LOYALTY INSIGHTS FROM 2022 & PROMISING TRENDS FOR 2023

1. LOYALTY INSIGHTS FROM 2022 & PROMISING TRENDS FOR 2023 Brands have realized the new ground reality of customer behavior which amplifies the importance of data analytics and strategy. 72% of customers recommend brands having good loyalty programs. In addition, brands with futuristic vision have hopped on the mantra of holistic loyalty to unlock long-term benefits. Below are the trends that became a mainstream strategy in the loyalty software market in 2022:

2. Trends that Defined the Existing Wave of Customer Loyalty 1. Hyper-personalisation of loyalty programs In a survey, personalization was ranked as the top factor for boosting customer engagement for the next 5 years. As a result, 2022 saw a significant increase in brands adopting a data-driven approach to design loyalty programs. Radisson Hotel Group revamped its loyalty program with unique perks and high customizability of choosing rewards. Here are more features of the loyalty program: ■ Members can redeem 325 points to make their hotel stay carbon-neutral. ■ Discount booster allows customers to boost their discounts for future purchases.

3. 2. Brands utilize gamification to engage customers Gamification is a proven way to drive customer engagement, with gaming audiences increasing rapidly. Additionally, 81% of loyalty program members like to engage with loyalty programs having a gamified experience. Fitness Rewards by Strava has taken gamification to the next level. Creating a leaderboard of participants and curating experiential rewards for members who complete challenges makes the loyalty program compelling. 3. Introduction of cryptocurrency and NFTs as loyalty rewards With the web3 revolution on the rise, cryptocurrency and NFTs are painting the future of loyalty programs. Since NFTs are unique and highly valued, brands have included them in rewards to develop appeal and differentiate themselves. Starbucks Odyssey has included digital collectibles as rewards for customers completing challenges and participating in brand engagement activities. Furthermore, the digital collectible gives members access to previously unavailable experiences and coffee workshops. 4. Strategic partnerships between brands A constant challenge for brands is to stay ahead of competitors and engage customers for maximum time. Partnering with brands opens new opportunities to engage customers in multiple ways. Also known as the Coalition program, a partnership is a core element of a holistic loyalty program. For example, the World of Hyatt loyalty program has partnered with American Airlines to offer reciprocal earning of loyalty points. In addition, it provides a chance to earn points on stays, spa services, and hotel dining with its partner brands. 5. Perks that surpass the efforts Data analytics has enabled marketers to understand customers and stay ahead of their expectations. As a result, marketers can curate rewards that outweigh the efforts needed to earn them. Virgin Atlantic allows its loyalty program members to redeem rewards and get one day flight without fear, course with experts. A one-day experience to understand every movement, squeak, and wobble through training and flight experience with just your earned loyalty points.

4. 6. Empathy a driving force Empathy has been a driving force in forging long-lasting customer relationships Building a community of loyal customers with similar interests allows members to make empathetic connections and boost brand advocacy. Sephora’s loyalty program members get access to an online community – ‘The Beauty Insider.’ Members can ask questions, swap advice, and get event updates to get their answers. Keynotes from 2022 Loyalty Programs ■ Instead of focusing on each transaction or segment of the customer journey, brands focus on the entire omnichannel experience. ■ Customer behavior never stops evolving, but the impact of an emotional connection through rewards beyond cashback can go a long way. ■ Including social causes in loyalty programs shows the shift in marketers’ mindset that focuses on empathy for everyone. While 2022 has been a year of market resurrection for brands post-pandemic, 2023 will be the year of adaptation, and agility. Let’s go through the trends defining the customer loyalty market next year.

5. What to Expect from Loyalty Programs in 2023? ■ 80% of Millenials & 75% of baby boomers prefer earning rewards through engagement activities having excitement as an element. Nike created a virtual reality game called Reactland, allowing members to play and share the experience with social media to gain exclusive rewards. Going forward, achieving customer engagement will demand more creative ways. ■ Brands go the extra mile in rewarding the highest-tier members. In 2023, loyal customers will play a crucial role in the brand’s product releases, policies, and vision. This year, Target launched ‘Target Circle’, with personalization and exclusive perks, allowing members to choose where Target should spend its charitable funds. ■ Customers are not going to wait to redeem rewards. In loyalty programs, instant gratification will become a norm. For example, 84% of customers felt better when they could instantly get rewards for actions performed. ■ Omnichannel experience and a holistic approach towards loyalty programs will become a necessity. 87% of Gen-Z want loyalty programs to be accessible

6. everywhere. In-store and online store experiences will become unified and seamless with brands leveraging technology platforms. ■ Third-party data has lost its value. Marketers realized that zero & first-party data are the new frontiers of personalization and customer experience. Loyalty programs fetch this valuable data helping in curating precise strategies and a customer-centric loyalty program structure. Summary Going forward, data alone will lose its worth. Analytics becomes the key to unlocking insights. A robust technology platform is needed to match customer expectations. Marketers can ride the next wave of loyalty with data analytics that tells them different things about customer behavior, a futuristic tech stack that equips them with features necessary to offer better customer experience, and the right strategy to connect with customers for building long-lasting relationships. Ultimately, a holistic approach where these fundamental essentials work together will become the lightsaber for loyalty leaders.