Loyalty Programs Category Intelligence
Report Coverage
The report provides insights on the following:
- Global Capacity–Demand Analysis
- Global Trade Dynamics
- Regional Market Snapshot-North America, Europe, Asia
- Cost Structure Analysis
- 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
Market Size
Market Size North America
$71 - 73 Bn
Market Size Europe
$36 - 38 Bn
Market Size Asia Pacific
$21 - 23 Bn
Loyalty Programs Market Overview
The global market for loyalty programs is expected to reach $215-$216 Bn growing at a CAGR of 5-6% between 2017 and 2022. By 2020, the global loyalty management market was expected to reach around $184-186 Bn, according to Beroe’s loyalty management market report.
Companies across key industries are progressively shifting from product-centered toward customer-centered approaches. Analysts at Beroe have observed that creating consumer value and prioritizing customers generates the greatest and ever-lasting business value.
As loyalty programs hover around attracting/rewarding businesses’ recurring customers, creating customer-centered methods have become essential to improve the customer retention rate, thus pushing the demand for loyalty programs.
Loyalty Program - Global Industry Analysis
- 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 to evaluate and monitor both channel and customer loyalty programs.
- 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 to ensure customer loyalty while driving down costs.
- 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. This can be a game-changer in the region whereby customers have been wary of such programs. It can help bring this region into the spotlight as more customers will be willing to participate, thereby fuelling the growth of the market.
- Globally, suppliers are increasingly focusing on customer acquisition and retention operations. Customer retention ensures that existing customers can be retained and new customers can be acquired and turned into loyal customers. This has allowed suppliers to offer a range of loyalty programs that are suited for different needs.
- Rather than take a single approach, suppliers are focusing on providing a range of loyalty programs depending on their customers. These include loyalty card schemes such as card rewards, affinity programs, cashback programs, and point-based card rewards.
- The pricing component is based on the specific project. Sometimes, the pricing is based on the volume too, and can vary from industry to industry and the particular requirements.
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 to ensure customer loyalty while driving down costs.
- 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. This can be a game-changer in the region whereby customers have been wary of such programs. It can help bring this region into the spotlight as more customers will be willing to participate thereby fuelling the growth of the market.
- Globally, suppliers are increasingly focusing on customer acquisition and retention operations. Customer retention ensures that existing customers can be retained and new customers can be acquired and turned into loyal customers. This has allowed suppliers to offer a range of loyalty programs that are suited for different needs.
- Rather than take a single approach, suppliers are focusing on providing a range of loyalty programs depending on their customers. These include loyalty card schemes such as card rewards, affinity programs, cashback programs, and point-based card rewards.
- The pricing component is based on the specific project. Sometimes, the pricing is based on the volume too, and can vary from industry to industry and the particular requirements.
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
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Loyalty Program - Global Market Maturity
- The global Loyalty Program market was valued at $181 billion in 2019.
- The market is forecasted to grow at a CAGR of 3–4 percent to $185–195 billion between 2020 and 2022.
- 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.
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 a digital loyalty program strategy. This will be a major growth driver in mature markets. Adoption of schemes such as a loyalty scheme under which you get customer loyalty and channel loyalty programs, membership programs, frequent flyer programmes, and digital rewards can help drive the market further.
Drivers
Cost Benefits
- Outsourcing in the reward program market 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 are high and the supplier passes on a part of the margin as a discount to clients.
Adoption of Advanced Technologies
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The success of a business is measured by the success of its consumers. Leading-edge technologies such as artificial intelligence (AI) and machine learning (ML) predict human behavior and buying patterns through various analytics.
- Moreover, AI and ML hold the potential to shape the strategies of loyalty program service providers. The AI-based predictive analysis helps businesses target relevant consumers to improve their customer experience (CX).
- AI and ML track several transactions as well as monitor and prevent hackers or crackers who might break into loyalty account points.
- Furthermore, both these innovative technologies provide retailers intelligent insights that can help improve consumer conversation, experience - and total sales.
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 and marketing services, food and beverage industries is a key driver. This can help propel the customer engagement program and reward plan schemes that can be a major driver.
Operational Benefits
- 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 providers will save cost by reducing the cost per unit of reward fulfillment (supplier provides discounts as the number of merchandising units increases due to economies of scale).
Rising Trend of Personalization
- To extract substantial revenue from loyalty programs, leading market players are integrating personalization into their loyalty platforms.
- Customers are getting attracted to custom coupons, recommendations, and promotions.
- Such loyalty programs improve customer satisfaction thus auguring well for loyalty program providers.
- By leveraging data gathered from omnichannel loyalty platforms, companies can make custom offers and recommendations to grab consumers' attention and trust.
Constraints
Subcontracting Practices
- Subcontracting of reward sourcing and delivery is done in case of suppliers lacking a 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 spending 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.
Government Regulations
COVID-19 Impact on Loyalty Program Market
The COVID-19 crisis is positively impacting the loyalty market as a majority of customers are rapidly shifting toward digital channels to buy products or services amidst the nationwide lockdown and related restrictions. The unprecedented growth of the e-commerce industry during the public-health crisis has influenced retailers to attract and retain maximum consumers to their websites, setting high hopes for loyalty platform providers.
Why Should You Buy this Report?
This report on the loyalty market also provides a descriptive industry overview 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 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 Frequently Asked Questions
- What is the market size of the loyalty programs market?
- The global loyalty management market is expected to reach a market size of $215-$216 billion by 2022.
- Who are the major players in the loyalty programs industry?
- As per Beroe’s loyalty program report, the high market maturity regions in the loyalty management market are West, East, and Gulf coast of US, UK, France, and Germany, Singapore, Hong Kong, China, Japan, and Australia, South Africa, UAE, Egypt, and Nigeria. The medium maturity markets are Canada and the central regions of the US, Spain, Portugal, Spain, Portugal, Poland, Morocco, Korea, Vietnam, India, Brazil, Argentina, Chile, and Mexico.
- What are the latest trends in the loyalty programs market?
- The various loyalty program trends are that there is an increasing cooperation between buyers and sellers in the loyalty management market which is leading to growing maturity. Suppliers are also ramping up their supply capability and monitoring their performances. E-commerce is also leading to rising demand for B2C loyalty.
- What will be the expected growth of the loyalty programs industry?
- Beroe’s loyalty program analysis shows that the global loyalty management market is expected to grow at 4-5% by 2022.
- What are the key drivers of the loyalty programs market?
- Some of the key drivers for the loyalty programs market are cost benefits, demand from potential industries, and operational benefits.
