Loyalty 2.0 and Other 2024 Trends Poised to Make an Impact on Retail
As we begin 2024, the world of e-commerce will see continued evolution and disruption. Consumer behavior has fundamentally shifted over the past several years, with more shoppers flocking to digital storefronts and leveraging digital shopping technologies. With this backdrop in mind, here are four key predictions for what's in store for e-commerce in 2024.
Consumers Will Become More Cautious About Spending
High prices, high interest rates, and general economic uncertainty are expected to continue into 2024. Therefore, consumers will likely become more conservative with their discretionary spending. Over the past couple years, many shoppers have become more selective, only buying what they really need or heavily weighing each purchase decision. At this point, it’s likely a habit people won’t soon abandon. Still, Adobe’s recent report on Black Friday and Cyber Monday indicated that online sales were up 7.8 percent, much stronger than expected — proving again that it’s still difficult to accurately predict consumer behavior.
The challenge for retailers will be convincing shoppers to continue this stronger spending on non-essentials and discretionary items from the holidays into 2024. If customers start pulling back post-holidays, how can brands maintain momentum? It’s clear they'll need to demonstrate their products’ value and highlight savings opportunities for consumers. We expect retailers to offer more strategic discounts, strengthen their loyalty program rewards, and offer incentives such as buy-one-get-one (BOGO) deals to entice the cautious consumer.
Retailers that help shoppers stretch their dollars will be best positioned to still capture business amidst consumer thriftiness. Providing payment plans such as buy now, pay later (BNPL) can help consumers budget and pay for larger purchases over time. BNPL is proving to be a winner for brands (and consumers), with PYMNTS Intelligence reporting almost one in five consumers used BNPL at least once in April 2023, and over Black Friday weekend 2023, online sales using BNPL saw a 17 percent increase from 2022.
More High-End Brands Will Embrace Rewards Programs
Historically, some luxury and premier brands have avoided implementing loyalty and cashback rewards programs out of concern it could cheapen their elite brand image. But in 2024, we'll likely see more high-end retailers dip their toes into rewards.
According to our research, consumers are increasingly turning to cashback browser extensions and other money-saving technologies. These tools make it easy for shoppers to automatically find and apply coupon codes to receive cash back for online purchases. In today’s tight economy, expect to see more premium retailers experiment with value-adding efforts such as affiliate programs, loyalty points, tiered rewards programs, and other incentives.
The challenge will be structuring these programs to align with a luxury brand's image. Overall, high-end brands prefer to make bigger investments in customer loyalty without compromising their prestige.
Retailers Will Unleash Generative AI
Generative artificial intelligence emerged as one of the hottest technologies of 2023. Retailers dabbled with tools like ChatGPT to generate content and handle customer service interactions. In 2024, we’ll see e-commerce brands unleashing the true power of generative AI.
Forward-thinking companies will start integrating these tools into shopping carts to provide personalized product recommendations, optimize landing pages, and create product descriptions tailored to each shopper. Customer service chatbots will continue evolving, becoming smarter and more conversationally fluent. Shoppers may even receive AI-generated texts and emails with deals based on purchase history and interests.
The challenge will be developing processes to ensure generative AI content is helpful, accurate and aligned with brand voice. But overall, retailers embracing this emerging technology will have a competitive edge in delivering highly customized, engaging customer experiences.
Loyalty Will Evolve
Loyalty and rewards programs have become table stakes for retailers looking to build a dedicated customer base. Looking ahead, we'll see "Loyalty 2.0" start to take shape in 2024, as brands take their programs to the next level.
Rather than just providing points and program tiers that are geared to transactions and spend, smart retailers will add more value that provides differentiated benefits for already-loyal shoppers. This is likely to include exclusive access to products and sales, more personalized rewards and offers, decreased friction in the checkout process with improved payment options, and more.
The challenge will be identifying and delivering perks that delight customers and deepen brand affinity. Retailers will need to leverage data and insights to intimately understand the wants of top customers. This may be accomplished by the usage of generative AI to analyze results and personalize marketing messages. Brands that can creatively elevate loyalty programs beyond feeling purely transactional will be primed for greater customer retention and lifetime value.
In summary, 2024 will be marked by continued retail disruption, the emergence of new technologies, and evolving consumer preferences. Agile, customer-focused brands that provide savings, value and personalized experiences will be best positioned to thrive in the coming year.
Michelle Wood oversees the merchant network side of the Wildfire Systems platform, which helps companies monetize their users with white-label cashback and coupon services.