Loyalty Management Market Size, Share and COVID-19 Impact Analysis, By Type (Customer Retention, Customer Loyalty, and Channel Loyalty), By Deployment (On-Premise and Cloud), By Enterprise Size (Large Enterprises, Small & Medium Enterprises), By Industry (Banking, Finance, Security and Insurance (BFSI), IT and Telecommunications, Transportation, Retail, Hospitality, Manufacturing, Media & Entertainment,) and Regional Forecast, 2020-2027

The global loyalty management market size stood at USD 2.47 billion in 2019 and is projected to reach USD 10.02 billion by 2027, exhibiting a CAGR of 19.9 % during the forecast period.

The digital explosion and growing competition have made customer loyalty and engagement a very difficult task. Brands and retailers are  focusing on  integrated plans to maintain their customer base. These  loyalty  programs offer customers early access to sales, coupons, and products along with free merchandise. Organizations are strongly shifting  their approach towards the adoption of loyalty solutions to gain repetitive sales for brands. Technological revolution and digitalization have transformed  loyalty programs and retain insights from user experience and engagement cycle. Real-time communication facilities and purchasing analytics transform the loyalty program platforms into effective marketing channels. Retailers are largely adopting  loyalty programs to augment their sales by maintaining a strong and loyal customer base. The evolution of loyalty program has led to the creation of  omnichannel platforms to encourage customers to earn and utilize points across multiple channels such as websites, applications, or in-store. Their capacity  to boost sales and revenue by augmenting customer satisfaction has made personalized loyalty programs favorable among businesses.   

Impact of COVID-19 Global Pandemic on the Market

The COVID-19 global pandemic positively impacts the market in terms of loyalty management software adoption. Owing to the current lockdown situation across  countries, almost all the businesses, including transportation, retail, hospitality, and banking, are disrupted. The lockdown limits the direct product sale, however online shops and e-commerce websites gaining traction worldwide to sale essential products and services. Unexpected growth in the online purchasing during the crisis, led shoppers to attract and retain maximum customers to their websites, driving the demand for this type of management. The majority of the companies are focussed on leveraging the lockdown situation as an opportunity to strengthen their customer loyalty and retention by frequently contacting people.

Businesses are concentrating on customer optimism. They are viewing the pandemic period as an opportunity to strengthen customer trust and confidence, the two pillars of customer loyalty. Companies are strategically helping customers during this global crisis by putting flexible pricing, refund, and exchange policies in place to attract  customers towards their offerings and products.

People are paying  attention to how companies or organizations are responding and show the responsiveness during COVID-19 global pandemic, will likely to emerge as the leaders. Moreover, several U.S. based companies such as  Walmart, Apple, and Uber have enabled revised sick leave policy for all employees, which allow them paid work from home facility. Such factors are positively impacting the customers' views and interests towards a particular company, which  ultimately drives customer loyalty.

• April 2020 - ACI Worldwide, Inc. is delivering financial institutes debit and credit card capabilities within its ACI issuer product to address the financial challenges during COVID- 19 crisis. The solution will offer advanced analytics, reporting, and loyalty management.

LATEST TRENDS

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Omnichannel Loyalty Programs to Substantially Enhance the Adoption of Loyalty Management Platforms

Adding multiple channels to loyalty programs enhances consumer experience and it reflects in  improvement in  sales. Providing significant engagement through each touchpoint from the in-store point of sale (POS) to social media will escalate  the adoption of omnichannel loyalty programs. Customers’ expectations to engage with the brand through a variety of channels, devices, and platforms encourages the trend of the omnichannel loyalty program. Along with unifying customer’s experience across multiple channels, it helps retailers to grow their sales by availing  marketing opportunities.

Omnichannel loyalty programs offer a streamlined purchasing process, personalized recommendations, offers, and instant access to different devices. These offerings support retailers to build sales and retention strategies to innovate their loyalty programs, resulting  in the loyalty management market growth. According to Information Resources, Inc. (IRI's) 2018 consumer survey, number  of brands  using an omnichannel loyalty program as their transactional volume increased by 50.0% from 2017 levels.

DRIVING FACTORS

Artificial Intelligence (AI) and Machine Learning (ML) to Enhance  Loyalty Programs

Loyalty is closely interrelated with customer experience. Emerging technologies such as  artificial intelligence and machine learning can predict human behavior and purchasing patterns through different analytics. Additionally, AI and ML technologies have the potential to transform the loyalty industry. Advanced AI algorithms are capable of predicting customer behavior and influence their purchase patterns. This predictive analysis is used to target  relevant customers to augment user experience, which in turn expected to drive the growth of this market in the coming years. AI is capable of  monitoring  multiple transactions, as well as detecting and eliminating fraudsters who may  attack loyalty points accounts. Moreover, AI and ML can offer retailers intelligent insights that can enhance customer conversation, experience, and overall sales. The advantageous features offered by these tools  are  anticipated to further boost this market growth.

Growing Customer Preference for  Personalization to Push  Loyalty Program Adoption

To derive substantial growth from loyalty platforms, key players have started to add personalization into their loyalty platforms. Personalization helps to enhance a customer's attention and experience. Customers are showing  interest in personalized recommendations, coupons, and promotions. Such  loyalty programs enhance customer satisfaction, which in turn fuels loyalty platform adoption. By using data captured in  multichannel loyalty programs, brands can make personalized recommendations and offers to gain consumer’s attention and loyalty. For instance, In April 2018, Marriott International, Inc. partnered with Salesforce Inc. to conduct personalized loyalty programs for their customers across different channels such as  web, mobile, and call centers on a global scale. Personalized loyalty programs increase sales, customer loyalty, and online traffic as well as  profit and are hence favored by retailers.

RESTRAINING FACTORS

Stringent Government Regulations may Affect the Aadoption of Loyalty Programs 

The growing demand for better customer engagement and efficient delivery of services is the prime objective for businesses. However, strict government regulations may limit the growth of this market. Growing concerns about certain government and regional laws such as gift certificate laws, trading stamp laws, data security, and privacy law may restrict the adoption of loyalty platforms. Federal and state laws forbid merchants and organizations from engaging customers. Many data security and privacy rules and regulations restrict retailers to access customer details. As a result, retailers are failing to meet realistic customer expectations, which is affecting the adoption of loyalty platforms. Some credit card related acts and regulations are restricting the banking sector to restructure their reward system, impacting the overall  market growth.

SEGMENTATION

By Type Analysis

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Customer Loyalty and Retention are Anticipated to Grow with a High CAGR

By type, the  market is segmented into customer loyalty, customer retention, and channel loyalty.

A loyal customer spends on brands more than others. Along with this, they share positive experiences with their friends, families, and colleagues about the brand, which in turn boost sales and generate revenue. Therefore, the adoption of loyalty solutions to achieve customer loyalty is becoming a  prime growth factor. 

Customer loyalty and retention are closely interconnected. With growing competition among the brands and product offerings, it becomes necessary for retailers to satisfy their customers to prevent them from switching to other brands or services. As a result,  many of the large brands and retail stores are conducting loyalty and reward programs to retain their customers. Ability to engaging customers and enhacing their loyalty to brands supporting the demand for these management platforms.

In the evolving business era, brands or retailers are required to build mutually profitable relationships with their distributors, trade partners, channel partners, wholesalers, and key influencers. These relationships help to strengthen the network and market position. A channel loyalty program is a crucial element and an important sales pillar in the growth strategy of the business. It helps in transforming the relationship between the brand and trade partners to enhance the return on  investment, and boost sales. Thus, channel loyalty program adoption is also expected to showcase average growth in the coming years.

By Deployment Analysis

Growing Need for Real-time and Automated Solutions to Increase the Demand for Cloud Deployment Model

By deployment, the market is bifurcated into on-premise and cloud.

Flexible, automated software marketing tools such as Gmail, web conferencing, and many more platforms are fast gaining  popularity. These tools are creating opportunities for brands to augment their loyalty services by sending personalized emails and messages. However, these common ways are not sufficient to ensure  customer satisfaction. Cloud-based loyalty solutions  overcome this barrier by offering an ability to communicate with customers through system generated personalized messages. The cloud deployment model supports multiple channels such as tablets, mobile phones, social media, and many more. The customer data is analyzed and stored in the master marketing database of the organization's cloud, which enables organizations to build a comprehensive view of the customers. The software solution also helps to keep track of real-time updates regarding customers' queries, response rates, and retention rates.

Due to the robust security structure, the on-demand loyalty segment is expected to showcase average growth.

By Enterprise Size Analysis

 Growing Adoption of Loyalty Management platform Among SMEs are Expected to Boost the Market Growth

By enterprise size, the market is categorized into large enterprises and small and medium enterprises (SMEs).

With the growing popularity of cloud-based loyalty platforms, small and medium-sized enterprises (SMEs) are leading the  adoption of cloud-based loyalty solutions. SMEs are the key drivers of economic growth and employment generation and the segment is expected to grow at the hatest rate during the forecast period. Business to Business (B2B) loyalty reward programs increase customer retention and acquisition, encouraging  SMEs to adopt these management platforms.

On the other hand,  large enterprises tend to witness high purchase frequency and repeat purchases from  customers, most likely due to diverse product range and multiple distribution channels. Loyalty brings potential publicity to the brands and strengthens their market position, which is a crucial factor for the growth of the large enterprises segment.       

By Industry Analysis

Retail Industry to Continue its Dominance in the Loyalty Management Market

Based on industry, the market is classified into banking, finance, security and insurance (BFSI), IT & telecom, retail, manufacturing, transportation, hospitality, media and entertainment, and other industries.

To maintain brand loyalty and improve repetitive purchases, the retail sector has been adopting advanced loyalty programs for decades. The development of  customer self-service portals as a web or cloud-based platform provides online shopping to users. Rewarding customers with discounts, points, and certificates enhances customer relationships and augments the adoption of this type of management platforms. Advanced AI-based loyalty platforms can enable enhanced  reporting and analytics facilities to reward customers intelligently and personally. Thus,  the advanced loyalty platform adoption is expected to grow in the retail sector.

With the adoption of advanced technologies, banking and financial institutions are focusing on strengthening their loyal customer base. Growing competition across the banking sector encourages banks to adopt loyalty solutions to enlarge as well as maintain their customer base. Internet banking and mobile banking platforms are unlocking opportunities to gain customers' attention and loyalty. Further, the ability to send and receive reward points using mobile banking applications is gaining traction in the developed banking sector. Providing an omnichannel view on customers' rewards helps banks to achieve better customer engagement. Thus, technological enhancements in the banking sector are expected to boom this market in the coming years.

Moreover, major airline companies such as Aeroplan and Avion have adopted loyalty and rewarding schemes for improving customer satisfaction. Not only travel companies, but hotels and rental car companies are also paying attention to loyalty programs. Hotels, restaurants, as well as rental car companies reward their customers through “points”. Majority of the travelers are loyal to the hotel and travel brands and loyalty programs are helping maintain a loyal customer base. The approach of each brand to differentiate itself  from their competitors is expected to surge the loyalty program adoption across the transportation and hospitality industry.

Acquiring new customers by keeping existing customers satisfied is a powerful weapon in the manufacturing, IT, and telecom industries.  Many telecom operators are enhancing  their value-based services by maintaining a pre-established expectation of trust and constructing an affinity with subscribers, thereby ensuring  loyalty. Therefore,  the need to retain  customers has led the IT and telecom sectors to adopt  loyalty platforms.

REGIONAL INSIGHTS

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Geographically, the market is segmented across five major regions, namely, North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. They are further categorized into countries.

North America dominates the loyalty management market share as the region’s retail sector has been rapidly adopting loyalty platforms since the past decade. Most of the customers from the U.S and Canada are preferring loyalty-based retail brands. Scanning cards in the store is the most common loyalty program adopted in the region.  Monetary offerings such as rebates or cashback, free products, free shipping, and product discounts are favored by customers in North America. Investments in AI-based loyalty programs are resulting in a significant return on  investment (ROI), booming the adoption of loyalty platforms across the region. Thus,  North America is expected to continue its leading position in the market.  

Product discounts, shipping discounts, and offers by European businesses to customers is resulting  in the growth of the market across the region. Personalized loyalty programs effectively enhance customer engagement and satisfaction. Most of the major European nations such as Italy, France, Belgium, and Spain have a high adoption of personalized loyalty management platforms, while theadoption in Germany is comparatively  lower. Major European countries are aggressively investing in AI to improve their customer service and loyalty, thereby driving the growth of the market across Europe. Many of the coalition, as well as stand-alone loyalty programs, have been adopted by European retailers, further contributing to the market growth.   

Asia Pacific (APAC) is expected to hold a high CAGR during the forecasted period as retailers and organizations in the region have directed their approach towards enhancing customers experience. Presently, China is dominating the market in the APAC. Growing competition and penetration of leading brands, expected to boost the adoption of loyalty platforms across the region. Since advanced loyalty programs offerings are easy to use and available at  affordable prices, it is expected that their adoption will substantially grow In the coming years. Improved return of investment (ROI) by loyalty programs is encouraging  retailers across APAC to adopt  loyalty systems. Further, rapidly digitalization across APAC is encouraging  brands and retailers to adopt advanced loyalty programs, and is expected to continue during the coming years.  

Customers have a growing interest in economic rewards and discounts, which is encouraging  retailers across the Middle East and Africa (MEA) region. This has led to investments in loyalty programs. Developed economies of the region such as the United Arab Emirates (U.A.E.), Saudi Arabia, and others are most likely to adopt  advanced loyalty programs. Many banks, travel agencies, and airlines are seen to be adopting  loyalty platforms to enhance their customer retention and loyalty. Thus, the MEA region is expected to upsurge the market growth in the forecast  years. Latin America (LATAM) is seen to be strengthening mobile payment landscape. To acquire and retain the customer loyalty, mobile payment websites of LATAM are adopting the respective management programs.  

KEY INDUSTRY PLAYERS

IBM Corporation is Focussing on the Advancement of Loyalty Management Platforms 

IBM Corporation is one of the major market players delivering advanced loyalty solutions to retailers and organizations. The company is focusing on the development of its loyalty platform by merging technologies such as Blockchain, AI, and ML. The company is  strengthening  its loyalty programs by providing customized rewards and discounts for frequently purchasing customers. The company has developed a loyalty commerce platform that offers real-time and efficient customer management. Further, to enable real-time monitoring, reporting, and analytics, IBM Corporation has developed an Annext cloud, which strengthens the loyalty platform capabilities.

• February 2019 – IBM Corporation enhances its loyalty reward commerce platform called BUCKiTDREAM using Watson's marketing platform to augment the personalized brand engagement experiences.

Key Players are Primarily Focusing on the Product Platform Advancement

Several key players are emphasizing on continuous product development and portfolio expansion by leveraging advanced technologies such as AI, ML,  blockchain, cloud computing, and many more. Several market players have started offering mobile loyalty management solutions owing to  the growing adoption of smartphones. Cloud-based solutions, real-time analytical models effectively enhance customer experience. Further, customized and personalized loyalty program offerings strengthen the market position of key players. Strategic partnerships, acquisitions, and collaborations proactively are aiding the financial performance of key market players.

• October 2019 – Bond Brand Loyalty launched a new XO Lab comprised of a multi-disciplinary team of automation specialists, data scientists, and strategy management experts to deliver personalized loyalty programs to their clients and customers. 


• October 2019 - Oracle Corporation acquired CrowdTwist to offer personalized customer experiences. The acquisition will enable the delivery of personalized customer engagement to all sized organizations.  It will also enable the extension of loyalty and reward programs for brands.


• May 2019 – Kobie Marketing launched next-generation, real-time loyalty platform named Kobie Alchemy X under the Kobie loyalty platform.


• January 2019 – Capillary Technologies has launched its first deals and coupon shopping application named DealHunt. The app enables customers to enjoy loyalty deals and offers across all categories such as food, fashion, travel, health, and many more. 

List of Key Companies Profiled:

• Aimia, Inc. (Canada)


• Antavo (United States)


• Blue Ocean Contact Centers, Inc. (Canada)


• Bond Brand Loyalty (Canada)


• Capillary Technologies. (India)


• Comarch SA (Poland)


• Epsilon Data Management, LLC. (United States)


• IBM Corporation (United States)


• ICF International, Inc. (United States)


• Kobie (United States)


• Maritz Motivation, Inc. (United States)


• Oracle Corporation (United States)


• Salesforce.com, Inc. (United States)


• Target Brands, Inc. (United States)


• TIBCO Software, Inc. (United States)


• VeriPark (Belgium)

KEY INDUSTRY DEVELOPMENTS:

• June 2019 – Air France-KLM Group and the Accor Group are extending their partnership to offer rewards for common  customers to attain their loyalty. The companies will offer dual rewards schemes in the European travel and hospitality industry to strengthen their global  customer base.     


• September 2019 – Target Brands, Inc. launched a new nationwide loyalty program named Target Circle to gain customer retention and loyalty to their brands. The program combines a variety of features such as  birthday rewards, personalized offers, and 1% savings on purchases to attract customers towards brands.

FUTURE OUTLOOK

Technology aid advancement in the loyalty management product portfolio to strengthen the product features and intelligence. People are showcasing their inclination towards intelligent loyalty programs, which is expected to escalate the market in the near future. Besides, an advanced interactive platform generates a better return on investment (ROI) with an enhanced customer base. This is anticipated to boost the market in the coming years. The integration of artificial intelligence with the existing loyalty platform offers more precise and personalized customer engagement, resulting  in improved loyalty as well as retention. An advanced omnichannel loyalty platform connects businesses to their customers through  all possible channels. Thus,  the popularity of AI and the omnichannel loyalty platforms is expected to fuel  the market in the future.

REPORT COVERAGE

An Infographic Representation of Loyalty Management Market

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The loyalty management market research report offers qualitative and quantitative insights on the market and provides a  detailed analysis of market size & growth rate for all possible segments in the market.  Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape.

Key insights provided in the report are the adoption trends of Loyalty Management by individual segments, recent industry developments such as mergers & acquisitions, consolidated SWOT analysis of key players, partnerships, Porter’s five forces analysis, and business strategies of leading market players, key industry trends, macro, and micro-economic indicators.

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