The basic principles on which loyalty programs are based have remained the same for decades – customers are rewarded for their business with points, miles or vouchers which they can then exchange for a specific – usually limited – range of goods, typically with the issuing brand. This article will review how this traditional model constrains loyalty programs and limits their power to incentivize shoppers to keep spending with a specific brand. We will further introduce what has become clear as the next logical step in the evolution of the loyalty industry – the merging of loyalty and payments – and set out the benefits for both retailers and consumers.
Unfulfilled potential
The popularity of loyalty programs is fueled by the idea that a customer will get something they value in return for their engagement with the brand. Redemption must therefore be relevant, straightforward, and accessible. Yet, consider the following: an estimated 85 percent of loyalty points are left unredeemed.
As well as representing missed engagement opportunities, unredeemed loyalty points are considered a liability for a brand, in the form of a future cost that the company may have to incur. When enough loyalty points are left unredeemed, the brand may need to set aside funds to cover the future cost of providing the rewards, which can impact their financial statements and cash flow.
There are a variety of reasons why points aren’t redeemed, including point expiration; rewards being tied to specific products or activities that simply don’t appeal to customers; and customers leaving physical cards and vouchers behind, or forgetting to redeem digital coupons at checkout. In one survey, it was found that 26 percent of Gen Z (people born 1997-2012) never redeem loyalty program rewards at all!
It is clear, therefore, that today’s loyalty programs are falling far short of the mark when it comes to rewarding customers in a meaningful way for engaging with their brand, and retailers will typically experience lower customer engagement levels as a result. In order to reap the benefits of increased engagement that improves their own bottom line, and avoid the liability of unredeemed points, retailers therefore have a vested interest in making it easy for their customers to spend their points – which includes expanding the range of available redemption opportunities.
CoinBridge is the only solution that delivers an outstanding, seamless experience - from implementation, to use, to payment execution - giving retailers a unique competitive advantage in the market.
Reward constraints
Whilst, as mentioned above, the basics of loyalty programs have stayed the same over the years, the loyalty ecosystem hasn’t remained completely static. In an effort to stand out in the vast ocean of loyalty programs, in recent years brands have created partnerships and alliances to facilitate point redemption at other retailers. For the consumer, being able to ‘burn’ points at a wider range of outlets enhances the appeal of remaining loyal.
For the brand, however, such a move requires substantial behind-the-scenes investment of capital, time and resources, making it increasingly prohibitive as they extend coverage of their program to an increasing number of merchants.
A redemption revolution
Breaking out of the closed-loop model and opening up loyalty redemption opportunities for consumers, anywhere at all, enables brands to really make their loyalty programs work for them. Now, thanks to the new market disruptor CoinBridge by Nayax, they can do so with very little effort or investment – of time or money – on their part.
Creating a new paradigm that is set to revolutionize the whole loyalty industry, CoinBridge seamlessly merges loyalty and payments into one. Customers may now use loyalty assets at their own convenience to pay for whatever goods or services they want or need, at any merchant, in-store or online, worldwide.
CoinBridge overcomes any technological, timing, financial or resource challenges that may otherwise be faced by retailers that are considering expanding their loyalty program through partnerships or alliances. Covering all technological, regulation, merchant settlement, and transaction handling aspects, it provides a single-point solution, that is simple and fast to implement, with no POS or merchant integration, and no need to sign contracts with multiple retailers. Retailers just need to implement a simple software kit (SDK) into their existing mobile app to instantly upgrade their loyalty proposition with infinite redemption opportunities at any shop or website.
Based on innovative, patented technology, CoinBridge is the only solution that delivers an outstanding, seamless experience – from implementation, to use, to payment execution – giving retailers a unique competitive advantage in the market.
Maximizing loyalty program benefits
Once implemented, CoinBridge generates a wealth of transactional data, which can then be utilized to improve the retailer’s offering. For example, if a customer uses their loyalty points to buy coffee at another chain, the retailer gains insight into an area of consumer spending behavior that they could not otherwise have accessed. This can be leveraged to personalize propositions for them, as well as to optimize the retailer’s own business operations – perhaps by opening an in-store coffee shop!
Meanwhile, the increased financial freedom, convenience and overall sleek customer experience of a truly open-loop program drive greater customer loyalty. Not only do they keep coming back and spending more, but they also become advocates for the brand, recommending it to their friends, family, and their all-important social media followers.
Frictionless payments
For customers, too, CoinBridge is a leap forward. By bridging the gap between loyalty and payments to essentially turn loyalty assets into a viable and globally-accepted payment method, the friction that can traditionally arise during the redemption process is drastically reduced.
This is great news for consumers, especially in light of rising living costs and ongoing financial uncertainty. In a recent IAG Loyalty survey, 92% of consumers in the UK said they rely on loyalty programs to provide extra value during the cost-of-living crisis, and more than 50% said they’re actively looking for new ways to collect points and maximize the returns when they spend money. CoinBridge has an essential role to play in enabling them to maximize the resources at their disposal to include loyalty rewards, and in doing so, strengthen the household economy.
Ultimate value
CoinBridge is the solution that retailers have been missing to make their loyalty offering more attractive, so that they themselves can reap maximum benefits. By giving their customers what they most value – simplicity, efficiency and choice – they add untold value to their own brand.
For more information on the Loyalty-to-Payments™ solution from CoinBridge by Nayax, contact us using the form below.