When We Will See the Next Great Innovation in Loyalty Programs?

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After a lot of recent thinking about AI/ML and marketing analytics, I took a recent detour back to the loyalty marketing space with this comment on Domino's revamp of their rewards program.  Having been part of any number of program relaunches, I was curious about what might be driving the redesign and what it meant for the consumer experience.  My verdict: not a game-changer, but well done, even if it was just minor tweaks in terms of how points are earned and expanding the available rewards pool . (I guess I shouldn't have been too surprised, given that Domino's consistently ranks among the top brands in Brand Keys' annual ranking. (Apple, Amazon, Domino's Remain Loyalty Legends)

Around the same time came some news about another restaurant loyalty redesign - Subway MVP Rewards. So I thought in my next post I would explore that and compare/contrast with Domino's. Then I can get back to AI/ML, and the obvious intersection - what does AI/ML mean for the future of loyalty programs? (Quick summary on MVP Rewards: way way too complicated for a QSR program, incorporating every aspect of any rewards program every deployed.  Moving from "tokens" to "points" won't matter to consumers, the tier structure will reward the existing heavy users more than moving lighter users up the tiers, and not sure about the expected value of offering Subway-branded merchandise...)

But as I was getting mired in the program details, I thought to myself, "from a broader sense, is it really worth spending a lot of calories thinking about small changes in any one loyalty program, or are you missing the bigger picture?" There are still new programs being launched all the time, but they are really not worth examining since they all seem to be just variations on the same theme - earn points at a pre-determined spend ratio, and redeem points based on a pre-determined give-back ratio, with a few bonus opportunities thrown in (see Hanna Andersson launches loyalty program, with $10 reward for every $125 spend, and UNDER ARMOUR LAUNCHES NEW "UA REWARDS" LOYALTY PROGRAM, with $125 spend earning $5 reward, as recent examples).

And that gets back to the nagging feeling that there's a bigger issue here.  When will we see the next major innovation in loyalty?  One that has broad applicability across brands and product/service categories? And that doesn't assume that consumers are terribly invested in every single brand and category?  There are a lot of great minds working on it, but nothing significant has gained traction, and the points-based program structure has been around for a long time now.  When every brand has a similar program, we've reached parity and the value of such programs begins to wane - they can't all be driving 6x value vs non-members!  Next-Gen Loyalty Programs: Trends & Innovations  We have to remember that the most important aspect of loyalty is having the product/service deliver for the consumer; points and rewards and exclusive offers can't overcome product issues, maybe they serve as a tie-breaker at best.  (It is interesting that many articles and presentations on loyalty program best practices or great loyalty ideas, like 14 Innovative Loyalty Program Ideas [Mission: Loyalty, ignore that the product has to be at the fore.) 

The answer as to where the next great loyalty innovation will come from is probably right in front of us, somewhere in the mix of current ideas: blockchain and Web3, subscription-based and experiential-based programs, and especially AI-based personalization.  So maybe instead of breaking down program re-launches, it would be better to start exploring the potential value of those emerging loyalty concepts.  As those ideas continue to percolate, in the meantime, we will have to keep tweaking points-based programs to optimize customer value as best we can, alongside equal effort towards optimizing the quality and value of the consumer experience delivered by our product or service, which is the ultimate driver of customer loyalty.

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