Key Technological Trends of Loyalty Programs for E-commerce

The heights that an e-commerce business can reach are dependent on how well the business serves its customers. A study conducted by McKinsey demonstrated that 70% of the buyer's journey is based on how customers perceive the service rendered. Brands that execute impressive customer-centric strategies and utilize retention technologies always triumph over their competitors.

According to a Hubspot report, 90% of consumers utilize customer service quality as a determinant in their decision to engage with a company. 68% of customers indicated that a customer service representative played a vital role in a recent positive service experience, and 62% stated this was also partially due to the efforts of a sales representative or seller.

One of the strategies enhancing customer service quality and facilitating customer retention is loyalty programs. These are designed to reward customers who make regular purchases.

Well-conceived marketing endeavors can elevate customer interaction to a new level. Loyalty programs contribute to enhancing customer satisfaction, improving conversion rates, and boosting brand profitability.

Let's delve into a few of the most successful technologies shaping e-commerce loyalty programs in 2023 and beyond.

For online retailers, standing out in the crowded e-commerce landscape becomes increasingly challenging as competition grows. To achieve this, investment in technology that provides a competitive edge for customers is crucial. One such tool enabling personalized customer interactions and stimulating brand loyalty is Artificial Intelligence (AI)-powered e-commerce software.

For instance, deploying AI chatbots in e-commerce helps optimize the interaction between the business and its customers. These bots facilitate natural conversation and continuously improve over time.

While basic chatbot technology advances conversation using keywords or UX features like suggested responses, AI-based chatbots utilize natural language processing and semantics to understand the context of human communication.

Advanced customer loyalty programs based on AI can offer profound personalization and enhanced customer interaction. At the core of such loyalty programs lie machine learning and deep automation.

For example, one cosmetics and perfume retail chain employs AI to boost sales and optimize marketing expenditure. Algorithms assist in determining which loyalty card owners are likely to make a purchase in the upcoming weeks and even predict potential items for purchase. Personalized recommendations and individual discounts based on these data help to maximize results.

A mobile wallet is a type of virtual wallet that stores payment card information, accessible via an app installed on a mobile device. Mobile wallets enable users to make in-store payments without the need to carry a physical wallet, as well as safely and easily make online purchases.

As more online purchases are made via smartphones, this trend is impacting payment methods in e-commerce stores. Today, several options are offered for customers to conduct monetary transactions from mobile devices, one of which is the use of digital wallets.

Mobile wallets can be conveniently integrated into a customer loyalty program as the wallet can also receive all customer information in real-time. As a result, it becomes easier to see where, when, and what transactions were made. This information can be used by the sales department to formulate and send personalized messages to customers.

Here are some of the advantages e-commerce stands to gain from incorporating mobile wallets into customer loyalty programs:

● Reduced advertising costs – reaching customers with information can be costly. Digital wallets can be used for targeted messaging and significantly cut down on advertising expenses.

● Improved customer experience – customers prefer brands that make purchasing more convenient. Mobile wallets support multiple accounts, offer easy payment management, and provide personalized offers from sellers. Moreover, digital wallets are stored on mobile phones, making them compatible with e-commerce websites.

● Secure payments – what makes mobile wallets more secure are multiple layers of encryption that protect electronic transactions. As each transaction is encrypted, the transferred data is devoid of any account owner information. Furthermore, to conduct a successful transaction, you need a fingerprint or authorization PIN code.

It's no surprise that apps are the most preferred customer touchpoints when it comes to loyalty and rewards. Although there are numerous financial payment methods, many companies achieve great success by utilizing their own loyalty apps.

Starbucks is one prime example. The brand created its own digital loyalty marketing platform that allows customers to load money or gift cards directly into the app, and then use it by simply scanning a QR code when purchasing in-store or ordering delivery. Additionally, the app displays accumulated points and alerts about the possibility of obtaining complimentary drinks right after purchase.

The Internet of Things, or IoT, is a technology that facilitates communication between various devices and data transmission to the cloud. Thanks to affordable microchips and high telecommunication bandwidth, there are billions of devices currently connected to the internet. This means that any household and industrial devices, from toothbrushes and vacuum cleaners to cars and industrial installations, can use sensors to collect data for subsequent analysis and optimal adjustment to user actions.

An IoT system performs real-time data collection and exchange and consists of three components:

◆ Smart Devices

These are devices capable of collecting data from their environment, user input or usage patterns, and transmitting them via the internet to or from a database.

◆ IoT Application

An IoT application is a set of services and software that collects data from various IoT devices. Such an application uses machine learning or artificial intelligence (AI) technology to analyze this data and make informed decisions. These decisions can be sent back to the IoT device for it to intelligently react to the input data.

◆ Graphical User Interface

IoT devices can be controlled via a graphical user interface. This can be a mobile application or a website used for registering and managing smart devices.

Today, IoT is becoming a mandatory technology that no serious e-commerce store can do without. Companies can benefit from analyzing big data, which comes from various connected devices in real-time. This information helps to build relationships with each customer at a whole new qualitative level.

E-commerce sellers, responding to specific customer actions, can provide them with a more individualized loyalty program.

Digital beacons, or simply "beacons," are miniature radio transmitters installed in devices or premises and near them that transmit data packets. They can be Bluetooth-based transmitters, trackable pixels in a message or on a website, and more. Apple also developed its own technology called iBeacon.

Mainly, beacon technology is used in three cases:

1. The first and most popular is sending personalized push notifications of informational or advertising nature to smartphone users. This happens automatically when a person is near a specified object (for example, near a store or a product shelf). Sending such notifications is possible if the user has a special application installed.

A successful example of using technology in this key is McDonald's, which used iBeacon to notify its visitors about the offer of the day - "McChicken" at a special price. During the promotion period, the profit from the sale of this product increased by about 8%.

2. The second is that beacons can organize convenient navigation indoors. Supermarket visitors can see an interactive map on the smartphone screen. For the user's convenience, routes to the desired object or the objects themselves and information about them can be marked on it.

In progressive countries, such a navigation system is almost on all large objects with high traffic, for example, in large international airports. The technology is especially common at international exhibitions. With the help of a detailed map of the exhibition area on the mobile phone, it is convenient to automatically lay out the route to the stand or hall of interest.

3. Third, and no less important - with the help of beacons, you can collect real statistics and specific indicators about people's behavior. You can analyze both an individual's route and the general indicators of visitors'/buyers' movements. This is a kind of "webvisor" for offline, which allows you to successfully optimize the layout of goods and recognize "hot" and "cold" zones in the trade room.

Example - when a conditional buyer passes by a store, a message with a profitable offer to make a purchase comes to his smartphone. And not just a discounted product, but exactly the product near the shelf with which the buyer spent five minutes during his last visit.

The viability of any business hinges on its ability to foster a strong foundation of loyal customers that ensure steady sales.

One of the most effective ways to cultivate this loyalty is by enhancing the customer's shopping experience. Reward and loyalty programs are among the most reliable tools a business can utilize to leave a positive impression and retain customers. The incorporation of the latest technologies into these loyalty programs allows for the utmost precision in tailoring offers for each customer, aiding in the achievement of set goals.