Technology and geo-political factors offer new business opportunities to new and existing industry players across the world. One aspect to evolving regional and global economies is the concept of loyalty ecosystems.
What Constitutes a Loyalty Ecosystem?
What is a Loyalty Ecosystem?
A loyalty ecosystem is a consumer-centric framework that rigorously retains customers by rewarding them for their loyalty – a principle which becomes the basis of a new kind of currency.
The most effective loyalty ecosystems rarely exist within a single brand or company – though some large-scale retailers like Amazon and Apple have created a network of proprietary products, services, and loyalty programs. In most cases, several complementary organizations (such as a system of lead brands and multiple white-label producers) join forces to deliver a more sustainable customer experience.
Implied within the term “ecosystem” is the awareness that consumer behavior evolves over time. As such, consumer deliverables must break free from static models and embrace an iterative approach to product or service development.
What are Key Components of a Loyalty Ecosystem?
Loyalty ecosystems are still emerging in today’s current economy. Thanks to analytics platforms, experts know more about the value of loyalty programs and currencies. And thanks to mobile technology, transaction applications are able to synthesize a host of different currencies, including loyalty points and online banking integration.
At Pri-Num, we define the key components of a loyalty ecosystem, as follows:
- Intimate knowledge of buyer behavior
- Transaction or POS data analytics
- Value drivers
- Mobile UX design
- Digital wallet functionality
- Product/service bundling
- Agile product/service development
Buyer behavior validates cutting edge data supporting loyalty ecosystem tools. Thanks to online user tracking and POS information, retailers have terabytes of customer insights whether or not they realize it. Loyalty ecosystems unlock intimate awareness for a detailed audience segmentation analysis.
Thanks to this data, marketers and developers recognize value drivers – those products or services that buyers value most. This insight helps organizations adjust pricing models to match consumer behavior, increase profit margins, and institute intuitive loyalty programs.
To capture optimum client retention, vendors turn their attention toward the user experience. As smartphone use overtakes all other methods for accessing the web, mobile UX design offers the key to unlocking consumer excitement and loyalty.
Similarly, digital wallet functionality reduces barriers and the number of clicks it takes for consumers to access products and services they want or need.
More so than ever before, vendors can follow consumer trends and anticipate evolving demand. These realities help organizations embrace brand partnerships and agile development. Partnerships become value-driven productservice bundles.
Ongoing product and service development can address more nuanced customer segment needs.
It’s true that investing into a loyalty ecosystem involves high up-front costs – it’s a full digital transformation that includes deep-dive analytics on consumer behavior and UX redesigns.Elena Volkovskaya
But as steep as the up-front costs are, the returns are much greater. Among them are authentic connections with a fast-rising number of loyal customers. That loyalty will translate into more frequent and higherdollar purchases.
Director of Strategic Marketing
Why “Modern” Banking is Outdated
Charles Ehredt, former executive at Accenture and now an industry thought leader, addressed a crowd of business students at a TEDx event. In this TED Talk, Charles introduced a few key mindsets that trace the trajectory of transaction technology.
And as fate would have it, the future of transactions break the mold of what some naively refer to as “modern” banking.
A glaring problem with banking today is that it leaves out entire regions of unbanked, emerging economies around the world. Entrepreneurs and consumers in these regions embrace mobile technology and leverage primitive mobile wallet applications to participate in the global economy. “Modern” banking has little to do with this trend – blockchain technology, mobile applications, and loyalty currency do.
What is Currency?
Fiat currency lacks the unquestioned credibility it once enjoyed from consumers over the last five centuries. That’s not to say that fiat currencies are going away. But currency is a bigger concept than the Dollar or Euro. Consumers are learning that value can be agreed upon and represented in many ways, such as is the case in ancient barter systems and modern crypto currencies.
Mobile technology also expands the currency conversation, since vendors have found ways to incorporate various easy payments, crypto transactions, and loyalty points for increased customer lifetime value.
Money is something that represents a unit of account, it’s a store of value and it’s broadly accepted and stored by people as a medium of exchange.Charles Ehredt
What is the Value of Loyalty Currency?
Loyalty currency is hardly a new concept. The 1980s coffee shop that handed out punch cards to customers so that they could turn in 10 purchases for a free drink is a clear example of loyalty currency.
However, a quick customer retention margin analysis demonstrates that loyalty currency is seriously undervalued in most marketplaces.
The next major development in retailing will be brands competing to increase the value of loyalty currency in exchange for significantly larger market shares.
Loyalty points are a type of currency. They are in extreme use worldwide and most people belong to a dozen or more loyalty programs. In fact, there is more value in loyalty point currency in circulation than US Dollars.Charles Ehredt
How the Mobile Wallet Enhances a Loyalty Ecosystem
Mobile technology deployment makes a thriving loyalty ecosystem possible. Fiat currencies, securities, and loyalty points must find a way to speak the same programming language before customers can take full advantage of the modern marketplace.
Consumers already enjoy credit/debit card account integration with their smartphones. Similarly, mobile device authentication and biometrics help consumers secure tickets and insurance information more reliably. Each of these features set the stage for mobile wallet technology.
Organizations that embrace mobile wallet platforms give their customers the ultimate buying experience. Not only does the software provide value-driven product-service bundles and secure transactions, but it can increase the value of loyalty currency with greater efficiency.Elena Volkovskaya
Director of Strategic Marketing
Placing digital wallet technology at the center of branded loyalty programs can dramatically enhance the customer experience, resulting in higher acquisition and retention.
Digital transformation allows organizations to access critical data and capabilities to thrive in today’s loyalty ecosystem. Consumer behavior is less of a mystery when transaction and user data highlight demand trends. Furthermore, businesses enabling demand trends can anticipate customer segment lifestyle needs and meet those needs with value-driven deliverables.
Across every phase of the buyer’s journey, embracing mobile shopping and payment platforms greatly enhances the customer experience. Consistently anticipating and delighting buyers helps modern-day vendors disrupt stagnant markets and claim key partnerships and significant market shares.