Jun 13, 2023

Promotion insights: Loyalty programs define the future of customer engagement

David Hartery

Content Lead


6 minutes to read

Image of man climbing mountain, illustrating Promotion Insights

Spring has sprung — and that means people are planning some much needed time in the sun. But how do brands stay top of mind, no matter what season it is?  

Imagine you plan to hike the 4,260-km Pacific Crest Trail. Nearly halfway through, a fellow camper recommends you replace your undersized hiking boots with a new pair because they’re injuring you — and it will only get worse. Stuck in the wilderness, you wish you could — but don’t have any money to buy new boots. 

“You should call the company you bought your boots from and they’ll have new boots sent to your next stop.”

You follow the advice and call the company. They tell you that they understand your situation and will send you the boots. You just need to get to the next stop and pick them up. 

That seems like a pretty good service, right?

In the movie Wild (2014), when Cheryl - who was actually in the above situation - heard the company confirmation, she said, “Thank you so much. You’ll be my favorite company for ever and ever.”

That’s a perfect example of going above expectations for your customers. If businesses want to become their customers’ favorite brands for ever and ever, they need to:

  • demonstrate authentic empathy.

  • gain their trust.

  • build a relationship with them based on mutual profit.

  • ensure their messaging engages, inspires and impacts their customers.

But rather than focusing on servicing mountain ranges, there’s an easier way., Businesses need a quality, future-proof loyalty program to create an outstanding experience for their customers. 

What does a successful and effective loyalty program look like? What are the key features? How do loyalty programs reverberate across different sectors?

Spotlight on… Loyalty programs

With information, ease of comparison, and multiple shopping channels at their fingertips, the new generation of customers is more likely to shift to brands with a better loyalty program. According to McKinsey, two-thirds of millennials say they are willing to switch brands for a discount of 30 percent or more.

However, it’s not only about the price. A customer loyalty study shows that 90% of consumers say they’ll choose a retailer where they hold a premium loyalty membership over another retailer offering a lower price.  

Many brands have received the message, investing more on loyalty programs. According to Statista, the global loyalty management market was worth 4.43 billion US dollars in 2021. It is estimated that the size of the loyalty management ecosystem will surpass 18 billion US dollars by the end of 2028.

Therefore, a basic loyalty program limited to simple coupons and vouchers is next to having no loyalty scheme at all. You need cutting-edge loyalty technology that enables you to stand out from your competitors

Your loyalty program should address the customers’ growing concern over adopting a more sustainable lifestyle. According to Deloitte, nearly 1 in 3 consumers stopped their interaction with certain brands because they had ethical or sustainability-related concerns about them.

This is a great opportunity for brands to elevate their customer engagement by directing their loyalty schemes toward causes that have positive environmental and social impacts.

Starbucks has recently unveiled additional green initiatives to meet its 2030 planet positive goals. In cooperation with Volvo, the brand will develop an electric vehicle-friendly driving route featuring charging stations from the Denver area to its Seattle headquarters.

The American apparel company Bombas was founded on the philosophy of donating those in need. For each pair of socks purchased at Bombas the company donates one pair to the homeless. Bombas sold and donated its one-millionth pair of socks within its initial 2.5 years.

The swiftness of your response to your loyal customers is as important as its quality. According to Statista, the most disliked factor about loyalty or rewards programs is the time it takes to redeem a reward, cited by 45 percent of respondents. Your customers want their loyalty rewarded in no time.

This is where loyalty technology can help differentiate your program. With tech-based solutions, such as Talon.One’s API promotion software, you can add the real-time redemption feature to your loyalty scheme.


“If a business is no longer solving the issues of its consumer, then they are no longer fit for purpose in today’s ultra competitive world. Trust is key within any relationship where financial exchanges are taking place. Over the years, businesses that have rewarded customer loyalty through value-added services and rewards which give established customers something extra have prospered”.

Simon Phelan

Founder of Hometree



Fintechs and loyalty technology

As the financial services sector develops rapidly, different companies turn to digital to maintain their competitive edge. On the Talon.One blog, we’ve paid particular attention to how the rise of ecommerce and fintechs is transforming legacy loyalty programs in this sector.

The surge in the number of partnerships between banks and fintechs shows the willingness of financial institutions to embrace digital transformation. The dependability of established banking infrastructure coupled with the freedom to innovate and the agility to create tailored solutions for each customer - offered by fintechs - would promise more collaborations in the future. 

In a recent partnership, Lloyds Banking Group and fintech Bink teamed up to transform the way customers of the bank’s retail brands are able to link their loyalty points directly to their payment cards. 

The American fintech Affirm has established partnerships with a number of financial institutions including Cross River Bank and Celtic Bank, adding a Buy Now, Pay Later (BNPL) feature to their services. 
The fintech impact on loyalty programs isn’t limited to organizations operating in the financial sector. Fintech solutions can eliminate potential pitfalls in the successful implementation of a loyalty program, including account inactivity, low redemption rates, time delays, high transaction costs, high system management costs and low numbers of new and retained clients.


Loyalty technology arms race in the restaurant industry

March saw fierce competition in the restaurant industry in terms of developing loyalty programs. The competition dates back to a few years earlier and it all started with fried chicken!

In 2019, Popeyes launched a fried chicken sandwich that rocked the American fast food market. Sales skyrocketed as every other chain fought to keep up, along with the supply chain. 

The competition was merciless. McDonalds sold limited merch bundled with a chance to try one of their new chicken sandwiches early. They sold out in a single minute. Meanwhile, Popeyes purchased the 50 most common misspellings of the McDonalds used for this offer, redirecting them to a coupon code for a free Popeye’s sandwich. 

The loyalty arms race goes on. Zaxby’s fried chicken sandwich is a cornerstone of its loyalty campaign, even capitalizing on scarcity: new Zax Fanz Club members can reserve a free sandwich via the loyalty app for pick-up in store.

McDonalds also launched “MyMacca’s Rewards” loyalty program in Australia. Customers can earn 100 reward points for every $1 spent on eligible food and drink purchases via the MyMacca’s app. Once you earn a minimum of 2500 points, you’ll be able to redeem them on a range of menu favorites. 

Rib and Chop House went big too. The American restaurant chain successfully implemented its loyalty campaign, selling out of all its $600 loyalty cards. Since rolling out the cards in mid-March, sales were up 9 percent as diners continued to come back to pre-restriction levels.

There’s good news for pancake lovers too! The International House of Pancakes has launched a new loyalty program. The brand’s customers are invited to open an account online or through the IHOP app to participate in the campaign. They earn one PanCoin for every $5 spent, and can redeem those PanCoins for pancakes or save up for other rewards.

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Isabelle Watson

Loyalty & promotion expert at Talon.One

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