2024 will bring uncertainty – investing in loyalty will be key to growth

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We are heading into the Year of Loyalty, where businesses that invest in their employees and customers will give themselves a platform for success.

Predicting what 2024 will bring is challenging – with the prospect of a General Election and the constantly shifting sands of economic policy have created a much more uncertain future.

Last year, we knew everyone was in for a rough ride and so it proved, with businesses and employees wrestling with rising costs and interest rates. But while 2024 may not be as clearly-defined, what is certain is that loyalty will be the most influential driver.

The experience of the last 12 months – and in some ways the last three years – has created in consumers and workers a greater sense of their own value – to themselves, the places they work and the businesses and services they use.

The businesses that succeed in 2024 will be the ones that recognise how to build and maintain loyalty in a more meaningful way.

Out with the old – sales and loyalty are changing

From a consumer standpoint, traditional loyalty programmes no longer have the influence they once did. Already we have seen the biggest supermarkets adjust their loyalty programmes so that rather than focusing on accumulating points, members get instant discounts at the checkout instead.

Price remains a strong influence, but that is falling. According to data from customer experience managers Qualtrics, 61% of consumers base their loyalty to a brand on the quality of the service or product and 47% on the customer service support. Only 43% base it on low prices. So the impact of sales – with the possible exception of Black Friday – is diminishing in customers’ eyes.

These significant shifts in consumer behaviour will filter through to all businesses in 2024. Consumers post-Covid have an increasing need to feel looked out for and protected from the unexpected.

Businesses that can offer wraparound care with tangible benefits – service packages for major expenses for example – will see real growth in 2024. But those packages need to offer real value at the right price. Never have consumers been more aware of what they are actually getting when they sign up for value-added services.

Make it too complex, too expensive or pay lip-service to the problem you’re claiming to protect them against and it could be very damaging to your business.

Retention is still king for employers

We’ve seen a lot of recent articles preaching retention for 2024 and we agree, retention is vital. We actually had this as a key point for 2023 and the message has not changed.

Recruitment remains challenging for business, with significant numbers of unfilled vacancies across the economy.

Latest figures from the Office of National Statistics show almost a million unfilled vacancies in the UK right now. So it’s obvious that retaining employees is vital to growth.

Love2shop’s own Employee Value Report, published in September, told us that despite this need to retain staff, 4.4 million UK workers are considering leaving their job as they feel undervalued, with 1.5 million ready to leave without a new role to go to.

When asked why, 41% said they felt their contribution to the business was not acknowledged, 32% cited poor pay and benefits and 29% believed that loyalty is a one-way street and they did not matter to their employer.

That indicates serious disillusionment with employers – and that could become a crisis in 2024.

What’s frustrating is that the UK workforce is not asking employers for a lot. We also found that 90% would feel more valued by receiving a spontaneous gift card at work but 47% said their employer never gifts them anything.

Small regular shows of appreciation beyond the pay packet in 2024 are the key to employee retention. Employee discount schemes can be one solution, but many are complex and not valued by employees.

Consider offering employees discounts they can apply instantly. Everyday Benefits from Love2shop for example is a card employees pre-load funds onto at a 7.5% discount. So for example, if they load £100 on, they only pay £92.50. They then have £100 on the card to spend at more than 140 partner retailers.

Businesses that get it right will be in a strong position when the economy begins to truly grow again.

AI will find its place

This year AI has been the buzzword in business and that is unlikely to stop. However, we believe it will settle down and find its place in the ecosystem in 2024.

The rapid explosion of artificial intelligence in 2023 made it seem a bit like the Wild West, with even Google struggling to keep up!

But 2024 will see more businesses employ AI strategically. Used as a support tool to improve customer experience alongside human interaction it can help businesses manage more enquiries and ease some of the teething troubles growing businesses sometimes have with fulfilment.

According to global research firm Forrester, AI will be used more surgically, particularly by digital businesses, to support customer service delivery, however it also predicts that 40% of buyers aged 25-44 will rate person-to-person interactions as their most meaningful – so if customer loyalty is your goal, invest in people.

Spreading API-ness

APIs are nothing new, but we will see them deployed more by businesses to enhance their user experience.

Businesses working with partners to deliver key employee benefits or customer rewards will move away from engineering their own in-house solutions and instead will expect suppliers to provide seamless APIs that help them to deliver global-quality brand engagement and user experience within their budget.

Critically, the most important investments businesses will make in 2024 will be around experience – the workplace experience, the customer experience, the online experience.

Integrating Love2shop into your reward and recognition systems is a great way to enhance those experiences – opening up a mammoth catalogue of brands for recipients to spend with.

You can find details of how our API integration offers safe, secure real-time integration here: https://business.love2shop.co.uk/api-for-gift-cards.

Whatever happens 2024 will be a year of significant change for business. Attitudes and behaviours may be shifting but by using new insights to focus on what’s really important businesses will thrive.

The primary focus, as ever is on quality of products and services. But invest in your workforce and your customers. Create an eco-system around your brand that people want to engage with and be a part of.

That will make your business resilient, agile and ensure you’re ready to grow whatever surprises 2024 has in store.

Cost of living rise presents big challenges – and there are ways to mitigate the impact

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Evidence of the UK’s worsening cost of living crisis is becoming impossible to ignore – it is there in the data and in countless anecdotal examples.

One high street butcher, Raymond Millar, reports that his customers had already started saving for their Christmas dinner in July. His savings scheme that allows people to buy their meat for the festive season doesn’t usually start until September.

Then there is the GP, Dr Laurence Dorman, who for more than a year has been offering food vouchers to his patients. He is now giving them out with increasing frequency. Dr Dormam told the BBC the cost of living crisis could have “massive, profound implications” for patients’ health.

It feels like the price of everything is on the rise. As we emerged from the pandemic supply chains struggled to keep up with demand. This caused an initial spike in inflation and now the Russian invasion of Ukraine has accelerated the crisis.

Energy costs push inflation upwards

Russia is a major global source of oil and gas and the war has put huge constraints on supply. From June 2021 to June 2022 gas prices for UK households soared by 95% and electricity prices by 54%. The UK’s wholesale electric price is linked to the price of gas.

From October 1, the energy price cap will go up further. The price cap is a mechanism that sets the maximum amount that suppliers can charge in England, Scotland and Wales. From October the typical annual gas and electricity bill is likely to reach £3,358, according to consultancy Cornwall Insight.

In contrast, in October 2021 the average annual bill was just £1,400. And Cornwall Insight is forecasting this could go above £4,200 by January 2023. Millions of people are wondering whether they will be able to afford to switch the heating on at all this winter. This may dampen the enthusiasm from some for working from home.

Finance and consumer rights guru Martin Lewis, says: “This is a national crisis on the scale that we saw in the pandemic.”

Martin, and many others, are now calling on the government to take urgent action to soften the blow. From September it is likely that, whoever is prime minister, whether that’s Liz Truss or Rishi Sunak, will be forced to act. Both have been vague on the issue during their campaigns. But once they take office, the pressure to act will be irresistible.

Inflation is now above 10% and the Bank of England is projecting it will hit 13% in the next few months, tipping the UK into recession. Food prices are rising rapidly in the shops. Who can forget the price of a tub of Lurpak surging above £9 in July?

Ukraine impact felt in the supermarkets

Again, the conflict in Ukraine is having a major impact. Ukraine is a leading exporter of essential commodities such as sunflower oil, grain, maize and wheat. The United Nations has warned global food costs could rise by 20%. The rising price of oil means the cost of moving food around is also much higher, adding to high prices.

Rising costs are also hitting businesses which are in turn facing the dilemma of whether or not to pass the costs onto their customers. Some cafes, bars and restaurants are considering reducing their opening hours to reduce outgoings, according to a study by eEnergy and Censuswide.

And even nipping out for a sandwich in your lunch break is now becoming more expensive. In the last few weeks both Boots and Co-op have hiked the prices of their meal deals. Outside London, Boots has put the price up from £3.39 to £3.59. In London it has gone up from £3.99 to £4.19.

Co-op’s meal deals have jumped in price from £3.50 to £3.75. And the nation’s favourite bakery chain, Greggs, is warning of rises of up to 9% on some products in the coming months.

There is upward pressure on the cost of getting to and from work. Motorists have already seen petrol prices at the pumps rocket. And public transport users face further unpredictability. Train tickets prices rise each January based on the retail price index from the previous July, plus 1%. This means commuters could face 12% fare rises in 2023.

Although still low by historical standards, interest rates are also on the rise. At the time of writing the Bank of England has pushed up rates to 1.75% from 1.25%. Those on fixed-rate mortgages have some protection for the moment. However, the average monthly cost of a tracker mortgage has increased by more than £160 since December 2021.

Simple actions that make a difference 

There are steps people can take to mitigate some of their daily outgoings. Sharing car journeys into work with colleagues could make a significant difference to fuel costs. As could using park and ride schemes. And although grocery prices are rising, taking your own lunch into work will always be cheaper than buying a sandwich.

And many coffee shops run loyalty schemes where you get a free hot drink after your card’s been stamped so many times, or a reduced price if you use a reusable cup. These smaller benefits can make a difference over time.

There are also things employers can do. There is an increasing number of businesses which are being pro-active. According to the Living Wage Foundation, 10,000 employers in the UK have now committed to paying the Real Living Wage. At £9.90 for most of the country and £11.05 in London, this is higher than the mandated National Minimum Wage.

In recent weeks there have been multiple reports of companies pledging one-off financial payments to help their people deal with the cost of living. One of those is Love2shop, which has offered a payment to all of its employees.

And the company is doing its bit for the wider community by partnering with digital payment business PayPoint. This agreement will see both parties expand their product range to provide local authorities with a new way of servicing the most financially at-risk people.

Employers can do their bit to help

Love2shop is also working with businesses across the country to help them offer real financial rewards and incentives through its Love2shop gifting products. Given the broad range of retailers available on Love2shop, it allows employers to meaningfully contribute to their employees’ cost of living dilemmas if that’s how they choose to spend their gift cards.

As well as the ‘treat’ opportunities with a Love2shop Gift Card, it’s also accepted by more than 150 leading UK consumer brands including Sainsbury’s, Argos, Tesco, Wilko, Iceland, Matalan, New Look, and Argos. So people can choose to buy everyday essentials or for those little luxuries.

With the new school year about to start, a multi-retailer gift card could offer great savings on the price of school uniforms or other essential items such as school shoes or a PE kit.

This is also the time of year when we start thinking about Christmas. People could use their gift card to get a head-start and buy gifts in advance, taking away some of the stress normally felt in November and December.

Some employers may be able to negotiate cheaper corporate discounts with local car parks to reduce parking costs, or allow more people to work from home when practical – if the costs don’t outweigh the costs of going to work considering the rising fuel costs come winter.

There are tough times ahead but employers can make a big difference to the lives of their employees for a modest outlay.

If you can see how Love2shop reward and recognition products could help your business, contact our business team today. Email [email protected] or call  0344 375 0739.

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