Rising inflation and the subsequent surge in product prices have meant that more and more consumers are seeking higher value for every dollar spent. This has resulted in a growing adoption of loyalty programs, across different business verticals. From retail to travel and hospitality, the adoption has been growing at a rapid rate worldwide over the last few quarters. The trend is projected to further continue in 2023, as inflationary pressures continue to impact the disposable income of millions around the world.
With firms experiencing a high growth period for their loyalty programs, the competitive landscape in the segment has also grown significantly over the last few quarters. Consequently, to reach more customers and further innovate with their product offerings, firms are raising venture capital and private equity funding worldwide.
United Kingdom-based Propello also announced that the firm had raised £650,000 in a funding round in December 2022. The capital infusion was led by DSW Ventures and other angel investors.
The firm has developed a plug-and-play customer loyalty solution that brands and businesses can integrate into their own websites and mobile applications. Hello Fresh and JD Gyms are among the many businesses that are using the loyalty solution developed by Propello. With the investment round, the firm is planning to expand its team and develop a more robust solution offering.
In the United States, WEEDAR, the loyalty and distribution ecosystem for cannabis brands, announced that the firm had raised US$1.5 million in a seed funding round from a private investor in January 2023. It is planning to use the capital for improving its existing set of features and scaling the firm going forward in 2023.
With customer retention and acquisition becoming a major pain point for brands and businesses amid the current macroeconomic environment, including declining spending and growing competition, more brands and businesses are expected to incorporate loyalty programs into their business model. This means that demand for providers such as Propello and Antavo is well-poised to record accelerated growth over the next few quarters in the global market.
This, coupled with the growing adoption of loyalty programs among consumers, is expected to further drive venture capital and private equity funding in loyalty program solution providers from the short to medium-term perspective. In addition to fundraising rounds, firms are also expected to forge strategic alliances to launch and introduce innovative loyalty programs.
A growing innovation is taking place in the Web3 space and conventional businesses are seeking to integrate the offerings into their business model through the use of loyalty programs. Consequently, PayNXT360 expects more strategic alliances to emerge to launch and introduce NFT-powered loyalty programs in 2023.
In Q1 2023, these trends have already started to emerge, including the collaboration between Polygon and Cha Cha Matcha. The partnership between the two firms will enable customers to access rewards and experiences that are not accessible through conventional loyalty programs. The collaboration between Polygon and Cha Cha Matcha is similar to that with Starbucks and other brands. Going forward, PayNXT360 expects more such strategic alliances in the global market.