Loyalty Management Market Size, Share and COVID-19 Impact Analysis, By Deployment (On-Premise and Cloud), By Enterprise Type (Large Enterprises and Small & Medium Enterprises), By End Use (BFSI, IT and Telecommunications, Transportation, Retail, Hospitality, Manufacturing, Media & Entertainment, and Others), and Regional Forecast, 2023-2030

The global loyalty management market size was valued at USD 5.29 billion in 2022 and is projected to grow from USD 6.47 billion in 2023 to USD 28.65 billion by 2030, exhibiting a CAGR of 23.7% during the forecast period.

By delivering individualized offers, loyalty management software assists merchants and businesses in retaining customers. The software analyzes client purchasing patterns, behavior, historical customer data, and other factors to give reward points, coupons, discounts, and other incentives to customers interested in the company's products or services. This aids in business growth, sales, and wealth generation. BFSI, hotel, retail, media, and entertainment industries are projected to boost their investment in customer-rewarding solutions. For example, PayU incorporated the Twid loyalty program to better serve its 350+ million customers.

COVID-19 IMPACT

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

The COVID-19 pandemic had a beneficial influence on the market in relation to software adoption. Almost all businesses, including retail, hotel, transportation, and banking, were disturbed as a result of countrywide lockdowns. During the pandemic, end user purchasing patterns changed drastically.

According to a survey conducted by Ketchum, 45% of American shoppers changed their brand choices during the crisis. The survey highlighted that shoppers switched toward larger e-commerce competitors, such as Amazon, Aldi, Walmart, Target, and others, for basic merchandise. This resulted in the adoption of loyalty management solutions by merchants.

According to the McKinsey analysis, the shift in consumer attitude is projected to extend beyond COVID-19 impacts. As a result, numerous retailers are likely to invest significantly in loyalty management programs to retain new consumers and win back lost customers. As a result, after the pandemic, the program's demand is likely to skyrocket.

LATEST TRENDS 

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

Providing best-in-class customer experience is vital for the success of any business. However, building customer loyalty is a challenge. Adoption of emerging technologies, such as Machine Learning (ML) and Artificial Intelligence (AI), enable revolutionize loyalty management system and enhance customer engagement. AI-powered loyalty solutions analyze customer data to create personalized offers using their purchase history. For instance, Starbucks uses AI to offer customized offers to each individual based on their purchasing behavior.

Moreover, AI-powered chatbots use Natural Language Processing (NLP) to provide faster and more efficient responses. Through predictive analytics, companies tailor their loyalty programs to meet specific customer preferences. AI is capable of detecting fraud by monitoring various transactions that target loyalty point accounts. For instance, Amazon uses AI to detect and prevent fraudulent activity in AWS marketplace.

These tools’ advantageous features are expected to boost the market growth even further.

DRIVING FACTORS

Growing Customer Preference for Personalized Solutions to Push Market Growth

Key players have implemented personalization capabilities into their reward programs to draw significant growth from them. This feature aids in attracting customer attention and improving their overall experience. Customers want individualized advice, discounts, and promotions from companies to profit from them. Such initiatives increase client happiness, which drives their adoption across sectors. Brands may acquire customer attention and trust by making individualized suggestions and offers based on data gathered via multichannel solutions. Many shops are implementing individualized incentive programs due to their numerous benefits. For instance,

• In April 2021, Schuh, a U.K.-based trendy footwear store, partnered with Salesforce.com to develop its reward program. To attract consumers, the program based on the Salesforce Customer 360 Platform creates customer-centric and customized initiatives.


• In April 2022, Universal Drugstore partnered with Comarch to launch Wellness Rewards loyalty program. The program uses Comarch's Loyalty Marketing Cloud to aid enterprises connect and engage with their customers.

Retailers consider personalized reward programs as they improve sales, consumer loyalty, web traffic, and profit. These aspects are anticipated to boost the loyalty management market growth over the forecast period.

RESTRAINING FACTORS

Stringent Government Regulations May Affect the Adoption of Loyalty Programs

The market expansion may be hampered by strict government regulations. Concerns regarding various federal and state regulations, such as gift certificate laws, trade stamp laws, data security laws, and privacy laws, may limit the implementation of loyalty programs. Many privacy and security standards & regulations limit merchant access to client information. As a result, businesses are failing to match realistic customer centric expectations, impacting platform adoption. Various credit card-related rules and laws prevent the banking industry from reorganizing its incentive system, which has an influence on the overall market growth.

SEGMENTATION

By Deployment Analysis

Affordable Program Designing Solutions to Boost Cloud Demand

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

The cloud segment will hold the greatest market share and witness significant growth throughout the predicted period. The cloud deployment strategy offers an array of devices that are simple to use such as social media, mobile phones, tablets, and others. The cloud-based software also keeps track of real-time updates on client inquiries and response rates at reasonable pricing. For instance, in March 2021, Comarch SA announced its Loyalty Cloud 1.2 to make management, operations, and build immersive programs more affordable for users. Attributed to the robust security framework, on-premises will demonstrate consistent development.

By Enterprise Type Analysis

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

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

Large enterprises segment will dominate the segment share owing to the investments made in loyalty solutions as a result of their large client base and increasing purchase frequency. It increases prospective brand exposure and boosts their market position.

Small & medium enterprises would witness the highest growth rate throughout the projected period, owing to rising affordability of cloud-based solutions. For example, to improve consumer engagement and relationships, in May 2022, Zithara, the UPI rewards app, launched the Bharat Loyalty program for small & medium-sized businesses.

By End Use Analysis

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Growing Competition to Drive Reward Program Adoption in the Retail Industry

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

The retail segment will attain a major market share as the industry's strong rivalry is encouraging the development of customer-rewarding solutions. Furthermore, due to increased purchase frequency and as retail business is more transactional, the loyalty program aids in increasing sales and revenue growth.

The BFSI segment will expand rapidly throughout the predicted period. JustBilling, Punchcard, EchoApp, SailPlay, and others are BFSI's rewarding software. Growing competition in the banking industry drives banks to use these solutions to expand and retain their client base. Furthermore, online banking and mobile banking platforms are opening up new possibilities for capturing clientele interests and dedication.

The hospitality sector is also heavily utilizing the rewarding solution to increase client retention by delivering prizes based on their preferences, interests, and spending habits, among other things. Similarly, the transportation, media, and entertainment industries are transitioning toward rewarding software to increase client trust in their businesses.

REGIONAL INSIGHTS

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

North America has the largest loyalty management market share due to the rapid adoption of loyalty management software across the regional retail sector. This is because North American customers prefer monetary incentives such as payback or rebates, free shipping, free items, and product discounts.

Europe will have the second-largest market share over the projection period. Loyalty programs are well-established in several European nations. The area is more inclined toward tailored loyalty schemes. For instance, in June 2022, METRO and Capillary Technologies partnered to develop a multi-country B2B loyalty program. This partnership with METRO aids Capillary to debut in the Europe market.

Asia Pacific is anticipated to grow at a rapid pace throughout the forecast period, owing to growing adoption of digital channels and increasing focus on customer experiences. Key players in the region are providing tailored loyalty programs at reasonable price to meet the current need of customers. WeChat, Alipay, WhatsApp, Paytm, and others are some platforms that companies use to deliver their loyalty programs.

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The Middle East & Africa will witness a considerable rise in the implementation of loyalty programs. Given the increased usage, in February 2021, Salesforce announced a new loyalty management solution for end users, such as manufacturing, consumer goods, retail, and travel & hospitality, to enhance customer engagement and trust. Similarly, service firms in Latin America are implementing loyalty programs to enhance consumer engagement and revenue.

KEY INDUSTRY PLAYERS

New Product Development to Boost Market Position of Key Players

Key businesses are focusing on continual product design and portfolio growth with the use of modern technologies such as AI, machine learning, blockchain, cloud computing, and others. As smartphone penetration grows, several industry participants have begun to provide mobile loyalty management solutions. Real-time, cloud-based analytical management models dramatically improve customer experience. Similarly, the creation of a tailored and personalized loyalty program is projected to boost the key firms' market position. Collaborations, acquisitions, and strategic alliances help market participants improve their financial performance.

April 2023 – Capillary Technologies acquired Brierley to expand its footprint in the North America market. This acquisition leverages Brierley’s Emotional Loyalty Quotient with Capillary’s enterprise-ready AI-powered Software as a Service (SaaS) platform.

March 2021 – Comarch SA developed a new webpage for its loyalty and marketing solutions, including its Loyalty Marketing Cloud to improve functionality and navigation. This makes it possible for any industry or small firm to start its own loyalty program.

List of Key Companies Profiled:

• Antavo Limited (U.K.)


• Capillary Technologies (India)


• Bond Brand Loyalty (Canada)


• Comarch SA (Poland)


• Epsilon Data Management, LLC (U.S.)


• Oracle Corporation (U.S.)


• Salesforce.com, Inc. (U.S.)


• Target Brands, Inc. (U.S.)


• TIBCO Software, Inc. (U.S.)


• VeriPark (U.K.)

KEY INDUSTRY DEVELOPMENTS:

• March 2023 – Salesforce joined Polygon Labs to create a proprietary NFT-based loyalty program. The NFT management platform brought NFT capabilities to all of Salesforce’s clients while expanding Polygon’s market in the enterprise industry. Companies are delivering blockchain rewards to customers with the support of Salesforce’s loyalty program.


• March 2023 – Sabre Corporation collaborated with Capillary Technologies to help airlines and hoteliers with Capillary's loyalty management features. This agreement enabled the companies gain valuable insights through real-time analytics.


• March 2022 – Antavo partnered with BMW (U.K.) Ltd on Inside Edge, a B2B loyalty program. The collaboration facilitated company drivers with rewards to benefit them save money, time, and enjoy the ride.


• August 2021 – Antavo Limited teamed up with Emakina, a digital agency, to provide next-generation loyalty solutions to shopping malls, shops, and brands. The company's solutions are available throughout North America, the Middle East, and Europe.


• May 2021 – Salesforce launched a new loyalty management tool for end users, such as manufacturing, retail, consumer products, and travel & hospitality, to increase engagement and trust. It is based on the Salesforce Customer 360 Platform, which provides intelligent solutions for both B2B and B2C clients.

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