Loyalty Management Market Size, Share & Trends Analysis Report By Component, By Software, By Deployment, By Organization, By Industry Vertical, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global loyalty management market size was valued at USD 7.84 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 10.5% from 2022 to 2030. The loyalty programs aim to establish customer engagement to understand and influence their buying behavior. Factors such as an increasing expansion of the retail and e-commerce market coupled with the shift towards a customer-centric approach by the business organization are primary factors driving the growth of the market. The increasing penetration of smartphones worldwide and enhancing internet services have enabled easy access to the internet, encouraging market expansion across regions.

The growing implementation of Artificial Intelligence (AI), Machine Learning (ML), and big data in loyalty management programs can help assess consumer perception and make effective loyalty programs for all consumer segments. The technology helps analyze a large amount of unstructured and structured data from smartphones, survey forms, wearable devices, and cookies to extract actionable insights, further driving the growth.

The shift toward personalized loyalty programs providing personalized recommendations which the customer interacts with helps in customer conversion. The inclusion of gamification into loyalty programs helps in increasing the figures for digital engagement, social sharing, and enhanced digital customer journey, further propelling the growth of the loyalty management market.

The COVID-19 pandemic adversely affected the transportation, construction, and hotel industries. The aggressive spread of coronavirus worldwide forced the government to introduce containment measures to curb the spread of the virus. The COVID-19 epidemic has had a moderate influence on the market growth of the market. In turn, the pandemic positively impacted the market growth.

Lockdowns imposed in various countries to stop the spread of the coronavirus hampered physical sales, yet, the popularity of e-commerce websites and online shopping grew significantly. As a result of the lockdowns, customers opted to shop online, prompting merchants to take various measures to retain their existing customers and attract new ones, resulting in the implementation of loyalty management programs.

The increasing uptake of online shopping has also led to the introduction of initiatives such as adding free delivery services for the starting loyalty program members—the new initiative of providing free delivery intended to deliver the greatest possible service to the consumers. For any business, understanding customer behavior, preference, and patterns are essential to improve engagement with them at all possible touchpoints, such as online transactions and browsing through catalogs on online sites.

In today’s time, just engagement is not enough to receive a reaction from the customer; the engagement has to hold meaning which can help make a strong relationship between the brand and its customers. With the large amount of structured and unstructured data generated through every click, the organization needs to go through the data and extract actionable insights. This data will help increase the customer’s lifetime value, retain existing customers, and even create interconnected in-store and digital customer experiences.

Major market player Oracle Corporation has developed the Oracle Crowd Twist Loyalty program, which combines in-store and digital customer experiences. When implemented in a retail or other organization, the software helps create an Omni channel loyalty program by combining digital and in-store experiences. The Omni channel approach provides a 360-degree view through analyzing data from all the touch points to create personal product recommendations or offer bonus points, coupons, and discounts on special occasions. The development of this software which provides a tailored experience to the customer is driving the market growth. 

Implementing AI and ML with a loyalty program to automate the loyalty management program while keeping up with real-time industry trends is helping organizations provide customers with services. Comarch has actively integrated AI and ML to provide personalized service, which helps organizations create close engagement with offers and promotions tailored for all loyalty program members. With sentiment analysis, micro service facilitates the organizations to monitor various written communication such as messages, emails, incoming requests, surveys, and social media posts.

The written communication analysis helps in understanding the key behavior traits of the customer, which help in creating loyalty management strategies accordingly. The receipt scanning feature takes digitalization one step further, as a customer can scan their receipts to redeem their rewards and coupons. The receipt scan is based on automation; this saves the customers time while enhancing their experience.

Gamification is also gaining popularity in loyalty management programs; gamification uses visuals based on cartoons or video games to extract insights and increase customer engagement. Brands can leverage data to provide rewards and offers relevant to the consumer with gamification. The ever-growing dependence of loyalty programs on consumer data also leaves space for its misuse.

Many organizations use cookies to collect data that websites can use to make the site more relevant to the visitor. The use of cookies has raised concerns over data privacy and security, restricting the end-user from giving information freely. These concerns have become major restraints for the adoption of loyalty platforms.

Data security and privacy regulations hamper organizations from accessing their user data freely. As a result, many organizations cannot provide engaging, meaningful, and realistic experiences and rewards. Similarly, laws related to credit cards and banking restrictions have forced the BSFI sector to revamp its loyalty management program.

The lack of awareness about loyalty programs and the perception that they are futile has created an entry barrier among middle-income groups. Furthermore, cases of fraud reported by consumers have also hindered market growth. As consumers are compromised, giving them a bad experience, hence, impacting the growth of the market for loyalty management.

Component Insights

The loyalty management software dominated the component type, with the highest revenue share of over 50% in 2021. Loyalty management software has become an essential part of the organization as the organization focus on customer experience management. Customer loyalty software is essential in analyzing the result of e-mail marketing campaigns.

Organizations are adopting loyalty management programs and retaining insights from the engagement cycle and user experience. The application of loyalty programs helps the organization retain data from every touch point, such as brand advertisement, point of sales, online payment process, and feedback. The data accumulated from the touchpoints are used to devise loyal programs for providing an enhanced user experience. 

The software segment is expected to register the highest CAGR of 10.8 % over the forecast period. Factors such as the increase of e-commerce, proliferation of mobile technologies, and youth showing interest in rewards-based loyalty programs have led the organization to adopt loyalty program software. These factors are also anticipated to fuel the growth of the segment.

Software Insights

The customer loyalty segment held the largest market share of over 40% in 2021. The loyalty of the customers toward a certain brand influences the buying decision of their social circle based on their word of mouth. Many organizations also mix their loyalty and referral programs to increase their engagement and customer count. These initiatives of giving referral codes or helping in adding a new customer is also a strategy to enhance the engagement while rewarding the referrer with a reward such as a coupon, discounts, or free months of subscriptions increases the organization's revenue and sales. Therefore, the uptake of customer loyalty programs is considered a primary growth factor.  

The customer retention segment will grow at a CAGR of 11.2 % from 2022 to 2030. Customer retention has always been a challenge for businesses worldwide. The changing consumer patterns during the COVID pandemic compelled organizations to focus on retaining their customers and implementing loyalty programs. The ability of loyalty management programs to engage and enhance customers' loyalty towards the organization and the brand is driving the growth of the segment.

Organization Insights

The large enterprise segment accounted for the largest revenue share of over 60% in 2021. Several industries and their verticals, such as BFSI, IT & telecommunications, retail & consumer goods, and media & entertainment, are increasingly adopting loyalty management solutions. Large enterprises are particularly investing in loyalty management solutions to cement their position in a highly competitive environment.

The small and medium enterprise segment is anticipated to register the highest CAGR of 11.1% over the forecast period. SMEs play a pivotal role in supporting the employment and economy of a country along with its respective industries. The advantages of cloud-based deployments, such as cost-saving, and compatibility with their CRM system, encourage small and medium enterprises to opt for cloud-based loyalty management solutions. 

Industry Vertical Insights

The retail & consumer goods segment accounted for the major market share of over 20% in 2021. Retail and consumer brands use loyalty programs extensively for customer engagement and encourage customers for repetitive purchases. Organizations generally implement loyalty programs such as point programs, cash backs, loyalty punch card programs, tiered loyalty programs, and coalition loyalty programs. The different types of programs cater to different segments of customers by rewarding them with discounts and gift coupons and redeem codes.

The BFSI segment is expected to register the highest CAGR over the forecast period. Advancement in technology is prompting BFSI companies to focus on strengthening customer loyalty. Intensifying competition across the banking industry has prompted banks to adopt loyalty management solutions to engage customers, enhance their relationships with them, and attract new customers. The growing preference for internet banking and mobile banking among customers is opening opportunities for banks to gain customer attention and strengthen customer loyalty.

Deployment Insights

The on-premise segment dominated the market with more than 50% of the revenue share in 2021. Concerns over data security and privacy of the customer and employees are the primary factors behind the on-premise deployment of the software. Furthermore, on-premise software deployment also allows companies to manage employee operations and assume control over the overall system and data.

The cloud segment is anticipated to register the highest CAGR over the forecast period. The cloud-based deployment model can support devices and channels like computers, smartphones, tablets, social media, and websites. The growing internet penetration and smartphone ownership are propelling the online content generation over different social media platforms. Cloud-based deployment of loyalty management solutions is gaining traction due to advantages such as scalability integration and flexibility in usage extensibility, prompting organizations to implement public or private cloud platforms according to their needs and budgets.

Regional Insights

North America accounted for a revenue share of over 32% in 2021. North America consists of established economies, such as the U.S. and Canada. Customers in the region favor loyalty-based retail brands. Most customers prefer monetary benefits, such as cashback, rebates, and product discounts. All these factors bode well for the growth of the market.

The adoption of solutions based on the latest technologies for customer data analysis, real-time reporting, and aggressive investments in AI-based loyalty programs are also driving the adoption of loyalty management solutions. Many organizations prefer to offer personalized loyalty programs for different customers, which is likely to boost growth.

Asia Pacific is anticipated to register the highest CAGR of 11.6% over the forecast period. Asia Pacific is home to emerging economies such as India and China. The growing internet penetration, increasing social media usage, and the rising popularity of the e-commerce industry are encouraging the growth of the market. The use of credit and debit card transactions on e-commerce sites in China and India also favor regional market development. 

Key Companies & Market Share Insights

The market is highly competitive owing to the presence of several players. These players have a robust global presence and support many industries, such as BSFI, hospitality, and SMEs. To keep up with the ever-changing customer behavior and loyalty dynamics, the organization continually updates its product offering. For instance, Oracle announced updates in its Customer Experience (CX) Suite. The suit is now equipped with a voice assistant, smart listing facilities, and automated digital services supported by artificial intelligence. 

The players are also implementing growth strategies, such as mergers & acquisitions and strategic partnerships, to create a stronger foothold in the market. For instance, Annex Cloud and Bazaarvoice have announced a partnership to leverage each other product expertise which will enable different brands to develop multichannel loyalty programs for rewarding their customers. The partnership will allow end-users to use Annex Cloud’s Loyalty Experience Platform effectively and the Bazaarvoice database for product reviews and user-generated content solutions. Some prominent players in the global loyalty management market include:

• AIMIA

• BREIRLEY+PARTNERS

• Comarch

• Fivestars

• ICF Next

• Lacek Group

• Oracle Corporation

• SAP SE

Loyalty Management Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and analyzes the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global loyalty management market report based on component, software, deployment, organization, industry vertical, and region:

• Component Outlook (Revenue, USD Million, 2018 - 2030)

  • Software

  • Service

• Software Outlook (Revenue, USD Million, 2018 - 2030)

  • Channel Loyalty

  • Customer Loyalty

  • Customer Retention

• Deployment Outlook (Revenue, USD Million, 2018 - 2030)

  • On-Premise

  • Cloud

• Organization Outlook (Revenue, USD Million, 2018 - 2030)

  • Small & Medium Enterprise

  • Large Enterprise

• Industry Vertical Outlook (Revenue, USD Million, 2018 - 2030)

  • Transportation

  • IT & Telecommunication

  • BFSI

  • Media & Entertainment

  • Retail & Consumer Goods

  • Hospitality

  • Others

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • China

    • Japan

    • India

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa