Loyalty Programs Market Overview
The market for global loyalty programs is expected to reach $215-$216 billion while growing at a CAGR of 5-6 percent between 2017 and 2022. High market maturity would be experienced in regions such as Western Europe, North America, and some parts of APAC such as Australia, Japan, Hong Kong, and Singapore. In addition to this, APAC and parts of the LATAM are also expected to be the future growth driving markets for loyalty program services.
Loyalty Program - Global Industry Analysis
- The global Loyalty Program market was valued at $172.5 billion in 2018.
- The Loyalty Program market in North America was valued at $72 billion in 2018 and is growing at CAGR of 2-4 percent.
- Regions, such as Western Europe, North America, and some parts of APAC, such as Australia, Japan, Hong Kong, Singapore, have high market maturity.
- The APAC and parts of Latin America are expected to be the future growth driving markets for loyalty program services.
Loyalty Program - Global Industry Trends
- The growing geographic footprint of service providers and the adoption of global loyalty program strategy by buyers indicate the increasing maturity and willingness of both the supplier and buyers to partner on a global scale
- Suppliers are also improving their supply capability while adopting performance-based metrics for evaluation and monitoring of both channel and customer loyalty program
- E-commerce is fueling the demand for B2C loyalty, whereas B2B is driven by customer retention, as the marketers aim to guard their brand against generic products in the market. This has led to the outsourcing of services by buyers
- In order to boost loyalty program participation in the Middle East, suppliers are investing in analytics and business intelligence tools to personalize the program for relevant rewards and incentive schemes
Why should you Buy this Report
The report also provides a descriptive overview of the market for loyalty programs in areas such as North America, Europe, Middle East, Africa, APAC, Australia, and Latin America. It also explores the various opportunities and challenges affecting the loyalty programs industry, along with Porter's five forces analysis of developed and emerging markets.
Methodology for writing this Report
Beroe gathers intelligence through primary sources that include industry experts, researchers, and consultants, as well as current suppliers, producers and distributors. Secondary sources can include business journals, newsletters, magazines, market research data, company sources, and industry associations. Following data collation, analysis, and strategic review, the Final Research Report is published on Beroe LiVE.
Loyalty Programs Market Trends
Category Intelligence on Loyalty Programs covers the following
- Information relating to market, supply, cost, and pricing analysis
- Hard to find data on cost and TCO models, supplier details, and performance benchmarks
- Macroeconomic and regional trends impacting cost, supply, and other market dynamics
- Category-specific negotiation and sourcing advice
Loyalty Program - Global Market Maturity
- Loyalty program penetration is high outside Europe and North America, due to increasing e-commerce and online buying behaviour of the customers
- High adoption for Loyalty Program in APAC, due to the presence of regional/global suppliers with the established technology platform and regional/local merchant network offering iconic reward catalogue. Global buyers are looking at consolidating the supply base
- The Middle East and Africa have low adoption, as infrastructure and connectivity pose a challenge in rewards sourcing, fulfilment, and delivery in certain locations
Growth Drivers and Constraints
The growth of retail and e–commerce in the emerging markets is expected to drive loyalty program budgets in these markets. Growth in online buying culture, high adoption of mobile and smartphone by the consumers had raised the need for digital loyalty program strategy. This will be a major growth driver in mature markets.
- Outsourcing has led to a reduction in the number of hours billed for the technology platform. The initial infrastructure cost for creating a technology platform is a one–time spend and this platform is customized to suit client requirements. Hence, the margins on a long term contract in providing this platform to clients is high and the supplier passes on a part of margin as a discount to clients
Potential Industry Sectors
- The demand for loyalty services is primarily driven by the retail, financial services, consumer product and food and beverage industries. Demand for digital reward program, analytics and business intelligence for customization by the retail, food and beverage industries is a key driver
- Outsourcing allows buyers to standardize the level of services across various locations. Productivity and efficiency could be enhanced through the introduction of various critical performance indicators and compliance clauses in the contract
- Centralized procurement through global/regional service provider will save cost by reduction of the cost per unit of reward fulfilment (supplier provides discounts as the number of merchandising units increases owing to economies of scale)
- Subcontracting of reward sourcing and delivery is done in case of suppliers lack proper network in a particular region or when the program requires high localization. This practice indirectly affects the buyer since subcontractors (Local Agency) charge a margin to the service provider, which is eventually passed on to the buyer. This margin–on–margin increases the spend of the buyer
Limitation of Technology Platform
- The loyalty program that runs on the plug and play SaaS model and is limited by SaaS capability will face issues as the customization of the program may spike the cost of the program and cost saving by avoiding customization may lead to a dissatisfied customer