Loyalty Management Market Size, Share and COVID-19 Impact Analysis, By Component (Software and Services), By Deployment (On-Premise and Cloud), By Enterprise Size (Large Enterprises, Small & Medium Enterprises), By End Use (BFSI, IT and Telecommunications, Transportation, Retail, Hospitality, Manufacturing, Media & Entertainment, and Others), and Regional Forecast, 2021-2028

The global loyalty management market size was USD 3.65 billion in 2020. The software considered in the scope includes LoopyLoyalty, Annex Cloud, Kangaroo Rewards, Loyalty Gator, and more. The global impact of COVID-19 has been unprecedented and staggering, with loyalty management witnessing a significant impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a significant growth of 21.4% in 2020 compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 4.43 billion in 2021 to USD 18.22 billion in 2028 at a CAGR of 22.4% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Loyalty management software helps retailers and companies in retaining customers by providing personalized offers. The software analysis the customer purchasing pattern, behavior, historical data, and more to offer reward points, coupons, discounts, and more, thereby attracting customers to company's products or services. This helps in business expansion, sales, and revenue generation. Industries such as BFSI, hospitality, retail, media, and entertainment are expected to increase their investment in customer rewarding solutions. For instance, PayU integrated Twid loyalty program to personally serve its 350+ million customer base.

COVID-19 Impact

Drastic Change in Consumer Behavior During COVID-19 to Drive Market Opportunities

The COVID-19 global pandemic positively impacted the market in terms of software adoption. Owing to the nationwide lockdown, almost all the businesses, including transportation, retail, hospitality, and banking, were disrupted. The buying pattern of the consumers during the pandemic witnessed a drastic shift. For instance, as per the Ketchum report, 45% of American customers altered their brand preferences during the crisis. As per the report, the customers shifted to bigger e-commerce players such as Amazon, Target, Aldi, Walmart, and more for the basic products. This led to the adoption of solutions across retailers.

As per the McKinsey report, the shift in consumer approach is expected to go beyond COVID-19 effects. Thus, to retain the new customer and bring the lost customers various retailers are expected to invest considerably in loyalty management programs. Thus, post-pandemic, the demand for the program is expected to grow significantly.

 LATEST TREND

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Growing Application of Artificial Intelligence for Innovative Solution to Drive Market Growth

Loyalty is closely interrelated with customer experience. Emerging technologies such as artificial intelligence and machine learning offer various potentials to transform loyalty management solutions in the coming future. It can offer retailers intelligent insights that can enhance customer conversation, experience, and overall sales. These technologies can predict human behavior and purchasing patterns through different analytics. It’s then used to target relevant customers to augment user experience, which is expected to drive the loyalty management market share.

AI is capable of monitoring multiple transactions and detecting and eliminating fraudsters who may attack loyalty points accounts. For instance, in May 2021, Comarch SA introduced a new AI-powered loyalty program enrolled with security services. It is helping in enhancing the customers' trust in the brands by offering data protection and privacy solutions. The advantageous features offered by these tools are anticipated to further boost market growth.

DRIVING FACTORS

Growing Customer Preference for Personalized Solutions to Push Market Growth

To derive substantial growth from loyalty platforms, key players have introduced personalization features into their loyalty platforms. This feature helps to attract customer's attention and enhancing their experience. Customers are showing interest in personalized recommendations, coupons, and promotions to gain benefits from the brands. Such programs enhance customer satisfaction, which in turn fuels its adoption across industries. By using the data captured in multichannel solutions, brands can make personalized recommendations and offers to gain consumer’s attention and trust. Owing to its various benefits, many retailers are offering personalized reward programs. For instance,

• In April 2021, UK-based fashion footwear retailer, Schuh, collaborated with Salesforce.com to launch its loyalty program. The program built on Salesforce Customer 360 Platform designs customer-centric and personalized programs to attract customers. 


• In October 2020, point-of-sale provider Flooid Hub collaborated with HTK Limited to offer a personalized reward system for digital and in-store retails.

Personalized loyalty programs increase sales, customer loyalty programs, online traffic, and profit and are hence favored by retailers. This is likely to drive the loyalty management market growth.

RESTRAINING FACTORS

Stringent Government Regulations May Affect the Adoption of Loyalty Programs

The strict government regulations may limit the growth of the 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. Many data security and privacy rules and regulations restrict retailers from accessing customer details. As a result, retailers are failing to meet realistic customer expectations, which is affecting the adoption of the platforms. Various credit card-related acts and regulations restrict the banking sector from restructuring its reward system, impacting the overall market growth.

SEGMENTATION

By Component Analysis

Growing Demand for Customized and Personalized Program to Boost Software Market Share

On the basis of components, the market is classified into software and services.

Software to dominate the segment share during the forecast period. The demand for software is increasing owing to its ability to recognize potential repeat and loyal customers of the brands. It also supports in providing customized rewards on the basis of customer buying behavior and purchase history.

Services to gain rapid growth owing to increasing adoption of rewarding solutions and platforms. These services include client service, technology service, campaign management, IT & customer service, among others.

By Deployment Analysis

Affordable Program Designing Solution to Boost Cloud-based Demand

Based on deployment, the market is bifurcated into on-premises and cloud.

Cloud to gain maximum revenue share along with rapid growth during the forecast period.  The cloud deployment model supports multiple devices such as tablets, mobile phones, social media, and many more that offer easy operation. The cloud-based software also helps keep track of real-time updates regarding customers' queries, response rates at affordable prices. For instance, in March 2021, Comarch SA launched its Loyalty Cloud 1.2 to offer affordability to the users in managing, running, and designing immersive programs. On-premises to showcase steady growth owing to the robust security structure.

By Enterprise Size Analysis

Growing Focus on Customer Retention to Drive Large Enterprises Investments in Loyalty Program

Based on enterprise size, the market is bifurcated into small & medium enterprises and large enterprises.

Large enterprises dominate the segment share during the forecast period. With a huge customer base and higher purchase frequency, large enterprises are subsequently investing in loyalty solutions. It brings potential publicity to the brands and strengthens their market position.

Owing to the increasing cloud-based affordable solutions, small and medium-sized enterprises will gain a maximum growth rate during the forecast period. For instance, to boost customer relationships and engagement, in September 2020, Epsilon Data Management, LLC launched PeopleCloud Loyalty for mid-size businesses.

By End Use Analysis

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Growing Competition to Drive Reward Program Adoption in Retail Industry 

By end use, the market is categorized into BFSI, IT & telecom, retail, manufacturing, transportation, hospitality, media and entertainment, and others.

Retail to gain a dominant share of the market during the forecast period. The fierce competition in the retail industry is driving the adoption of customer rewarding solutions. Moreover, as the industry is more transaction-faced and due to higher purchasing frequency, the loyalty program helps in boosting sales and revenue growth.

BFSI to gain rapid growth during the forecast period. Some of the BFSI rewarding software are EchoApp, SailPlay, JustBilling, Punchcard, and more. Growing competition across the banking sector encourages banks to adopt these solutions to enlarge and maintain their customer base. Further, internet banking and mobile banking platforms are unlocking opportunities to gain customers' attention and devotion.

The hospitality industry is also significantly implementing the rewarding solution to boost customer reappearance by offering rewards based on their interests, preferences, and spending behavior, and more. Similarly, transportation and media, and entertainment are shifting towards rewarding software to improve customer trust in their brands.

REGIONAL INSIGHTS

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

North America dominates the market share as the region’s retail sector has rapidly adopted loyalty platforms for the past decade. Customers in North America favor monetary offerings such as rebates or cashback, free products, free shipping, and product discounts. As per the Oracle report 2020, 72% of the millennial population redeems loyalty programs.

Europe to rank second in market share during the forecast period. The loyalty programs are well established across European countries. As per the Nielsen loyalty sentiment survey, 66% of Europeans are registered for more than one loyalty program. The region has more inclination towards personalized loyalty programs. As per KPMG 2019 report, 20% of Italy, 15% of Spain, and 16% of France respondents nominated personalized offers as more valued programs. 

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. 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. China dominates the revenue share owing to increasing investment from the companies such as Tencent, WeChat, and Alibaba.

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The Middle East and Africa to showcase significant growth in loyalty program adoption. Considering the growing adoption, in February 2021, Salesforce introduced a new product of Loyalty Management for the end-users such as retail, manufacturing, consumer goods, and travel & hospitality to boost customer engagement and trust. Similarly, to improve customer engagement and sales, service providers are adopting loyalty programs in Latin America.

KEY INDUSTRY PLAYERS

New Product Development to Boost Market Position of Key Players

Key players are emphasizing 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, real-time analytical models of management effectively enhance customer experience. Similarly, the launch of a customized and personalized loyalty program is expected to strengthen the market position of the prominent players. Strategic partnerships, acquisitions, and collaborations are aiding the financial performance of market players of Loyalty Management.

March 2021 – Comarch SA launched a new microsite for its loyalty and marketing solutions to enhance functionality and navigation including in its Loyalty Marketing Cloud. It is accessible to all industries and small size businesses to launch its own loyalty program.

December 2020 – IBM Corporation announced a partnership with Air Canada to launch Aeroplan Loyalty Program.  It includes mobile and cloud-based web experience to offer flexible, personalized, and delivering loyalty rewarding experience.

List of Key Companies Profiled:

• Antavo Limited (London, U.K.)


• Capillary Technologies (Bangalore, India)


• Bond Brand Loyalty (Toronto, Canada)


• Comarch SA (Kraków, Poland)


• Epsilon Data Management, LLC (Texas, U.S.)


• IBM Corporation (New York, U.S.)


• Salesforce.com, Inc. (California, U.S.)


• Target Brands, Inc. (Minneapolis, U.S.)


• TIBCO Software, Inc. (California, U.S.)


• VeriPark (London, U.K.)

KEY INDUSTRY DEVELOPMENTS:

• August 2021 – Antavo Limited collaborated with Emakina, a digital agency group, to offer next-generation loyalty technology for shopping malls, retailers, and brands. The company is offering its solutions across North America, Middle East, and Europe.


• May 2021 – Salesforce introduced a new product of Loyalty Management for the end-users such as retail, manufacturing, consumer goods, and travel & hospitality to boost engagement and trust. It is built on Salesforce Customer 360 Platform, which offers intelligent solutions for B2B and B2C customers.

REPORT COVERAGE

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The global loyalty management market report highlights leading regions across the world to offer a better understanding of the user. Furthermore, the report provides insights into the latest industry and market trends and analyzes technologies deployed at a rapid pace at the global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.

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