How To Win and Retain Customers In The Loyalty Era

Today, an abundance of consumer choice online has become the norm, and hyper-competitiveness rules. We have shifted into the Loyalty Era, in which consumers are no longer only swayed by the lowest price. This era, characterized by limitless consumer options, low friction enabling easy switching among those options, and high consumer expectations, demands a fresh approach to customer engagement and retention strategies. 

With this in mind, businesses, banks and financial institutions are faced with capturing and retaining loyal customers in a landscape of unprecedented choice and convenience.

How we got here

The journey to today’s Loyalty Era is marked by significant shifts in consumer behavior and market dynamics. First came the Credit Era in the 1960s. In it, credit cards revolutionized purchasing power and allowed consumers to “borrow” money to buy things instantly. A few decades later, the 1990s ushered in the E-commerce Era, building on the credit era and dramatically expanding shopping convenience and choice among millions of online stores around the world. 

And now, we find ourselves in the Loyalty Era, where this abundance of options means a laser focus on customer retention and value creation for the consumer is a non-negotiable.

The progression from the Credit Era to the E-commerce Era to now - the Loyalty Era - has fundamentally altered the competitive landscape. In the early days of credit cards, competition was relatively low (and was quite local), and customer acquisition costs were manageable. The E-commerce Era saw a surge in competition as the internet connected consumers to a vast array of merchants globally.

Competition is fiercer than ever in the Loyalty Era, with low barriers to entry for selling goods online in almost any product niche you can imagine. And the increased prosperity in much of the world means more people have purchasing power to buy what brands are selling.

As a result, every business is effectively competing for nearly the same customers. In a market saturated with choice, where brands have largely eliminated friction from the purchase process and choice is abundant, the only viable strategy for growth is to attract customers away from competitors. This reality turns customer acquisition into a zero-sum game, where one brand's gain is another's loss. 

In today’s Loyalty Era, loyalty is essentially the only strategy that works.

Consistency, value, and convenience: the new priorities

To succeed in this environment, brands must focus on adding more value for consumers. Now, this doesn't only mean offering better prices or more generous rewards (though those certainly help). Instead, it requires a holistic approach to value creation that addresses the customer's broader needs.

Today's customers have high expectations centered around three key pillars: consistency, value, and convenience. In a world where consumers are bombarded with choices, the brands that can consistently deliver a superior customer experience based on those principles will win. 

Consistency is not just about delivering the same quality of service or product each time; it’s about providing a uniform experience across all channels, whether online, in-store, or through customer service interactions, and even in post-purchase communications. Inconsistent experiences, or those that don’t match the expectations of today’s fickle, choice-rich customer, can erode trust and diminish the perceived value of a brand, leading those same customers to defect.

Second, convenience remains a critical factor in customer satisfaction. The ubiquity of e-commerce has set a high bar for convenience, with customers now expecting fast (one click!), hassle-free checkout experiences,  especially on their mobile phones. Consumers also expect  speedy, flexible, and predictable delivery options, and simple return processes at any store they shop. 

Finally, value is no longer solely about offering the lowest price. It has taken on new dimensions in the Loyalty Era. While financial rewards remain important, customers increasingly seek personalized offers, exclusive access, and benefits that align with their lifestyles and personal principles. Successful loyalty programs now go beyond purely transactional rewards to also create emotional connections and deliver meaningful value.

Adding more value

The financial services sector offers a prime example of these strategies in action as traditional revenue sources like interchange fees face potential pullback due to regulatory pressures and the rise of alternative payment methods. As a result, banks and credit card issuers are turning to innovative loyalty solutions to drive customer engagement, increase value for their customers, and create new revenue streams.

For instance, some financial institutions are developing travel platforms under their brand that integrate booking services with exclusive travel deals for cardholders, such as the Chase Travel and Capital One Travel portals. When their customers book travel in these portals, the bank earns a commission while the customer also gets a great deal on their travel package.  

In another example, some banks are launching online shopping rewards programs with browser extensions and mobile apps that display cashback offers and coupons in real time as the customer shops online. When the customer activates cashback or a coupon and makes a purchase, that customer benefits with the added value of saving on their purchase, while the financial institutions themselves earn a commission on the order at no cost to the customer.

One additional value-add for consumers that deepens relationships and drives new revenue for financial institutions are Retail Media Networks. These are ad networks that use a brand’s first-party user data to create an effective advertising platform in which other companies can promote their products. Chase Bank is an innovator in Retail Media Networks, launching the first  by a financial institution, Chase Media Solutions, in April 2024. This network allows brands to tap into Chase’s 80-million strong customer base to target offers to the most relevant Chase customers, using the bank's first-party data and historical transaction data. 

Customers who purchase through ads served by the Chase Media Solutions network can earn cash back from the advertiser on those purchases, gaining additional value from their banking relationship. Meanwhile, Chase earns incremental revenue through their new ad offering.

Thriving in the Loyalty Era

As we navigate the Loyalty Era, success will belong to the brands that can continuously evolve their offerings to meet and exceed customer expectations. By focusing on consistency, value, and convenience, and by constantly seeking ways to add more value to customers' lives, businesses can not only retain their existing customer base but also attract customers from competitors.

The key lies in viewing loyalty not as a program, but as a comprehensive strategy that affects every aspect of the customer experience. In doing so, brands can create the lasting, long-term connections with customers that define true loyalty in this new era of consumer choice and empowerment.