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Optimize your loyalty program with the power of data

Author: Lindy Porter


How much do you know about consumer preferences across your audience segments? A lack of actionable data means you don’t have the insight necessary to drive customer loyalty. According to Forrester's Media And Marketing Benchmark Recontact Survey, 2022, 34% of U.S. online adults say they're more likely to purchase brands that share content that interests them - and they're willing to join loyalty programs to get it!

You know that data-driven decision-making is critical regardless of your industry. And data is the key to optimizing your loyalty program. The challenge? Connecting the dots between consumer behavior and your offerings. A loyalty program can only be successful if you leverage consumer data correctly.

Consumer behavior has evolved

Once upon a time, consumers interacted through one or two channels. Today, that’s not the case, particularly if you have multiple brands under a single umbrella. Not only must you consider email, website, app, social media, and telephone interactions, you must also multiply it across your brands.

The result is a fragmented landscape that makes it incredibly challenging to create a unified view of consumer behavior and preferences. For instance, why would a guest rent a room at a luxury hotel during one trip, but then choose a budget hotel during their next trip? Is it all about price preference? Availability? Amenities?

The answer is in the data. With access to comprehensive, first-party, cross-domain data, you determine the “why” and take an active stance, rather than a reactive one. It’s all about offering what each customer wants, rather than tossing “extras” at them that may or may not offer value.

Traditionally, businesses relied on direct communication with their customers and whatever other information they could assemble through third-party sources. With today’s consumers using multiple channels, businesses must capture, contextualize, and stitch data points together to remain competitive and create programs that meet consumer expectations – and therefore build loyalty. You must also be able to gather, organize, and transform data from across those channels to inform your loyalty program development, incentives, and outreach efforts in real-time.

Challenges with today’s loyalty programs

Loyalty programs promise repeat business, access to interested customers, and a reduction in marketing costs combined with an increased return on your investment. They’re also incredibly popular. According to HBR, there are over 3.3 billion reward/loyalty program memberships in the US alone.

Unfortunately, many of those loyalty programs ultimately fail. According to MarTech, 50% of US consumers say loyalty programs don’t offer much value. And 77% of new loyalty programs based strictly on transactional modeling fail within their first two years.

If they’re so popular, why do they backfire? In almost all cases, it comes down to poor use of data.

A rewards program can drive loyalty, encourage customers to engage, and help prevent them from abandoning your brand. However, the program must be effective to achieve those goals. Some of the most common breakdowns in rewards programs include the following:

  • Rewards that are either unappealing or unattainable. Your rewards should resonate with individual customers, but they must also be within reach. If it takes 10 years for a customer to build enough points to attain a reward, it’s not particularly viable.
  • Perks that are limited to flat-rate discounts. Loyalty programs should include both soft benefits and hard benefits, including experiential perks.
  • Loyalty programs that don’t communicate value to customers. If your customers don’t know what your rewards program offers or how it works, they won’t use it. It’s as simple as that.
  • Failure to be where customers are. Your loyalty program must be accessible in multiple formats, including through in-person interaction, via mobile app, through your website, and more. And the easier the access – the better.

Consider Walmart’s decision to launch the Walmart+ program. Mobile app-based, the program also offers integration in the physical world, with uses ranging from gas pumps to scanning barcodes while shopping to skip the checkout line.

When correctly structured and fueled with accurate data, it’s possible to build a successful loyalty program that offers great value to your customers while keeping them devoted to your brand.

Personalization is king

Initially, rewards programs offered customers access to the same perks regardless of their preferences, history with the company, or sensitivities. For instance, a store rewards card might entitle the customer to 3% off their bill at checkout or access to specific product coupons regardless of who they were or their purchase history.

Today, one-size-fits-all reward programs aren’t enough. Consumers expect (and deserve) offers that mirror their wants, needs, and sensitivities. This is where a true loyalty program comes in. Creating programs that reflect individual preferences can be challenging, but with access to accurate first and second-party data, it becomes much simpler.

Let’s take the hospitality industry as an example. Someone books a room at an Atlanta-area Holiday Inn. A few months later, the same guest books a room at a Crowne Plaza in Asheville, North Carolina.

Both hotels fall under the same umbrella (IHG) and the bookings represent an opportunity to learn more about that guest’s preferences. But most data capture solutions can’t track identity across domain (let alone over time), so that same guest would appear as two different individuals. With a modern first-party data capture solution, marketers can capture individual-level data across domains, and use it to create hyper-personalized offers that resonate more with the individual guest. It simply requires asking some pertinent questions and comparing the different stays. For example, IHG may consider:

  • Did the same number of people accompany the guest each time?
  • What was the reason for each trip?
  • Did the guest compare different hotel brands before booking?
  • How did the guest filter and sort their searches?
  • Did the guest make similar requests or access similar amenities during each visit?

The company has multiple opportunities to gather information about the guest and their preferences, pain points, and needs. Before, during, and after the booking data is captured from the website and through email communications with the guest. Deep contextual understanding of the customer journey that led to the booking provides invaluable insight into each guest’s interests and preferences. During the stays, information is also generated through interactions with staff, including front desk staff, concierge staff, and amenities staff, as well as data about activities the guest took part in during their stays.

With this information, the hotel group can build a more accurate identity graph based on individual interests and preferences, and even price sensitivity. Insight can be gathered from group size and make-up, room and amenity preferences, and activities and attractions chosen during the booking or stay.

The goal is simple: build a more accurate identity for each guest so the hotel can customize their marketing efforts and create a more relevant loyalty program experience. For instance, they could send personalized emails with discount offers for family stays at the property. They might be able to offer discounted tickets to area attractions that allow them to deliver more value to guests while building stronger business-to-business ties in the community. On the other hand, business travelers might prefer access to specific perks like free Internet during their stay or an upgrade to a suite if they’ll be in town for some time.

In retail, this same insight can be uncovered by analyzing data around search and sorting behavior, purchase history and brand interactions. Each data point helps build an accurate picture of individual consumers to inform loyalty program perks, communications, and ROI.

Optimizing your loyalty program with data

Building a better loyalty/rewards program begins with clean, accurate, viable data. It’s the foundation for any pivot in your growth strategy and can be used to fuel the evolution of your program to better suit your customers. Here are some critical points to consider in the process of optimizing your loyalty program.

Maximize first-party data

We’re living in an increasingly “cookie-less” world - moving away from using third-party data, which has historically been the foundation of most companies’ advertising and marketing strategies. Google is set to be the final piece of phasing out third-party cookies to protect consumer privacy, and that shift will have major implications for your loyalty program (and the rest of your marketing efforts). If you’re using third-party data, the resulting data gaps will make it impossible to really know your customers or personalize their loyalty experience.

Instead of relying on third-party data, focus on second and first-party data to inform your marketing and loyalty programs. Let’s recap what those are, briefly:

  • First-party data: Information about your customers that you collect directly through your website, apps, CRM, email interactions, and more.
  • Second-party data: Information about your customers collected by a partner and shared with you through an agreement.

First and second-party data allows you to access much more accurate information about your audience and use it to create better loyalty program experiences. It’s about building deeper customer relationships and increasing trust. With increased trust, customers are more likely to share personal information. That data can then fuel even more accurate outreach efforts and loyalty rewards.

You can gather this type of information from online browsing, shopping, and booking data. The insight captured can enable everything from loyalty program tiers to improved pricing models based on the specific behaviors and preferences of individual consumers and their families (when applicable).

And don’t forget about the mutually beneficial relationship your loyalty program has with data – you can gather valuable zero-party data (a subset of first-party data) through your loyalty program itself. Just remember to be strategic in what you ask for, and transparent about how your customers’ data will be used.

Segment your audience

You would never target your entire audience on Facebook with the same ad, so don’t assume everyone enrolled in your loyalty program wants or expects the same thing either. There’s no one-size-fits-all solution here. Using data to segment your loyalty members allows you to drive improvements based on multiple factors, including:

  • Status: You can create a multi-tiered loyalty program based on customer status, such as active, inactive, high earning, repeat purchasers, and even lapsed members. This allows you to deliver tailored incentives or rewards based on that customer’s situation. For instance, a lapsed member can be enrolled in an email promotion, while a high-earning customer can be rewarded with entry into an exclusive sweepstakes.
  • Action: You can segment your audience based on actions taken. For instance, if some have not yet taken a brand-valued action (made a purchase, shared your post, signed up for your newsletter, etc.), then you can send reminders or notifications encouraging them to act.
  • Balance: If your loyalty program uses points, you can target members based on their balance to encourage them to use those points and boost engagement. A simple reminder email might be enough to remind them they have almost enough points to reach the next tier or threshold, which drives engagement as well as profitability.

Fine-tune your program

Every loyalty program will encounter a few bumps along the road. The difference between a successful program and one that falters is how they use data to adjust and improve on an ongoing basis.

For example, let’s assume you want loyalty program members to complete a preference survey. Doing so will provide you with even more valuable data to help optimize your loyalty program. Your metrics suggest that 30% of your audience will complete the survey if you send them an email invitation, but the reality is only 20% click through and complete it.

Your data can help you fine-tune this. For example, your data may indicate members are highly motivated by points, so you could increase the number of points offered for survey completion. You could also offer a specific perk or reward in exchange for the action to make it more appealing to a wider segment of program members, based on the rewards your data tells you members prefer. Or, perhaps 80% of your members use the mobile app while only 20% use email as a primary channel. Shifting your promotion to mobile could greatly improve the response rate. Again, there’s no single answer but your data will tell you what you need to do.

Data: The determining factor in your efforts

Everything we’ve discussed is centered on one thing: access to accurate, clean, high-quality data. Anything less leads to reduced ROI and risks alienating your customer base. Without clean, organized data, you’re still flying blind.

According to Venture Beat, $12.9 million is lost annually due to poor data quality. That doesn’t even account for the millions lost by failing to connect with your audience in more meaningful ways that build trust. To ensure data quality, consider the following:

  • The first step is to define the data critical to your organization’s success. This allows you to focus on the most important information for specific purposes, prioritize efforts, align actions with goals, and deliver value by focusing on the most critical data first.
  • Data sources vary in terms of quality, availability, and viability for use with loyalty programs. Again, zero, first, and second-party data offer the most value and traction.
  • Different business segments require different data sets. Your loyalty team will have a specific need for customer data, but it likely overlaps with data that also benefits your marketing team. Having a unified system for comprehensive data capture solves for both.
  • The amount of customer data available is vast. To truly optimize your loyalty program you need a customer data solution that can absorb and contextualize it all in real-time.

The good news is you already have a massive source of valuable data available - your website, app, and social media accounts. The difficulty is capturing and contextualizing that data in one system that creates a single customer view and can easily activate the data to achieve critical insight into individual consumer preferences and behaviors.

At Celebrus, data is our business. We simplify data capture so you can maximize your loyalty program, and your marketing efforts, to achieve the best possible results. Celebrus CDP offers powerful features to solve pressing identity challenges, enabling you to capture data across device, domain, channel, and time, then contextualize and activate it in real-time to truly optimize your loyalty program.

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