discount beauty supplier. They found a niche and they grew. But they got to a point where they couldn’t continue to grow at the same pace. As a discounter they couldn’t secure brands like Estee Lauder for their offering. To expand, they needed to up market. But how was that possible when they were known for discounts? If they suddenly went full price, they’d lose most of their customers.  

They decided to take the risk and go full price—and launch a loyalty program. As a consumer, if you become a member of the loyalty program, you retain the ability to get discounts. If you don’t become a member, you pay full price.  

With this loyalty strategy, Ulta was able to move up market and keep the majority of their existing customer base. In addition, this approach was so appealing to customers that almost everyone who made a purchase joined the program. According to Ulta CEO  Dave Kimbell, “loyalty is the best investment we make”.

Today, well over 90% (I’ve heard as high as 98%) of all Ulta transactions are made by loyalty members. This means that for more than 90% of their customers they’re able to control the discounts being offered. Perhaps a better way to think of this—they control the value they give to each customer. (Note, I’m not convinced they do this well yet; but think of the potential!) This means they have levers to pull to drive store traffic, sell specific product, move seasonal items and more.  

The icing on this cake—they have the ability to predict the future. Okay, maybe not the actual future, but they can predict their forecast for management, the board and the street better than any other retailer. Because they know more than 90% of their customers by name, their shopping patterns and how to motivate them to purchase.  

Create new possibilities with loyalty

Loyalty programs can help you drive new growth, shift growth into new areas and better manage that growth. And, with the right customer loyalty software, they’re one of the best ways to enable the personalized, omnichannel experience customers expect. Given all that, investing in loyalty is a risk worth taking. The value it brings is exponential. Let’s dare to dream together and be hope full in 2024!