Understanding the Shift Towards Real-Time in Loyalty Programs

Consumers have grown accustomed to the instant gratification of mobile apps, social media, and e-commerce platforms. As a result, they now expect the same level of responsiveness from all their interactions, including loyalty programs. Concurrently, advances in cloud computing and AI have increased businesses' ability to collect and analyze data in real-time, enabling the creation of contextually relevant offers tailored to individual customer needs.

Despite these advances, my discussions with loyalty practitioners suggest a lack of clarity about the concept of “real-time” and its practical benefits. This article aims to explain the key concepts and proposes that "real-time" will be increasingly important for modern loyalty programs.

The Distinction Between Real-Time Issuance and Real-Time Redemption of Offers

Although closely linked, real-time issuance and real-time redemption represent distinct stages in an offer's lifecycle. Understanding these differences is critical to maximizing customer engagement and business outcomes.

1. Real-Time Issuance of Offers

Definition: Real-time issuance refers to the immediate creation and delivery of offers to customers based on their current behavior, location, or context. These offers are generated and sent when the business detects a trigger, such as a customer entering a particular physical location, browsing a website, or making a specific purchase.

Example: Imagine a customer who enters a shopping center car park. Within seconds, they receive a push notification with a personalized offer from a business they previously engaged with online at the shopping center’s website.

Objective: The primary goal of real-time issuance is to provide timely, contextually relevant offers that align with a customer’s immediate needs. At Eagle Eye, we believe that real-time issuance will be the next big transformation in loyalty marketing, as businesses capitalize on the power of AI to engage with customers "in the moment”, at the times that matter most.

Some Scenarios Where Real-Time Issuance Is Effective:

• Location-Based Offers: When customers are known to be in a particular location, like an airport, road, or shopping center, real-time issuance can deliver targeted offers relevant to their current context, increasing the likelihood of purchases from businesses in a specific geographic area.
• Behavior-Triggered Promotions: When a customer engages in a particular behavior, such as browsing specific products online, real-time issuance can instantly send offers to encourage them to complete the purchase or explore related items.
• Event-Driven Incentives: During special events or time-sensitive scenarios, like sporting events or shopping trips, real-time issuance can create urgency by delivering immediate offers that prompt customers to act quickly.

2. Real-Time Redemption of Offers

Definition: Real-time redemption refers to the immediate execution of an offer at the point of sale (POS), in-store or online, so the offer or discount is instantly applied before the transaction is completed and payment is made.

Example: Consider a customer who receives a coupon via a mobile app for a pre-flight drink at an airport bar. They use the coupon at checkout, and the discount is applied instantly.

Objective: Real-time redemption aims to increase satisfaction and uptake by instantly applying personalized offers to deliver immediate gratification, rather than the deferred benefits delivered by traditional loyalty points-based offers.

Some Scenarios Where Real-Time Redemption Is Effective:

• Loyalty Partnerships: Real-time redemption enables consumers to burn their points directly for products at the partner's business. For example, Tesco Clubcard delivers several hundred thousand voucher redemptions monthly to partners like Café Rouge and PizzaExpress.
• Low-Frequency Categories: In categories where customers visit less frequently, offering an immediate benefit can be more impactful than a deferred one.
• New or Lapsed Customers: Immediate incentives are often more effective in attracting new customers or re-engaging those who have lapsed.
• Economic Hardship: Many customers have fixed budgets during tough economic times and strongly prefer immediate savings or bonus products.

The Strategic Importance of Real-Time Capabilities

As I work for a loyalty platform specializing in real-time capabilities, I recognize that my perspective might be biased. However, it’s important to note that many leading loyalty programs worldwide are already transitioning to a real-time proposition. This trend reflects a growing consumer expectation for instant gratification and personalized experiences. Loyalty programs that fail to adapt to this shift risk falling significantly behind.